Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise vs Diffusion Engineering Ltd on 22 September, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No. II Appln.No.E/CO/252/07 APPEAL No.E/943/07 (Arising out of Order-in-Appeal No.SVS/173/NGP-I/2007 dated 10/04/2007 passed by Commissioner of Central Excise & Customs (Appeals), Nagpur) For approval and signature: Honble Mr. Anil Choudhary, Member (Judicial) Honble Mr. Raju, Member (Technical) 1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the :Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether Their Lordships wish to see the fair copy :Seen of the Order? 4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================
Commissioner of Central Excise, Appellant Nagpur Vs. Diffusion Engineering Ltd., Respondent Appearance:
Shri.NN Prabhudesai, Supdt. (AR) for appellant Shri.Bharat Raichandani, Advocate Ms.Purnima Singh, Advocate, for respondent CORAM:
Honble Mr.Anil Choudhary, Member (Judicial) Honble Mr. Raju, Member (Technical) Date of Hearing : 22/09/2015 Date of Decision : 22/09/2015 ORDER NO Per: Raju
1. The appellants are manufacturers of steel products and selling the same through various dealers. They were also getting diaries and calendars printed for the purpose of abatement. The dealers were purchasing these diaries and calendars from the appellant and some amounts were being collected by the appellants from the dealers who purchased the goods. The revenue issued a demand notice seeking to demand duty on the amounts collected by the appellants from the dealers on the grounds that the cost of advertising was includable in assessable value. The revenue relied on section 4 (3) (d) which read as under:
(d) transaction value means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter; but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods.
2. On the basis of the above facts the notice was issued for recovery of duty on the amount recovered for the sale of diaries and calendars. The demand was appended by the Deputy Commissioner. The demand was later set aside by Commissioner (appeals) relying on the decision of Tribunal in case of AMCO batteries (2007 (207)ELT 612).
3. The revenue is in appeal against the order of Commissioner (Appeals) on the grounds that the decision of Tribunal has been wrongly relied upon and the facts are different. It was argued that in the case of Amco batteries before the Tribunal there was a dispute between dealers and manufacturers about advertisement expenses and there was a written contract between parties. It was argued that in the instant case there is no such dispute and there is no such agreement between parties. It was also argued that the diaries and calendars had the name of distributors and stockists, which helps them in getting more customers and an aware business. They also relied on a circular issued by Ministry vide MF (DR) F.No 354/81/2000-TRU dated 30.6.2000 which clarified that all amounts charged in relation to sale of goods will form part of assessable value. Learned AR reiterated the said arguments.
4. The Counsel for the respondents argued that the ratio laid down by the decision of Tribunal in case of Amco Batteries (Supra) is that value of such material can be added only if the purchase of such material is mandatory and not if it is voluntary. He argued that only very few dealers bought diaries and calendars and most of the dealers did not. He also produced a letter of request from such dealers asking for such diaries from the respondents. He further argued that it was not mandatory for the dealers to buy the same.
5. We have gone through the facts of the case and find that the facts are squarely covered by the case of Amco Batteries (Supra). In the said case it has been observed that:
3.?On a careful consideration, we notice that the Commissioner himself in para 5 has clearly noted that there is no written agreement. He draws conclusion from reply dated 9-3-2005 of the assessee, wherein they have reimbursed to few of the dealers, to come to the conclusion that there is oral agreement between the assessee and the dealers to whom reimbursement has not been done. We are not agreeable with this finding. There has to be written agreement with an enforcement clause to enforce the legal right to insist on advertisement under the agreement. In the absence of any such agreement with such a clause then in that event, the advertisement expenses incurred by the dealers on their own account cannot be added to the account of the assessee. The judgements cited by the appellant clearly apply to the facts of the case. Respectively following the ratio of the cited judgements, the impugned order is set aside and appeal allowed with consequential relief if any.
6. It is clear that what has been held is that unless purchase and distribution of such material by dealers is mandatory, the value of the same can not be added. Further more the transaction value will only contain the amounts collected in connection with sale of excisable goods. Every amount collected by the manufacturer from the buyer is not includible. Revenue has not been able to establish from fact that the amounts collected were in connection with sale of excisable goods. The respondents have clearly stated that the diaries and calendars are made and supplied at the request of dealers and it is not mandatory since only few dealers are buying these things. In view of above the revenue appeal is dismissed. The cross objection filed by the respondent assessee is also disposed of.
(Pronounced in Court) (Anil Choudhary) Member (Judicial) (Raju) Member (Technical) pj 1 5 Appln.No.E/CO/252/07 Appeal No.E/943/07