2007 (3) TMI 132 - AT - Central Excise

Valuation(Central excise) - Revenue contended that amount reimbursed by third party shall be included by the assessee is the assessable value of the final product - Held that revenue contention was not correct and amount reimbursed by third party not to be added in the assessable value

Summary

Issues:
1. Inclusion of amounts reimbursed by a third party in the assessable value of the final product under Section 4 of CE Act, 1944.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Bangalore arose from the Order-in-Appeal where the demands confirmed against the Respondents were set aside. The Revenue contended that the amounts reimbursed by M/s. Britco Food Company Ltd. should be included in the assessable value as the final product was manufactured by the Respondents. However, the Commissioner (Appeals) found that the reimbursement had no connection with the final product and was part of a commercial relationship at arms length. The Commissioner (Appeals) emphasized that only consideration flowing directly or indirectly from the buyer to the assessee could be added to the assessable value for excise duty purposes. The Tribunal referred to previous decisions where it was held that third-party expenses not directly linked to the buyer were not includible in the assessable value. The Tribunal upheld the Commissioner's findings, stating that the appeal by the Revenue was not sustainable in law and dismissed it.

The Revenue argued that M/s. Britco, a subsidiary of M/s. Coco Cola, reimbursed expenses for manufacturing, advertising, and sales promotions, which should be included in the assessable value. However, after hearing both parties, the Tribunal found that the issue was already settled by previous Tribunal judgments. The Tribunal noted that the facts of the case aligned with previous decisions and upheld the Commissioner (Appeals) findings, rejecting the appeal.

In conclusion, the Tribunal upheld the Commissioner (Appeals) decision to set aside the demands against the Respondents regarding the inclusion of amounts reimbursed by M/s. Britco in the assessable value of the final product. The Tribunal emphasized the principle that only consideration directly or indirectly from the buyer to the assessee could be added to the assessable value for excise duty purposes. The Tribunal found no merit in the Revenue's appeal and rejected it, citing previous Tribunal judgments that supported the Commissioner's decision.