TMI Blog1997 (6) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... 1987 Rs. 16,192/- Rs. 2,25,945/- 1988-89 (1-1-1988 to 31-3-1989) - Rs. 43,81,732/- 2. Shri R.S. Parikh, Factory Manager of M/s. Darshak gave a statement on 17-4-1990 saying that Darshak were engaged in the printing/decorating of plain glass and glassware of Yera trade mark purchased from the appellants and marketing the same. Shri R.D. Guard, General Manager (Marketing) of Darshak also gave a statement on 23-4-1990 saying that the appellants incurred publicity expenses for Yera Ware up to 1987 and gave the figures of expenditure. He further said that the increasing expenditure on publicity of the product by Darshak was attributable to increase in sale of the product as evident from the sales figures in the balance sheet. He agreed that Darshak had spent substantial amount towards publicity and sales promotion of Yera Ware from 1988 onwards. He further stated that in marketing Yera Ware Darshak had to incur expenses for packing the goods. The packing clearly indicated appellants as the manufacturer and Darshak as its marketing organisation for Yera Ware . A statement was also given by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed order dated 3-9-1992. He considered their defence plea that advertisement expenses were incurred by Darshak on their own and not on behalf of the appellants. The appellants contended that Darshak cannot be regarded as related person of the appellant. Since the expenses were incurred by the customer after the clearances of the goods, they argued that it could not be added to the assessable value thereof. The Commissioner, however, did not accept this contention and came to the conclusion that advertisement expenses by the appellants were reduced and ultimately stopped as part of well thought out policy. He relied on the statement of the Executive Director of the appellant Mr. Trivedi. The Commissioner, therefore, held that the expenses incurred by Darshak on advertisement has to be added to the assessable value of the goods cleared by the appellants. He confirmed the demand under Section 11A of the Central Excise Act and imposed a penalty of Rs. 10 lakhs on the appellant. He ordered confiscation of the land buildings, plant and machinery belonging to the appellant under Rule 173Q(2) levying a fine in lieu of confiscation of Rs. 2 lakhs. 3. Shri Dushyant Dave, Sr. Counsel appear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional reported in 1983 E.L.T. 1896 it is not a cost incurred by the appellants as manufacturer therefore it cannot be included in the assessable value of their product. The ld. Sr. Counsel further argued that there was no ground for invoking the longer period for demanding the duty under Section 11A. The appellants had not wilfully suppressed any material from the department but have made their balance sheet available to the department. The Collector s findings in Para 26 of the order goes against narration in Para 3 of the show cause notice which refers to scrutiny of the balance sheet of the appellant by the office. The ld. Sr. Counsel contended that there was no intention on their part to evade duty and hence longer period under Section 11A is not applicable as per Supreme Court decision in Cosmic Dye Chemicals v. Collector reported in 1995 (75) E.L.T. 721. In any case there was no contumacious conduct on the part of the appellant to justify penalty on them or for confiscation of land and building. 4. Shri D. Gurnani, ld. D.R. contended that the expenses on advertisement incurred by Darshak is an additional consideration enriching the marketability of the product which is an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner that but for this package deal and the shifting of the advertisement and sale promotion cost to Darshak, the appellants themselves would have had to incur such expenditure. This is clear from the appellants reply to the Commissioner dated 21-11-1991 in which they have stated that they did not concentrate upon advertisement activity because of the assured sale of product to Darshak. The appellants further stated therein that if tomorrow M/s. Darshak Ltd. decide not to purchase 85% of the total production of our client Company then in that case our client may have to think and consider once again on advertising its products for the purpose of maintaining its sale . In such a situation, therefore the expenditure on advertisements and sale promotion incurred by Darshak on conditionality of their lifting 90% of the appellants production and undertaking the marketing of the product is an expenditure which otherwise the appellants would have themselves had to incur. In that reasoning, it would become an additional consideration which has to be reflected in the price. This reasoning finds support in the judgment of the Supreme Court in the case of Metal Box India Ltd v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le price under Rule 5 of the Valuation Rules, is well founded and is sustainable. It is also to be noted that it is not being done on the ground that Darshak is favoured buyer or that they are related persons of the appellant. 6. The demand is also being resisted on grounds of limitation that appellants cannot be said to have deliberately suppressed material facts from the department with intention to evade payment of duty. Reliance is placed on the previous two show cause notices issued by the Asstt. Collector without invoking longer period. A perusal of the show cause notices shows that these show cause notices were within six months so there was no need for invoking the longer period. Reference has also been made to the correspondence with the Supdt. of the Range of the appellant calling for documents like balance sheet and annual report. But all these correspondance did not relate to any period anterior to the period covered by the present show cause notice issued by the Collector. It is also noted that no document giving details of the package deal under which the whole arrangement of shifting of the selling cost to Darshak came about is available on record. In such a contex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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