2006 (1) TMI 292 - AT - Central Excise

Summary

Issues:
1. Demand of duty based on advertising cost allocation in assessable value.
2. Interpretation of legal position regarding advertising cost allocation post issuance of Board Circular.

Analysis:

Issue 1: Demand of duty based on advertising cost allocation in assessable value
The revenue demanded duty on the appellant amounting to Rs 45,52,845, arguing that 50% of the advertising cost borne by the dealer should be added to the assessable value. The appellant contended that they had already included 50% of the advertising cost borne by them in the assessable value. The revenue insisted that the remaining 50% borne by the dealer should also be added. The appellant cited a Tribunal ruling in the case of Mahindra & Mahindra Ltd. v. CCE, Bombay, which held that expenses incurred by the dealer towards advertising, from which they also benefit, need not be added to the manufacturer's share. The appellant argued that the revenue did not accept this legal position, citing a circular issued by the Board in 2002. The Tribunal observed that the appellant had already included 50% of the advertising charges in the assessable value and that the dealer, who bore the remaining 50%, also benefited from the advertising. The Tribunal found that the legal position remained unchanged even after the issuance of the Board Circular. Consequently, the Tribunal allowed the stay application, granting full waiver and staying the recovery, as the cited judgments applied to the case.

Issue 2: Interpretation of legal position regarding advertising cost allocation post issuance of Board Circular
The appellant argued that the Board Circular issued in 2002 did not alter the legal position established by the Supreme Court in the case of Philips India Ltd. and the Tribunal in the case of Mahindra and Mahindra. The Tribunal concurred with this argument, emphasizing that the legal position remained consistent despite the issuance of the Circular. The Tribunal granted full waiver and stayed the recovery, indicating that the legal principles established by the aforementioned judgments continued to apply. The matter was scheduled for expedited hearing following the grant of full waiver.

In conclusion, the Tribunal ruled in favor of the appellant, allowing the stay application and granting full waiver on the grounds that the legal position regarding the allocation of advertising costs in the assessable value remained unchanged, as established by relevant judgments despite the issuance of the Board Circular.