2008 (10) TMI 530 - AT - Central Excise

Summary

Issues Involved:
1. Whether VBCL and AMAS are "related persons" u/s 4(3)(c) of the Central Excise Act, 1944.
2. Whether crate hire charges are includible in the assessable value.
3. Whether advertisement charges collected by AMAS are includible in the assessable value.
4. Whether the demand for differential duty is barred by limitation.

Summary:

1. Related Persons:
The Tribunal examined if VBCL and AMAS are "related persons" u/s 4(3)(c) of the Central Excise Act, 1944. The Revenue alleged that VBCL and AMAS had mutual interests and familial connections, thus qualifying as related persons. However, the Tribunal found no evidence of financial flowback or mutual control between VBCL and AMAS. The Tribunal held that familial relations alone do not establish a related person status, and there was no evidence of any agreement binding AMAS to incur advertisement expenses on behalf of VBCL. Therefore, VBCL and AMAS were not considered related persons.

2. Crate Hire Charges:
The Tribunal addressed whether crate hire charges recovered by VBCL from their dealers should be included in the assessable value. Citing precedents, the Tribunal concluded that crate hire charges are not includible in the assessable value, as there was no evidence of artificially inflated charges to reduce the assessable value.

3. Advertisement Charges:
The Tribunal considered if advertisement charges collected by AMAS from dealers should be included in the assessable value of the goods manufactured by VBCL. It was determined that since AMAS incurred these expenses independently and not under any binding agreement with VBCL, such charges are not includible in the assessable value. The Tribunal referenced similar cases where advertisement expenses incurred by buyers were not included in the assessable value of the manufacturer's goods.

4. Limitation:
The Tribunal also addressed the issue of limitation concerning the demand for differential duty. It was argued that the demand for the period from March 1994 to June 1995 raised by the show cause notice dated 25-2-99 was barred by limitation. The Tribunal noted that the issues were known to the departmental officers since March 1994, and there was no suppression of facts by VBCL. Therefore, the demand was considered time-barred.

Conclusion:
The Tribunal set aside the impugned order, holding that VBCL and AMAS are not related persons, crate hire charges and advertisement charges are not includible in the assessable value, and the demand for differential duty is barred by limitation. The appeals were allowed.