2005 (9) TMI 180 - AT - Central Excise

Valuation (Central Excise) - Advertisement expenses and royalty - SSI Exemption - Value of clearances - Clubbing of - Dummy units

Summary

Issues:
1. Revenue's appeal against the order of Commissioner of Central Excise, Ahmedabad regarding alleged dummy units and clubbing of clearances.
2. Inclusion of royalty and advertisement expenses in the assessable value.

Analysis:
1. The Commissioner held that M/s. M.N. Detergents (MND) and M/s. Hare Krishna Industries (HKI) were not dummies of other companies based on substantial documentary and oral evidence provided by the respondents. The Commissioner found no justification to club the clearances of MND with M/s. Vimal Detergent Cakes P. Ltd. and HKI with M/s. Pioneer Detergent Industries. The Department appealed against these findings.

2. The Commissioner correctly held that royalty and advertisement expenses should be included in the assessable value of the goods. The Department's claim that these expenses were not included lacked evidence and was based on surmises. The appeal memorandum's plea for cost audit before accepting the inclusion of these expenses was deemed unreasonable by the Commissioner, and his decision was upheld.

3. The Commissioner's rejection of the Department's contention regarding clubbing of clearances was supported by valid reasons. He relied on testimonies and representations to conclude that MND and HKI were independent units, not dummies of other companies. The Department's reliance on panchanama and case law was deemed misplaced, as each case must be examined based on its unique facts and evidence. The clubbing of clearances was not justified based on the evidence presented.

4. The appeal lacked merit as the Commissioner's findings were deemed appropriate regarding the clubbing of clearances for the purpose of exemption eligibility under relevant notifications. The show cause notice did not allege clubbing of clearances for the other units mentioned. The appeal was rejected, affirming the Commissioner's decision in favor of the respondents.