1992 (9) TMI 373 - AT - Central Excise

Summary

Issues:
1. Inclusion of advertisement expenses in the assessable value of goods.
2. Limitation period for the recovery of short levied duty.
3. Imposition of penalty under Rule 173Q(1) CE Rules.

Issue 1: Inclusion of advertisement expenses in the assessable value of goods:
The appellants manufactured TV game consoles and video game cartridges availing SSI exemption under Notification No. 175/86-CE. They included expenses on advertisements and publicity of their products in the assessable value. The dispute arose regarding expenses incurred by dealers for the appellants' products not reimbursed by them. The tribunal held that the expenses incurred by dealers, even if not reimbursed, should be included in the assessable value. The tribunal rejected the appellants' contention that the advertisement by dealers was optional, citing a scheme where 50% of local advertisement expenses were reimbursed. The tribunal relied on previous case laws to support its decision, emphasizing that advertisement charges enrich the value of goods and should be part of the assessable value.

Issue 2: Limitation period for the recovery of short levied duty:
The tribunal determined that the demand for duty, which was short levied due to non-inclusion of advertisement expenses, was not barred by limitation. The tribunal found that the appellants' non-disclosure of expenses incurred by dealers on product advertisement amounted to suppression, rejecting the appellants' argument of a bona fide belief. The tribunal highlighted the legal precedent set by the Hon'ble Supreme Court in the Bombay Tyre International case, establishing that advertisement charges form part of the assessable value for excise duty assessment.

Issue 3: Imposition of penalty under Rule 173Q(1) CE Rules:
The tribunal imposed a penalty of &8377; 5,000 under Rule 173Q(1) CE Rules for contravention of Rules 9(1), 173C, and 173F. The penalty was justified based on the findings that the demand for duty was sustainable on merits and not time-barred. The tribunal upheld the impugned order and rejected the appeal, ruling against the appellants on all three issues.

In conclusion, the tribunal upheld the inclusion of advertisement expenses in the assessable value of goods, determined that the recovery of short levied duty was not time-barred, and imposed a penalty under Rule 173Q(1) CE Rules. The judgment favored the tax authorities and ruled against the appellants on all issues raised in the appeal.