2024 (3) TMI 914 - AT - Central Excise

Inclusion of certain elements of cost in assessable value and revision of the method of determining assessable value applicable to transactions between related persons - inclusion of advertisement and sales promotion costs - HELD THAT - The finality, insofar as the first notice was concerned, was equally applicable to subsequent ones. The claim of higher precedent from decision of the Tribunal was also settled by the first appellate authority in later order despite which the obduracy on the part of the original authority continued to be manifested in remand proceedings. Even so, the finality accorded to that precedent by the Hon ble Supreme Court in re P B Pharmaceuticals P Ltd 2003 (2) TMI 68 - SUPREME COURT should have sufficed for the original and first appellate authority in the latest round. The orders passed in de novo proceedings by the original authority were not correct in law. That last which was upheld in the impugned order was also incorrect in law. The concurrence accorded to that impropriety by the first appellate authority piles gross impropriety on impropriety. We find no cause to allow this travesty of justice and judicial decorum to continue. The impugned order set aside - appeal allowed.

Issues Involved:
1. Inclusion of certain elements of cost in assessable value.
2. Revision of the method of determining assessable value applicable to transactions between related persons.

Summary:

Inclusion of Certain Elements of Cost in Assessable Value:
The appellant, M/s P&B Laboratories Ltd, faced a dispute over the inclusion of advertisement and sales promotion costs in the assessable value of their products. This issue was first raised in 1991 and adjudicated by the Assistant Collector of Central Excise, who ruled against the appellant. However, the Collector of Central Excise (Appeals) set aside this decision on 29th February 1992, directing the original authority to quantify the expenditure on advertisement and sales promotion incurred on behalf of the appellant. This partial remand was not appealed by either side, thus finalizing the issue.

Revision of the Method of Determining Assessable Value:
The second issue involved the method of determining assessable value due to the alleged relationship between the appellant and their distributor, M/s Pharma Chem Distributors. The first appellate authority ruled on 29th February 1992 that the appellant and the distributor were not related, and this decision was not challenged further, thus finalizing this issue as well. Despite this, multiple show cause notices were issued, and the original authority continued to revisit the declared price based on the alleged relationship, leading to a series of remands and appeals.

Judicial Discipline and Finality:
The Tribunal emphasized that the original authority and first appellate authority should have adhered to the finality of the earlier decisions. The remand proceedings were limited to the inclusion of advertisement and sales promotion costs alone, as settled by the first appellate authority. The Tribunal cited several precedents, including the Hon'ble Supreme Court's decisions in P&B Pharmaceuticals P Ltd v. Collector of Central Excise [2003 (153) ELT 14 (SC)] and Commissioner of Customs v. Kushalchand & Co [2015 (325) ELT 813 (SC)], to assert that reopening settled issues without further appeal violates judicial discipline.

Conclusion:
The Tribunal found that the orders passed in de novo proceedings by the original authority, which were upheld in the impugned order, were incorrect in law. The Tribunal set aside the impugned order and allowed the appeal, emphasizing the need to maintain judicial decorum and finality in litigation.

(Order pronounced in the open court on 19/03/2024)

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