2000 (11) TMI 484 - AT - Central Excise

Summary

Issues Involved:
1. Removal of 59 computers without payment of Central Excise duty.
2. Non-inclusion of warranty charges in the assessable value of the computers.
3. Non-inclusion of advertisement expenses in the assessable value of the computers.

Detailed Analysis:

1. Removal of 59 Computers Without Payment of Central Excise Duty:
The Show Cause Notice dated 9-12-1993 alleged that 59 computers were removed by the appellants without Gate Passes, without entry in the daily stock account, without following the Central Excise procedures, and without payment of Central Excise duty. During the investigation, it was found that one computer was being used in the office premises of M/s. V.B. Information Systems, Pondicherry without payment of duty. A number of discrepancies were found in the records, and the non-payment of duty for 58 other computers was admitted by Shri G. Dharmar in his statements dated 20-10-1993 and 5-11-1993. This allegation was not contested by the appellant's Counsel, thus confirming the charge. The adjudicating authority's view was upheld, confirming the duty liability of Rs. 2,48,000/- for the 59 computers.

2. Non-Inclusion of Warranty Charges in the Assessable Value:
The inter-relationship between the manufacturing concern (M/s. VBC) and their marketing company (M/s. VCS) was detailed in the Show Cause Notice and adjudication order. Warranty charges were compulsorily collected from customers for the first 12 months of sale. The marketing company, owned by Shri G. Dharmar, sold computers at a price inclusive of warranty charges. The warranty was provided by the manufacturer and was not optional. The Tribunal cited the case of Konark Televisions Ltd. v. CCE, Bhubaneshwar & Others - 1988 (33) E.L.T. 481 (T), which held that warranty expenses for the first twelve months were includible in the assessable value. The Tribunal also referred to the case of Electronic Corporation of India Ltd. v. CCE - 1989 (39) E.L.T. 414, which held that compulsory warranty charges were includible in the assessable value. Thus, the inclusion of warranty charges in the assessable value was deemed correct.

3. Non-Inclusion of Advertisement Expenses in the Assessable Value:
The Tribunal held that advertisement expenses incurred by the manufacturer were includible in the assessable value. The case of Union of India v. Bombay Tyre International Ltd. - 1983 (14) E.L.T. 1896 (S.C.) was cited, where the Supreme Court held that expenses contributing to the value of an article up to the date of sale, including advertisement expenses, were to be included in the assessable value. The Tribunal also referred to the case of Steel City Beverages (P) Ltd. v. CCE, Patna - 1994 (72) E.L.T. 80 (T), which held that advertisement charges were includible in the assessable value. The inter-relationship between the manufacturing concern and the marketing company was clearly established, and the advertisement expenses were correctly included in the assessable value by the adjudicating authority.

Conclusion:
The Tribunal, after careful consideration, agreed with the adjudicating authority's view on all issues. The appeal was found to lack merit and was accordingly rejected.