2000 (1) TMI 92 - AT - Central Excise

Summary

Issues Involved:
1. Includability of advertisement and sales promotion expenses in the assessable value.
2. Includability of interest on advances and security deposits in the assessable value.

Detailed Analysis:

1. Includability of Advertisement and Sales Promotion Expenses:
The appeals concern whether advertisement and sales promotion expenses incurred by buyers should be included in the assessable value of goods. The Assistant Commissioner had previously included these expenses, but the Commissioner (Appeals) set aside this decision, referencing the Tribunal's judgment in Havmor Ice Cream and the Apex Court's decision in Phillips India v. CCE, which held that advertisement expenses by the buyer should not be included in the assessable value. The Revenue argued that shifting these expenses to the wholesale dealer was intended to reduce excise duty and should be considered additional consideration. However, the Tribunal found no evidence that the transactions were not at arm's length or that the buyers were related persons. It held that the expenses incurred by independent buyers/distributors for advertising were not to be added to the assessable value, affirming the Commissioner (Appeals)'s decision.

2. Includability of Interest on Advances and Security Deposits:
The Revenue contended that interest on advances against sales and security deposits should be included in the assessable value, referencing the Tribunal's decision in Resistance Alloys Pvt. Ltd. The respondents argued that these advances were for properties like ice boxes and crates, not for sales of goods. The Tribunal noted that unless a clear nexus between the interest accrued on advances and the sale price is shown, such interest cannot be added to the assessable value. The Tribunal referenced the Hon'ble Supreme Court's decision in Indian Oxygen Ltd., which held that interest on deposits for the safe return of gas cylinders is not includible in the assessable value. It found that the advances were for the safe return of properties and not for sales of goods, and since the sale price remained constant irrespective of the advances, there was no nexus. The Tribunal remanded the matter to the original authority to verify if certain advances were against sales and not properties, otherwise rejecting the inclusion of advertising charges and security deposits.

Conclusion:
The Tribunal upheld the Commissioner (Appeals)'s decision that advertisement and sales promotion expenses incurred by buyers should not be included in the assessable value. It also found that interest on advances for properties like ice boxes and crates should not be included unless a clear nexus with the sale price is proven. The matter was remanded to the original authority for verification of certain advances, with the rest of the appeals being rejected. The appeal against Madurai Soft Drinks Pvt. Ltd. was similarly rejected based on the same rationale.