TMI Blog2013 (1) TMI 497X X X X Extracts X X X X X X X X Extracts X X X X ..... E/3822/2005 - A/980/2012 - Dated:- 24-8-2012 - Justice Ajit Bharihoke, Shri Rakesh Kumar, JJ. REPRESENTED BY : Shri B.L. Narasimhan, Advocate, for the Appellant. Shri A.K. Jain, Jt. CDR, for the Respondent. [Order per : Rakesh Kumar, Member (T)]. The appellant have a chain of restaurants and also manufacture confectionary items Cakes, Pastries, Cookies, Sugar Confectionaries, Biscuits, etc., chargeable to Central Excise duty. The goods manufactured are cleared to their own restaurants situated all over the country and also to their own business partners (franchisees) who run the restaurant in the name Nirulas . The period of dispute is from 1997 to March, 2004. The appellant, in terms of their agreement with their franchisees (business partners) charge lump sum amount of Rs. 3,00,000/- in the beginning as technical assistance fee, and thereafter a monthly amount @ 8.5% of the gross sales during the month. According to the department, the lump sum amount of Rs. 3,00,000/- and the monthly amount @ 8.5% of gross sales excluding sales tax and other taxes, collected by the appellant from their franchisees should also be added to the assessable value of the goods bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- and monthly fee @ 8.5% of the sale by the appellant from their franchisees is a pre-condition of sale of the goods to the franchisees and, therefore, is a part of the sales price, is without any basis, that there is no link between the price at which the Cookies, Cakes, Pastries, Sugar Confectionaries, Biscuits, etc., manufactured by the appellant are sold to their franchisees and the collection of one time technical assistance fee and monthly fee being charged from the appellant from the franchisees, that the technical assistance fee and monthly fee is for providing certain technical assistance to the franchisees and for permitting them to operate by using their brand name and business model, that the sales of the goods, in question, to the franchisees had been made on purely commercial terms and the price charged is equal to the price adopted for clearances of the same goods to the appellant s own restaurants, that when this factual position is not disputed, there is absolutely no justification for adding the one time technical assistance fee and monthly fee being charged by the appellant from franchisees, to the assessable value, that the one time technical assistance fee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on amounts, that there was no response from the department to the appellant s letters dated 12-2-1998, 17-2-1998 and 20-2-1998, that, thus the department was aware of this issue since February, 1998 and hence show cause notice could not be issued in March, 2003 invoking extended period under proviso to Section 11A(1) alleging that the appellant suppressed the relevant facts from the department and thus, irrespective of the merits of the case the duty demand of Rs. 80,79,383/- for the period from 1997-1998, 2000-2001 is time-barred and that in view of the above submissions, the impugned order is not sustainable. 4. Shri A.K. Jain, the learned Jt. CDR defended the impugned order by reiterating the findings of the Commissioner in it and emphasised that the one time technical assistance fee and the monthly fee @ 8.5% of the gross sales being collected by the appellant from their franchisees are additional consideration for sale and, hence, the duty had been correctly demanded on these amounts. 5. We have considered the submissions from both the sides and perused the records. 6. The appellant manufacture, Confectionary items, Cakes, Pastries, Cookies, Sugar Confectionaries, Bisc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or use in the manufacture of the goods which are to be sold to the buyer. Similarly, price cannot be said to be sole consideration for sale when - (i) the sale price is subject to condition that the buyer discharge some obligation having financial implication on behalf of the seller; or (ii) the sale price is subject to condition that the buyer buys some goods or services from the seller at a price which is much higher than the price at which those goods or services are normally available; (iii) in other words, for additional consideration to exist, there must be some direct or indirect financial flow from the buyer to the seller. 8. In this case, the appellant are receiving from their franchisees a one time technical assistance fee of Rs. 3,00,000/- and monthly fee @ 8.5% of the gross sale excluding sales tax and another taxes. On going through the appellant s agreement with their franchisees, it is clear that these amounts being received by the appellant are for certain services being provided by the appellant to the franchisees. For example in terms of the appellant s agreement with their franchisees, the technical assistance fee of Rs. 3,00,000/- is for advice ..... X X X X Extracts X X X X X X X X Extracts X X X X
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