2011 (3) TMI 372 - AT - Central Excise

Demand - Time barred - Appellant entered into agreement with Coca-Cola Company to use trade mark/brand name of Coca-Cola on the goods manufactured and for manufacture of its final product a non-alcoholic beverage base is sold by Coca-Cola to Appellant at agreed prices - Show Cause Notice was issued on 30-4-2008 on the ground that during the period 2003-2004 to 2005-2006 the Appellant suppressed the fact regarding the re-imbursement of expenses in respect of advertisement, marketing and sale promotion received from Coca-Cola the supplier of beverage base - as there is no evidence on record to show that Appellants are receiving any extra consideration from customers over and above the printed sale price on the goods hence the inclusion of cost of incentives received from the supplier of raw material i.e. from Coca-Cola to the assessable value is not sustainable particularly when the goods are assessable under Section 4 of the Act - Appellants are filing necessary returns regarding payment of duty on the basis of M.R.P, and when the M.R.P. was reduced the same was reflected in the monthly returns hence the allegation of suppression with intent to evade payment of duty is also not sustainable - Appeal is allowed

Summary

Issues:
- Appeal against demand confirmation and penalty imposition under Section 11AC of the Central Excise Act.
- Dispute regarding inclusion of discounts/incentives in assessable value of manufactured goods.
- Allegation of suppression by the Appellant.
- Time-barred demand issue.

Analysis:
1. The Appellant filed an Appeal against the demand confirmation and penalty imposition under Section 11AC of the Central Excise Act. The dispute arose from the inclusion of discounts and incentives received from the supplier in the assessable value of the goods manufactured. The Appellant contended that there was no evidence of selling goods above the declared M.R.P., thus no justification to increase the M.R.P. based on discounts/incentives.

2. The Appellant argued that previous demands regarding similar issues were dropped, emphasizing that the incentives were already included in the sale price of the goods by the supplier. The Appellant also claimed that the demand was time-barred, as they had been consistently filing returns based on M.R.P. and had not suppressed any information intentionally.

3. The Revenue's position was that the Appellant received additional considerations related to the price of the finished goods, which were not factored into the M.R.P. The Revenue alleged suppression of material facts by the Appellant, leading to the demand for duty payment. The Revenue contended that the incentives were directly related to the price of the goods and should be included in the assessable value.

4. The Tribunal analyzed the provisions of Section 4A of the Central Excise Act, which governs the valuation of excisable goods with reference to the retail sale price. It was noted that the incentives received by the Appellant were not additional considerations from customers but were provided by the supplier of raw material. Referring to a Supreme Court case, it was established that such incentives need not be considered in the assessable value calculation.

5. Considering the lack of evidence showing extra consideration received from customers above the printed sale price, the Tribunal concluded that the inclusion of incentives from the supplier in the assessable value was not sustainable. The Appellant's consistent filing of returns and reflection of reduced M.R.P. supported the dismissal of the suppression allegation. Consequently, the impugned order was set aside, and the Appeal was allowed.