1999 (2) TMI 377 - AT - Central Excise

Summary

Issues:
1. Inclusion of advertisement and sales promotion expenses in assessable value.
2. Competence of the Asstt. Commissioner in adjudicating the case.
3. Calculation of duty based on tariff rate leading to inflated demand.

Issue 1 - Inclusion of advertisement and sales promotion expenses in assessable value:
The case involved 14 appeals against a single impugned order of the Commissioner (Appeals) regarding the inclusion of advertisement and sales promotion expenses in the assessable value of goods manufactured by the appellants. The main issue was whether such charges incurred by the buyer, M/s. Darshak Ltd., for publicity and sales promotion expenses should be added to the wholesale prices, affecting the duty payable. The appellant argued that the facts were similar to a previous judgment by the Tribunal but differed from a subsequent Supreme Court judgment in the case of Philips India Ltd. The Supreme Court's decision emphasized mutual benefit in cases where advertisement expenses were shared between the manufacturer and the dealer. However, in the present case, the entire advertising expenditure was borne by the dealers alone, making the facts dissimilar. The Tribunal upheld the earlier judgment, stating that the ratio of the Philips India judgment did not apply.

Issue 2 - Competence of the Asstt. Commissioner:
Another point raised was the competence of the Asstt. Commissioner in adjudicating the cases. The appellant argued based on a CBEC Circular that the Asstt. Commissioner's jurisdiction was limited in cases involving fraud, misstatement, or suppression with intent to evade duty. However, the exclusion clause in the circular did not cover the present case, allowing the Asstt. Commissioner to adjudicate the matter without exceeding jurisdiction.

Issue 3 - Calculation of duty based on tariff rate:
The third ground raised was the calculation of duty based on the tariff rate, resulting in inflated demands. The appellant claimed that the duty calculation using the tariff rate led to a substantial increase in the confirmed demand. The Commissioner (Appeals) did not address this claim, leading to a direction for recalculating the duty amount. The Tribunal upheld the Commissioner's orders but remanded the proceedings to the Asstt. Commissioner for recalculation of the duty amount based on approved price lists and inclusion of advertisement expenses.

In conclusion, the Tribunal dismissed the appeals but directed the recalculation of duty by the Asstt. Commissioner based on the assessable value, considering the advertisement expenses incurred by the buyer. The judgment highlighted the importance of specific agreements between parties, jurisdictional competence, and accurate duty calculations based on approved price lists to ensure fair assessment and determination of duty payable.