2010 (8) TMI 297 - AT - Central Excise

Valuation - amount recovered from their traders/dealers by way of raising debit note are reimbursement of advertising and publicity/promotion expenses incurred by the dealers but undertaken by the appellant - appellant has not produced any evidence to support the above plea Held that - advertisement charges includible in assessable value no infirmity in lower authority order

Summary

Issues:
1. Recovery of amount through debit notes for I.C. Diesel Engines.
2. Dispute regarding reimbursement of advertising and promotion expenses.
3. Inclusion of advertising charges in the assessable value of the final product.
4. Imposition of penalty under Section 11AC of Central Excise Act, 1944.
5. Extension of option to deposit duty, interest, and penalty within 30 days.

Issue 1: Recovery of amount through debit notes for I.C. Diesel Engines
The appellant, engaged in the manufacture of I.C. Diesel Engines, raised debit notes to recover amounts from related persons without informing the Revenue. The Revenue alleged that these amounts were part of the value of engines sold, leading to proceedings for duty confirmation and penalty imposition. The lower authorities confirmed the demand and imposed a penalty under Section 11AC, which was challenged in the appeal.

Issue 2: Dispute regarding reimbursement of advertising and promotion expenses
The appellant claimed that the amounts recovered through debit notes were reimbursement for advertising and promotion expenses incurred by dealers but undertaken by the appellant. However, the appellant failed to provide sufficient evidence to support this claim. While one dealer mentioned reimbursement for key chains, the appellant could not substantiate procurement and supply of advertising materials for other dealers. The advertising charges were deemed to be included in the assessable value of the final product.

Issue 3: Inclusion of advertising charges in the assessable value
As the appellant could not prove that the advertising was done by the dealers and the recovered amounts were for the supply of advertising material, the lower authorities' decision to add these amounts to the assessable value was upheld. The confirmation of duty and penalty imposition under Section 11AC was supported by the law established by the Hon'ble Supreme Court in a previous case.

Issue 4: Imposition of penalty under Section 11AC
The Tribunal extended the option to the appellant to deposit the entire duty, interest, and 25% of the penalty within 30 days of the order. Failure to provide this option initially by the lower authorities was rectified based on a previous Tribunal ruling, reducing the penalty to 25% of the duty amount upon compliance.

Issue 5: Extension of option to deposit duty, interest, and penalty within 30 days
The Tribunal granted the appellant the opportunity to pay the duty, interest, and a reduced penalty within 30 days, aligning with the proviso to Section 11AC. This extension aimed to facilitate compliance and reduce the penalty amount for the appellant.

In conclusion, the appeal was disposed of with the decision to uphold the confirmation of duty, imposition of penalty, and the extension of the deposit option within the specified timeframe.