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TMI Blog2012 (10) TMI 382X X X X Extracts X X X X X X X X Extracts X X X X ..... demand on the portions of value representing cost of advertisement and on the notional interest on advance deposit. 1.3. As the two appeals arise out of common order-in-original, and involve common facts and legal issues, they are being disposed of by this common order. 2. Heard both sides at length on 24/07/2012. They were specifically permitted to file decisions on similar valuation disputes and accordingly, they filed written submissions including citations and the same were taken on record on 31/07/2012. 3. The relevant facts, in brief, are as follows:- (a) The appellant-assessee is a manufacturer of aerated waters falling under Chapter 22 of the Central Excise Tariff which was subject to specific rate of duty till 28/02/1994, ad valorem-based duty during the period 01/03/1994 to 31/10/1995 and was subject to duty based on tariff value w.e.f. 01/11/1995. The dispute relates to the period 01/03/1994 to 31/10/1995 when the impugned goods were subject to ad valorem duty. (b) The assessee filed a price list No.5/93-94 dt. 3/3/1994 effective from 1/3/1994 in respect of different varieties of aerated waters (like Pepsi, Team, Miranda, 7up etc.) manufactured by them. The Assista ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment conducted a special audit under Section 14A of the Central Excise Act, 1944 by the A.D.(Cost), Guntur. The cost arrived at during the study was found to be substantially higher than the assessable value declared. On the basis of findings of the cost audit report, a further show-cause notice dated 5/9/2003 for finalising the provisional assessment and proposing to demand differential duty of Rs.1,64,07,383/- (Rs.1,62,91,541/- + Rs.1,15,842/-) was issued answerable to the jurisdictional Asst. Commissioner. The said show-cause notice relied on the following :- 1) Monthly Returns for the period from March 1994 to October 1995. 2) Price List No.5/93-94 dt. 3/3/1994 effective from 01/03/1994. 3) Cost of Manufacture as detailed in the report submitted by the Asst. Director (Cost). 4) Balance sheets for the years 93-94, 94-95 and 95-96. (e) The assessee filed reply dt. 29/12/1994 to the show-cause notice dt. 30/09/1994. They also filed reply dated 17/12/2003 to the show-cause notice dt. 5/9/2003. Representatives of the appellants were heard by the Commissioner. During personal hearing, written submissions filed were reiterated. The assessee also filed vide letter dt. 11/11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (g) The assessee has filed the appeal challenging the demand of differential duty as above. The Department has filed the appeal on the ground that the Commissioner should not have dropped the demand on the portion of value representing the cost of advertisement and the notional interest on advance deposit. 4.1. The learned authorized representative representing the appellant-assessee firstly assailed the order of the Commissioner on procedural violations and made the following submissions: (a). There was no reason to resort to provisional assessment in the first place. There was no justification to keep the provisional assessment without finalization for more than 9 years. The time limit prescribed by CBEC for finalization of the provisional assessment has not been adhered to. (b) Issuance of show-cause notice dt. 5/9/2003 proposing finalization invoking Rule 9B which was no longer in existence was bad in law. If the new Rule 7 under the Central Excise rules, 2002 was to be invoked, it should have been done after taking necessary orders of the Commissioner/Chief Commissioner/Board for extending the period prescribed for finalization. (c). Conduct of audit under Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UOI & ors. (b). CCE, Meerut-I Vs. Coolade Beverages Ltd. [2000(116) ELT 622 (Tri. LB)] (c). CCE Vs. Moon Beverages Ltd. [2003(157) ELT 595 (Tri. Delhi)] (d). Order-in-Appeal No. 513/CE/Appl/Noida/2003 dt. 13/11/2003 passed by Commissioner(Appeals) in the case of M/s.Devyani Beverages Ltd. (e). CCE, Delhi Vs. Guru Nanak Refrigeration Corporation [2003(153) ELT 249 (SC)]. 5.1. Learned Additional Commissioner (AR) made the following submissions: (a). The Commissioner s order in so far as the same related to dropping of demand relating to advertisement expenses is erroneous. The decision of the Hon ble Supreme Court in the case of Philips India Ltd. Vs. CCE [1997(91) ELT 540 (SC)] related to a case where the advertisement expenses incurred by the dealer were held to be for the mutual benefit of both the dealer and the manufacturer and therefore, reliance placed on the said decision is not appropriate. The advertisement charges incurred by the assessee in the present case, clearly promoted the marketability of the article and therefore to be treated as expenses towards promoting the marketability of the product and hence should have been included in the assessable value. (b) Reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cers pointing out the delay in finalisation of the provisional assessment. It is also not clear as to whether the delay was attributable to the officers or whether the same was also attributable to the assessee. Suffice it to say that it is not for the Tribunal to impose / prescribe a time limit when the Act/Rule did not prescribe any finalisation of provisional assessment. (c) Regarding the submission that the issuance of show-cause notice dated 5/9/2003 proposing finalization invoking Rule 9B which was no longer in existence was bad in law, we find that it is not mandatory