Customs, Excise and Gold Tribunal - Delhi
Hindustan Photo Films Mfg. Co. Ltd. vs Collector Of Central Excise on 21 March, 1988
Equivalent citations: 1988(17)ECR102(TRI.-DELHI), 1988(35)ELT354(TRI-DEL)
ORDER K.L. Rekhi, Member (T)
1. The appellants are aggrieved by the demand for differential Central Excise dutv amounting; to Rs. 3,50,276/-. This demand pertains to the period from 1-4-1977 to 30-6-1978. It was issued on 28-11-1978. Thus, leaving the period of about one month, the demand for the rest of the period is time barred. The appellants have produced a copy of the show cause notice. We do not find the proviso to Rule 10 allowing the extended period of 5 years, having been invoked in the show cause notice. In the circumstances, the demand has to be confined only to a period of six months preceding the issue of the show causse notice. The plea of time bar has been raised by the appellants for the first time before us. But we are inclined to consider this plea in the interests of justice.
2. Coming to the merits of the appeal, we find from the record that the 12 distributors of the appellants' have been treated by the department as 'related person' and assessment has been ordered to be done on the basis of the sale prices of the distributors. In support of the department's conclusion that the distributors were related persons, only one particular provision of the agreement has been cited. This is Clause No. 19 of the agreement. It enjoined upon the distributors to spend some amount towards effective advertisement of the appellants' products. This circumstance can lead to the conclusion that the price charged by the appellants from their distributors was not the sole consideration for the sale inasmuch as the amounts spent by the distributors on advertisement and publicity of the appellants' goods were additional consideration for the sale which flowed from the distributors to the appellants. But this circumstance alone would not lead to the conclusion that the distributors were either relatives of the appellants or that there was mutuality of interest in the business of each other as between the appellants and the distributors. As such, the finding of the lower authority that the distributors were related persons of the appellants cannot be sustained. What can. however, be reasonably sustained is that the expenses incurred by the distributors on advertisement and publicity of the appellants goods should be considered as an additional consideration for the sale and their money value computed and added to the appellants' sale price to the distributors, in terms of Rule 5 of the Central Excise Valuation Rules, 1975. We so order.
3. Because of the compulsion on the distributors to spend some .money on advertisement and publicity of the appellants' goods, provisos(iii) and (v) of exemption Notification No. 120/75-C.E., dated 30-4-1975 were violated. This exemption, that is, the procedure of assessment on the basis of invoice values, was not admissible to the appellants. We order that their goods should be assessed for the relevant period under Section 4 of the Act on the basis of the appellants' sale price to their distributors plus the money value of the additional consideration in terms of Rule 5 of the Central Excise Valuation Rules. 1975. The demand should be revised on this basis and restricted to the period of six months preceding the issue of the show cause notice. The appeal is partly allowed in these terms.