9911796707
TMI Blog2002 (9) TMI 574X X X X Extracts X X X X X X X X Extracts X X X X ..... cises and Salt Act, 1944 and why an amount of Rs. 33,44,955/- being the differential duty for the clearances made from August, 1994 to January, 1995 should not be demanded from them in terms of Rule 9(2) read with Rule 173C(4) of Central Excise Rules, 1944, Section 4 and Section 11A of Central Excises and Salt Act, 1944. (As extracted from Show Cause Notice No. 209/95, dt. 22-2-95). The other show cause notices are also on similar grounds. It also appeared as mentioned in the show cause notice that the price charged is favourably low based on the mis-declarations. The notices, inter alia, also alleged that M/s. Sakthi Soft Drinks cannot be treated as the wholesale buyer and sales to them can be treated as a related person only. 3. The applicants in their replies to the show cause notices contended, inter alia, that the proposals in the show cause notices to consider M/s. Sakthi Soft Drinks Ltd. as a related person of the applicants was not sustainable. A personal hearing was also held. On receipt of this reply, the Department again conducted certain investigations and issued the results of the same by a letter alleging the nexus between the two companies and based on them made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assistant Commissioner in his adjudication order (Original) No. 94/97 dt. 9-12-97 held that the rental charges at Rs. 7.50 per crate collected by the assessee are not based on actuals. The loading charges up to the factory gate, cost of transportation of empty bottles back to the assessee s factory, breakages and shortages in the market, if any, are borne by the distributor. All the aforesaid charges are liable to be incurred by the assessee and should form part of the assessable value. The O/A, therefore, held that the rental charges of Rs. 7.50 per crate collected by the assessee from M/s. Sakthi Soft Drinks Ltd. represents the expenses and is in the nature of flow back over and above the declared assessable value and is therefore, to be included in the value for the purpose of assessment of duty and accordingly confirmed the demand of duty of Rs. 38,82,684/-. The O/A has held that the expenses incurred by the distributor towards advertisement and sale promotional activities are not to be included in the assessable value. 5. The rental charges at Rs. 7.50 per crate was in the nature of a flow back and for this the Assistant Commissioner came to the conclusion that the transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue. And held: - 11. M/s. Chamundeshwari Sugars Ltd. were clearing their entire products through M/s. Sakthi Soft Drinks Ltd. up to the time of the take over of the unit on 27-3-95 by M/s. Madurai Soft Drinks. M/s Madurai Soft Drinks Ltd. were also marketing their entire products through M/s. Sakthi Soft Drinks Ltd. There was no written contract between M/s. Chamundeshwari Sugars Ltd. and M/s Madurai Soft Drinks Ltd. with M/s Sakthi Soft Drinks Ltd. It is noticed that there was abnormal variation in the factory gate selling price and the price at which M/s. Sakthi Soft Drinks Ltd. sold the goods. The advertisements charges, the expenses connected with promotion of marketability of the goods, the loading charges up to the factory gate, the cost of transportation of empty bottles back to the factory, the breakages and shortages in the market were borne by the distributor. These expenses are normally liable to be incurred by the manufacturer and should form part of the assessable value of the goods. The assessee also collected rental charges from the distributors at the rate of Rs. 7.50 per crate. 12. It is observed that the manufacturers were not doing any advertisement or sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. Sakthi Soft Drinks Ltd. The loading charges at the factory gate, the cost of transportation of the empty bottles back to the factory, the breakages and shortages borne by the distributor are liable to be incurred by the assessee and therefore should form part of the assessable value. The manufacturer collects rental charges from the distributors at the rate of Rs. 7.50 per crate. The assessee has not produced any evidence to prove that the rental charges collected are based on actuals. Rental charges recovered from the distributors should be included in the assessable value applying the ratio of Hon ble CEGAT's decision in Kota Oxygen (P) Ltd. v. Commissioner as reported in 2000 (121) E.L.T. 369 (T). The Hon ble Supreme Court has dismissed the Civil appeal filed against the above order as reported in 2001 (128) E.L.T. A68. In view of the factual position discussed above, that the transactions between the manufacturers viz. M/s. Chamundeshwari Sugars Ltd. and M/s. Madurai Soft Drinks Ltd. with the distributor viz M/s. Sakthi Soft Drinks Ltd. cannot be held to be on principal to principal basis and sales are not at arms length. The expenses incurred are in the nature of ensuring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accruals from sales of the product in question. Consequently, no further addition could be called for towards advertisement expenses. Reliance in this regard is placed on the decision of the Tribunal in the case of Pepsi Foods Ltd. v. CCE reported in 1996 (82) E.L.T. 33. This decision of the Tribunal has been confirmed by the Hon ble Supreme Court in CCE, Chandigarh v. Pepsi Foods Ltd. reported in 1997 (91) E.L.T. 544; following the same, we find no reasons to add the advertisement expenses, in view of the facts of the case law. (d)(i) The Commissioner (Appeals) has confirmed the view of the Assistant Commissioner that the amount of Rs. 7.50 per crate collected by the applicants towards rental charges was not based on actuals and that the same was a flow-back covering various expenses. He has relied on the decision of the CEGAT in the case of Kota Oxygen (P) Ltd. v. CCE reported in 2000 (121) E.L.T. 369. The only ground not to exclude the rental charges from the assessable value is that no evidence has been produced to show that they have been collected based on actuals. This logic of the authorities below is not sound. As once it is accepted and found by them that this amount re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me spread in the market. The Commissioner s order has found no nexus of these expenses with the prices. These expenses being in nature of post clearance expenses incurred in the market, they cannot be loaded in the assessable value of manufacture . (g) The finding of the Commissioner (Appeals) of loading charges up to the factory gate to be included cannot be found fault with. However, there is no finding arrived at in Para 14 of the impugned order viz. ....... M/s. Sakthi Soft Drinks Ltd. as well as M/s. Madurai Soft Drinks (P) Ltd. had earlier admitted that the loading/unloading and transportation charges are paid by M/s. Sakthi Soft Drinks Ltd. M/s. Madurai Soft Drinks subsequently claimed that the loading charges inside the factory were borne by them and included in the assessable value. This cannot be accepted as the assessee has not produced any documentary evidence in support of their subsequent claim.... . has to be considered in view of the plea made all along; that loading charges up to gate are borne by the appellants and subsequent charge by M/s. Sakthi Soft Drinks is corroborated by the submissions made in Para 18 of the reply dt. 12-11-97 to the Assistant Com ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
