2007 (7) TMI 561 - AT - Central Excise

Summary

Issues involved:
The issue involved in this case is related to the demand of Rs. 63,588/- with penalty under Section 11AC of the Act and recovery of interest under Section 11AB, as confirmed by the Assistant Commissioner and upheld by the Commissioner (Appeals).

Summary:

Issue 1: Demand of Rs. 63,588/- with penalty under Section 11AC of the Act and recovery of interest under Section 11AB

The appellant, engaged in the manufacture of goods, was involved in providing various articles as gifts to customers, which were purchased in bulk from the open market and resold to customers. The Assistant Commissioner confirmed the demand of Rs. 63,588/- with penalty under Section 11AC of the Act and ordered recovery of interest under Section 11AB. The Commissioner (Appeals) upheld the decision but reduced the penalty amount.

Decision: The Tribunal granted waiver of pre-deposit and proceeded to hear the appeal itself for final disposal. The appellant argued that the gifts were given by dealers to customers as a trade promotion activity, and the appellant's role was limited to facilitating procurement and recovering costs. Relying on previous Tribunal decisions, it was contended that advertisement charges borne by dealers should not be included in the assessable value. The Tribunal agreed with the appellant, stating that the expenses were recovered from distributors and the promotional activities were not exclusively for the appellant's benefit. Consequently, the appeal was allowed, and the stay petition was disposed of.