to issue any show cause notice for the purpose of finalisation of provisional assessment. It was in keeping with the principles of natural justice that the show-cause notice was issued to enable the assessee to know the grounds for enhancement of the value. (d) The show-cause notice dated 30/09/94 was issued under the then existing Rule 9B of the Central Excise rules, 1944. Merely because the said rules were substituted by new rules, there was no warrant for abandoning the provisional assessment without taking it up for finalisation which might result in either a demand of short-paid amount from the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been invoked and, therefore, the question is only hypothetical and need not be addressed. (i) In the decision by the Hon ble High Court of Calcutta in the matter of M/s. Avery India ltd. & anr. Vs. UOI & Ors., which was sought to be relied upon by the assessee, the relevant facts of the case were that a show-cause notice dated 5.3.92 was issued proposing demand of duty for the period 1986 1991, which was adjudicated by the Commissioner, and in an appeal to the Tribunal, the Tribunal vide Order dated 29.9.1993 remanded to the Collector for de novo adjudication noting that the assessment was provisional during the relevant period. The Commissioner without undertaking de novo adjudication issued a notice dated 27.3.2002 proposing demand of duty from April 1996 to February 2002. The High Court, taking note of the fact that de novo proceedings in terms of Tribunal s order was pending and that the show-cause noticed dated 27.3.2002 did not contain any further material than the material relied upon in the earlier show-cause notice dated 5.3.1992 and the records relating to the later show-cause notice were missing set aside the show-cause notice dated 27.3.2002. The Hon bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes in which aerated waters were supplied was considered and it was decided in favour of the assessee with the following findings : 7. On both the above issues, the legal position is clear. Renting of containers in the case of packing of gases and liquids in reusable containers is a common trade practice. This is an ancillary or allied venture and the gains or profits from this activity are not to be added to the assessable value of the goods. Hon. Supreme Court has given a quietus to this controversy by ruling in the Indian Oxygen case that these rental charges are not includable in the assessable value of the goods supplied in the containers. The Tribunal has followed this decision in respect of aerated waters in the case of Herbertson (supra). Therefore, the Collector was acting entirely according to law in discharging the assessee from the illegal demands raised in the Show Cause Notice on account of the proposed inclusion of ROC in the assessable value of goods. The contention in the appeal that the Collector has committed an error or he has mis-conceived the judgment is entirely without substance. Therefore, Revenue s appeal on this issue has to fail. (c). The Tribunal in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we find that the allegation was KMBC are collecting rental @ Rs. 15.23 per crate but the value is not being added to the assessable value. It was further alleged that these were extra considerations (charges) which were collected by the assessee and such collection was suppressed from the department. Accordingly, the show-cause notice was issued directing them to show-cause as to why the advertisement charges, rentals, transportation charges and advance deposit with interest collected from the retailers through the above said distributors should not be added to the assessable value of aerated waters manufactured by the assessee from 1.4.94 onwards as per Rule 6 of Central Excise Valuation Rules, 1975. The show-cause notice accordingly proposed finalisation of the assessment and demand of differential duty under section 11A of the Act and proposed penalty under Rule 173Q of the Central Excise Rules, 1944. 8.3. Later show-cause notice dated 5/9/2003 alleged that there was vast difference between the prices claimed for approval and the market price of the goods under reference and proposed adoption of cost of manufacturing as the assessable value in respect of clearances made from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner has wrongly relied upon the decision of the Hon ble Supreme Court in the case of Philips India Ltd. It was their submission that the advertisement promoted the marketability of the product. In the instance case, the expenses incurred were for painting the vehicles which carried the aerated waters bottles. The expenses are only nominal. These expenses cannot be attributed to activities aimed at promotion of the product. Therefore, the Commissioner s reliance placed on the decision in the case of Philips India Ltd. cannot be faulted. 9.2. As regards dropping of the demand relating to advance deposits, the department is presuming that such deposits must have been taken from all dealers on the ground that aerated waters could be supplied only in bottles and carried in crates. Such presumption cannot be the basis for confirming a demand. No evidence was adduced to show that taking a deposit has reduced the assessable value of the subject goods. As already noted, the sale price adopted by the assessee to related persons and other distributors were found to be the same and the veracity of the same stands accepted. No valid grounds have been raised by the department to wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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