TMI Blog1996 (8) TMI 289X X X X Extracts X X X X X X X X Extracts X X X X ..... 995 added the said advertisement expenses to the value of the ice cream cleared by the appellants and worked out the duty on such increased value. Thereby the present appeal. 2. Shri Dushyant Dave, learned Senior Advocate appeared for the appellants along with Shri P.M. Dave, learned advocate. It was submitted by the learned senior advocate that the Commissioner had passed the impugned order by misconstruing their agreement with the distributor company and by misapplication of law. He stated that initially the appellants were engaged in the manufacture and sale of ice cream to wholesalers and other customers but found that if they could concentrate on manufacture of ice cream only leaving the marketing and distribution of their product to others, they could expand their business. Accordingly, the subject agreement was entered into by them with the distributor company. The agreement, clearly provided that the product was to be sold to the distributors who would acquire proprietary interest therein. The distributor company were free to sell it according to their choice at prices fixed by them (distributors). They were at liberty to incur expenses for promotion of their product. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t incurred by the distributor company were added to arrive at the assessable value. The Commissioner had relied upon certain Tribunal decisions to justify such a conclusion. It was pointed out by the learned counsel that these decisions were distinguishable as the agreement specifically provided for the distributors/wholesalers to carry out advertisement on behalf of the manufacturers. Another point urged by the learned counsel was that the Commissioner had misunderstood certain statement in their reply and arrived at erroneous conclusions. In paragraph 13.2 of his order he has referred to their reply to the show cause notice wherein they had stated that if any advertisement expenses were incurred by the buyer of the goods, then such advertisement expense is an extraneous consideration for the purpose of assessment of excise duty. What they had stated was that it was an extraneous or irrelevant consideration. Without prejudice to the main contentions referred to above, the learned counsel raised an alternative ground that the show cause notice was barred by limitation. The Commissioner has applied the longer period of limitation holding that there was suppression as the appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r liability of whatsoever nature. The reference to the distributors being at liberty to incur whatever expenses it likes for the promotion of its proprietary interest in ice-creams and that the manufacturer shall not have any right or liability has been taken by the Commissioner to mean that it enjoined upon the distributor to incur expenses towards effective advertisement of the assessee s product. Again the Commissioner has in paragraph 13.2 of his order observed as follows :- In this connection, it would be in fitness of things to refer to para 7 of the assessee s reply dated 18-3-1994 to the show cause notice dated 25-1-1994, wherein it has been mentioned that however, when the goods were sold by the manufacturer and after removal of excisable goods from the factory of manufacturer, if any advertisement expenses were incurred by the buyer of such goods. Then such advertisement expenses is an extraneous consideration for the purpose of assessment of excise duty. Thus, when the assessee himself conceives that such expenses incurred by the buyer of such goods towards advertisement is an extraneous consideration, the question is whether the advertisement expenses incurred by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed order places reliance on certain decisions for the proposition that the advertisement expenses incurred by the buyer are to form part of the assessable value. We have seen some of these orders. Thus, in Hindustan Photo Films Mfg. Co. Ltd. v. Collector of Central Excise - 1988 (35) E.L.T. 354, the Tribunal found that the advertisement expenses were obligatory on the distributors by agreement. It was observed in the order that the agreement enjoined upon the distributors to spend some amount towards effective advertisement of the appellants products. Likewise, in Eddy Current Controls (India) Ltd. v. Collector of Central Excise, Cochin - 1989 (39) E.L.T. 147, the agreement entered into by the appellants therein with their distributor, inter alia, required the latter to do effective advertisement and sales promotion for the appellants goods. The appellants also were willing to have the money value of the additional consideration on account of expenditure on advertising being added to the assessable value of the goods". Such provision in the agreement and the consent of the appellants for inclusion of the expenditure in the assessable value are absent in the present case. These ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the appellant firm are the respective wives of the aforesaid two Directors. The third partner is Shri Satish Chandra M. Chona HUF. In his individual capacity, he is a Director of the distributor company. The Commissioner has concluded that the distributor in this case falls within the term relative used in Section 4(4)(c) within the meaning of Section 6 of Companies Act read with Schedule 1 thereof. This conclusion has been preceded by an observation that the expression Relative and Distributor appearing in Section 4(4)(c) of the Act does not mean that every distributor would be a relative per se because that would make the section completely workable. After this observation, he has referred to certain observations in this regard made in the Supreme Court judgment in the Bombay Tyre International Ltd. case which he has extracted. These are as follows :- In our opinion, the definition of `related person should be so read that the words `relative and distributor of the assessee should be understood to mean a distributor who is a relative of the assessee. It will be noticed that the Explanation provides that the expression `Relative has the same meaning as in the Companie ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
