2005 (7) TMI 165 - AT - Central Excise

Summary

Issues:
Appeal against undervaluation and imposition of duty, penalty, and interest under Central Excise Act.

Analysis:

The case involved an appeal against an order passed by the Commissioner of Central Excise Bangalore III Commissionerate. The appellants, who manufactured P or P Medicaments, had agreements with Glaxo India Ltd. (GIL) and Meghdoot Chemicals (MCL) for the purchase of their entire production. The Revenue alleged undervaluation, contending that advertisement/marketing charges incurred by GIL and MCL should be included in the assessable value for excise duty purposes. The Commissioner demanded duty, penalty, and interest from the appellants. The appellants argued that duty is payable on the transaction value, as clarified by a circular issued by the Board. The Tribunal examined the records and found that the appellants were not merely hired labourers of GIL/MCL, but the transaction value was indicated in the agreements. The Tribunal noted that the advertisement charges incurred by the buyer on behalf of the seller could be included, but in this case, the goods bore the brand name of GIL/MCL, indicating that the charges were not incurred on behalf of the appellants. The Tribunal referred to the definition of transaction value and a Board clarification to support its decision. It concluded that the original order could not be sustained and allowed the appeal with consequential relief.

In summary, the Tribunal held that the appellants were not liable to pay duty on the advertisement charges incurred by GIL/MCL, as those charges were not incurred on behalf of the appellants. The Tribunal found that the transaction value was clearly indicated in the agreements between the parties, and the Board's clarification supported the exclusion of such charges from the assessable value. Therefore, the Tribunal allowed the appeal against the imposition of duty, penalty, and interest under the Central Excise Act.