Power Build Limited Vs. Commissioner of Central Excise and - Court Judgment

Excerpt:

.....limited, the appellant before us, on the ground that advertising expenses incurred by it, which was reimbursed to it by buyers of the goods manufactured by should from part of their assessable value. he has also imposed penalty on the appellant.2. the appellant is absent and unrepresented a despite notice. we have read the memorandum of appeal and heard the departmental representative.3. the contention in the appeal is that the conclusion of the commissioner that the income shown as "other income" in the balance sheet is not the expenses reimbursed from the customers for advertising but for other services.4. there cannot be any dispute that the cost incurred by the manufacturer towards advertising of the goods manufactured by him is includable in the assessable value. this has been laid down the supreme court international ltd.1983 (14) elt 1896. such cost would normally be passed on to the buyer by the manufacturer as an element of the sale price of the goods. that is to say, the manufacturer, while determining the sale price the goods, will take into account the expenses incurred by him in advertising. the appellant had in fact, contended in the reply to the show cause.....

Judgment:

1. In the order impugned in this appeal, the Commissioner has confirmed the demand for duty issued to Power Build Limited, the appellant before us, on the ground that advertising expenses incurred by it, which was reimbursed to it by buyers of the goods manufactured by should from part of their assessable value. He has also imposed penalty on the appellant.

2. The appellant is absent and unrepresented a despite notice. We have read the memorandum of appeal and heard the departmental representative.

3. The contention in the appeal is that the conclusion of the Commissioner that the income shown as "Other income" in the balance sheet is not the expenses reimbursed from the customers for advertising but for other services.

4. There cannot be any dispute that the cost incurred by the manufacturer towards advertising of the goods manufactured by him is includable in the assessable value. This has been laid down the Supreme Court International Ltd.1983 (14) ELT 1896. Such cost would normally be passed on to the buyer by the manufacturer as an element of the sale price of the goods. That is to say, the manufacturer, while determining the sale price the goods, will take into account the expenses incurred by him in advertising. The appellant had in fact, contended in the reply to the show cause notice that it was not correct to say that these costs were not included in the sale price. Whether the costs were included or not or whether as they shown in the balance sheet and relied upon by the Commissioner, it include, cost on account of advertising would have to be gone into.

5. According we allow this appeal and set aside the impugned order.

This Commissioner shall give the appellant an opportunity of being heard and to produce evidence in support of its contention that the sale price includes cost of advertising incurred by the manufacturer and that the 'Other income' shown in the balance sheet was received for purpose other than the advertising. The department may also produce such evidence, as it deems fit. The Commissioner shall thereafter pass orders according to law.