2017 (4) TMI 377 - AT - Central Excise

Valuation - sale promotion expense - includibility - whether sale promotion to be included in assessable value or not? - Held that - sale promotion which was included by the lower authorities is not part and parcel of the sale value of the appellant s goods, the so called sale promotion value was neither shown in the sale price of the appellant s goods nor recovered as extra consideration - The lower authority carefully erred by including the said sale promotion in the sale price of the appellant, for the reason that this element is related to the distributors sales price to whom the goods were sold on principal to principal basis to the appellant by the distributors - sales promotion which is part and parcel of sale price of distributors cannot be added in the sales price of the appellant, particularly when there is no extra consideration flowing on account of sales promotion to the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues: Valuation of goods for excise duty - Inclusion of sale promotion in assessable value

In this case, the Appellate Tribunal CESTAT MUMBAI addressed the issue of the valuation of goods for excise duty, specifically focusing on the inclusion of sale promotion in the assessable value. The adjudicating authority disputed the valuation of the appellant's Motor Vehicle parts, citing the declaration provided by the appellant regarding the sale price of the goods. The authority argued that sale promotion should be included in the assessable value, leading to a demand for such inclusion. The Commissioner (Appeals) upheld the original order, prompting the appellant to appeal to the Tribunal.

The appellant contended that the excise duty should be disputed on the transaction value at which goods were sold to distributors on a principal-to-principal basis. They argued that sale promotion is an element in the sale value of the distributors, not a part of the transaction value of the appellant's goods, as the cost of sale promotion was not included in the declared sale price nor flowed back to the appellant.

On the other hand, the Revenue representative reiterated the findings of the impugned order, emphasizing that the appellant did not declare the value of sale promotion in the price declaration. The lower authorities had included the value of sale promotion in the transaction value based on this omission.

Upon careful consideration, the Tribunal observed that the sale promotion included by the lower authorities was not integral to the sale value of the appellant's goods. The sale promotion value was not reflected in the sale price nor recovered as additional consideration. The demand was raised solely based on the details of the price structure provided in the declaration. The Tribunal concluded that the sale promotion, being part of the distributors' sale price, should not be added to the appellant's sale price, especially when there was no extra consideration received by the appellant due to the sale promotion. As the goods were sold on a principal-to-principal basis without any additional consideration for sales promotion, the inclusion of sale promotion in the appellant's value was deemed incorrect. Consequently, the Tribunal set aside the impugned order and allowed the appellant's appeal.