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TMI Blog2000 (11) TMI 484X X X X Extracts X X X X X X X X Extracts X X X X ..... , Advocate admitted the duty liability of Rs. 2,48,000/- with regard to 59 computers removed without payment of Central Excise duty. With regard to warranty charges and advertisement expenses, he however argued that they were not includible in the assessable value and he relied upon the Supreme Court decision in the case of Philips India Ltd. v. CCE, Pune - 1997 (91) E.L.T. 540 (S.C.). He also referred to a large number of other decisions which will be referred to at appropriate place in this order. In reply Shri S. Kannan, DR referred to the inter-relationship of M/s.VBC with their marketing organisation - M/s. VEL Computer Services, Madras (hereinafter referred to as M/s.VCS) and submitted that warranty charges were compulsorily collected and they were for the first twelve months of the sale. Similarly, advertisement expenses were also incurred on behalf of the manufacturers and submitted that as per various pronouncements of the Apex Court they were includible in the assessable value as they enriched the value of the goods, computers in this case. He further submitted that the Supreme Court decision in the case of Philips India Ltd v. CCE -1997 (91) E.L.T. 540 (S.C.) Pune was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use Notice. This allegation of removal of 58 + 1 = 59 computers without payment of Central Excise duty has not been contested by appellant s Counsel before us. Thus, this charge is established against appellants and we confirm the view taken by the adjudicating authority in this regard. 6. As regards warranty charges the inter-relationship of the manufacturing concern and their marketing company had been detailed in the Show Cause Notice and recorded in the adjudication order. The key figure in the organisation of both the manufacturing concern and marketing company was Shri G. Dharmar the warranty charges were compulsorily collected from the ultimate buyers. Warranty charges were for the first 12 months of the sale. The marketing company M/s. VEL Computer Services, Madras was a concern owned by Shri G. Dharmar. The computers were also sold directly from the factory to the customers at a price which was higher than the price at which the computers were supplied to M/s. VCS, Madras. The price at which M/s. VCS, Madras were selling the computers to the customers was inclusive of warranty charges for the first twelve months. A warranty certificate issued by the assessee was given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h alone could be held to be necessary for initial marketing of the appellants Television sets. The cost of such initial warranty is already included in their price as well as the assessable value. There is no case for adding in the assessable value optional service charge for the second and the third year. The learned representative of the department relied on this Tribunal s judgment in the case of M/s. Television Factory, Solan [1986 (26) E.L.T. 317 (Tribunal)]. We find that this reliance is mis-placed. The Solan case is distinguishable from the one before us for two reasons. First, the extra charge of Rs. 190/- per set was compulsorily recovered from all buyers in the Solan Factory s case while in the appellants case the recovery was not compulsory but optional. Secondly, the extra charge in the Solan Factory case was for service/warranty charges . The Tribunal s judgment aforesaid does not clarify whether it refers to the initial warranty for one year or for service in the subsequent years. The use of the word warranty suggests that the charge was for the initial warranty period. As already stated, in the appellants case in charge for the initial warranty period of twelve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be deducted. It will be noted that advertisement expenses, marketing and selling organisation expenses and after-sales service promote the marketability of the article and enter into its value in the trade. Where the sale in the course of wholesale trade is effected by the assessee through its sales organisation at a place or places outside the factory gate, the expenses incurred by the assessee upto the date of delivery under the aforesaid heads cannot, on the same grounds, be deducted. But the assessee will be entitled to a deduction on account of the cost of transportation of the excisable article from the factory gate to the place or places where it is sold. The cost of transportation will include the cost of insurance on the freight for transportation of the goods from the factory gate to the place or places of delivery. In the case of Steel City Beverages (P) Ltd. v. CCE, Patna - 1994 (72) E.L.T. 80 (T), the Tribunal in para 9 of their decision had also held that advertising charges were includible in the assessable value. Para 9 from that Tribunal decision is extracted below :- 9. The assessable value under Section 4 of the Central Excises and Salt Act, 1944 is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regards advertisement cost, we are not convinced with the argument advanced on behalf of the appellants that it was done on behalf of the area dealers and subsequently it was recovered by way of job charges. In the absence of agreement or prior request it is difficult to accept the plea that advertisement was done at the behest of the customers and the decision Kerala Electric Lamp Works Ltd. (Supra) is clearly distinguishable on facts as it was rightly argued by the Senior Departmental Representative. Concurring with the findings given by the Collector on this issue and following the ratio of the decision in the case of Bombay Tyre International [1983 (14) E.L.T. 1896 (S.C.)] and the decisions cited above by the Senior Departmental Repre sentative, we hold that advertisement charges form part of the assessable value for the purpose of excise duty. In the facts and circumstances of the case and on considering the submissions made by the party with reference to case law we set aside the penalty imposed on them. Accordingly we direct the adjudicating authority to determine the assessable value as indicated above and exact duty payable by the party may be worked out on the modified a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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