1999 (10) TMI 211 - AT - Central Excise

Summary

Issues:
1. Inclusion of advertising expenses in the assessable value of goods.
2. Allegation of under-valuation of goods by the manufacturer.
3. Application of Supreme Court ruling on advertising expenses.

Issue 1: Inclusion of Advertising Expenses:
The case revolved around determining whether the advertising expenses incurred by Blow Plast Ltd towards the sale of travel goods manufactured by VIP Industries Ltd should be included in the assessable value of the goods. The Collector found that the advertising expenses were not at the instance of VIP and did not constitute additional consideration for the sale of goods. He noted that there was a market for the goods apart from sales to Blow Plast, and the prices at which goods were sold to dealers were similar to those sold to Blow Plast. The absence of evidence showing an agreement between the parties mandating Blow Plast to incur these expenses was crucial in this determination.

Issue 2: Allegation of Under-valuation:
The Departmental Representative argued that there was under-valuation of goods by VIP due to the disproportionate amount spent on advertising by Blow Plast compared to the goods purchased. However, the Tribunal found that the lack of proportion between sales market share and advertising expenses alone was insufficient to conclude undervaluation. The absence of any obligation for Blow Plast to incur advertising expenses, as highlighted by the Collector, further weakened the argument of undervaluation.

Issue 3: Application of Supreme Court Ruling:
The Tribunal referred to the Supreme Court ruling in Philips India Ltd. v. C.C.E., 1997, stating that advertising expenses incurred by a dealer benefit both the dealer and the manufacturer and should not be included in the assessable value. Despite the disproportionate advertising expenses incurred by Blow Plast, the Tribunal emphasized the lack of evidence showing an agreement between the parties to evade duty through advertising expenses. The Tribunal upheld the ruling, emphasizing that the expenses did not form part of the assessable value.

In conclusion, the Tribunal dismissed the appeal, finding no reason to interfere with the decision regarding the inclusion of advertising expenses in the assessable value of goods and rejecting the allegations of under-valuation based on the evidence and legal precedents presented during the case.