1999 (3) TMI 192 - AT - Central Excise

Issues Involved:
1. Whether the expenses incurred by M/s Soft Drinks and Advertising Marketing Services Private Ltd. (SAMS) should be included in the assessable value of non-alcoholic beverages base (NABB).
2. Whether the amounts based on entries and worksheets found in the premises of the assessees, referred to as the rate difference, should be included in the assessable value.
3. Whether the amounts figuring in the debit notes issued by the assessee to the bottlers should be included in the assessable value.

Issue-wise Detailed Analysis:

1. Inclusion of SAMS Expenses in Assessable Value:

The Commissioner held that expenses incurred by SAMS for advertising should be included in the assessable value of NABB. The assessees argued that SAMS was an independent entity created by the bottlers and not controlled by them. They cited legal precedents indicating that expenses incurred by bottlers for advertising should not be included in the assessable value of the manufacturer's product (Philips India v. CCE, Escorts Ltd. v. CCE, Delhi Bottling Company v. CCE, Somany Pilkington v. CCE).

The department contended that SAMS was essentially created by the assessees to evade duty by reducing the price of NABB and that the expenses incurred by SAMS were actually for promoting the assessees' brand name and sales. The department cited cases such as Pepsi Foods v. CCE and Delhi Bottling Co. v. CCE to support their argument.

The Tribunal found no evidence that the assessees controlled SAMS or received any amounts collected by SAMS. It concluded that contributions to SAMS by bottlers were not at the behest or direction of the assessees and that these amounts were expended by SAMS, which was independent of the assessees' control. Therefore, the expenses incurred by SAMS were not includible in the assessable value of NABB.

2. Inclusion of Rate Difference in Assessable Value:

The Commissioner found that amounts referred to as rate differences, based on entries and worksheets found in the assessees' premises, were part of the assessable value. The assessees argued that these rate differences were notional and not actually collected from all bottlers. They cited decisions (Indo Hack Ltd. v. CCE, Universal Luggage Manufacturing Co. Ltd. v. CCE) indicating that subsequent price adjustments do not affect the assessable value already determined.

The Tribunal noted that the rate differences were only recovered from a few bottlers and that there was no evidence of a universal practice of collecting these amounts. It concluded that the price at which the NABB was sold was known and final at the time of clearance, and subsequent adjustments did not affect the assessable value.

3. Inclusion of Debit Notes in Assessable Value:

The Commissioner found that amounts mentioned in debit notes issued to bottlers were part of the assessable value. The assessees contended that these debit notes represented contributions towards All India Co-operative National Network Advertising and not recoveries of differential prices.

The Tribunal found no evidence that the amounts mentioned in the debit notes were actually recovered as differential prices. It noted that most debit notes were issued before 31st March 1989 and were barred by limitation. The Tribunal concluded that the amounts in the debit notes were not includible in the assessable value.

Conclusion:

The Tribunal allowed the appeals, set aside the impugned orders, and provided consequential relief according to law. The expenses incurred by SAMS, the rate differences, and the amounts in the debit notes were not includible in the assessable value of NABB.

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