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TMI Blog2013 (1) TMI 497X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 being sold to them. It is on this basis that four show cause notices dated 25-3-03, 3-7-03, 30-4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned duty demands, held that the payment of monthly fee and one time technical assistance fee from the business partners (franchisees) is a pre-condition for sale of the goods and the same cannot be disassociated from the payment of sale price and, thus, the same has to be considered as part of the sales price being an additional consideration of sale. 1.2 Against the above order of the Commissioner, this appeal has been filed. 2. Heard both the sides. 3. Shri B.L. Narasimhan, Advocate, the learned Counsel for the appellant, pleaded that the finding of the Commissioner that realisation of one time technical assistance fee of Rs. 3,00,000/- and monthly fee @ 8.5% of the sale by the appellant from their franchisees is a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and consultants, designing of food facilities, interiors decoration, training of staff, etc., at the time of starting a restaurant, that the monthly fee of 8.5% of the gross sales excluding taxes has nothing to do with the sale of the goods manufactured by the appellant to their franchisees and this amount is collected from the franchisees for various services provided by the appellant which are of ongoing nature, that the Commissioner's finding that the sale of the goods by the appellant to franchisees is subject to payment of technical assistance fee and monthly fee by them to the appellant is totally incorrect and without any basis, that in terms of Board's Circular No. 59/8/2003-S.T. dated 20th June, 2003, in the context of levy of ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Clause (a) of sub-section (1) of Section 4 of the Act, except the circumstance where the price is not sole consideration for sale, the value of such goods shall be deemed to be the aggregate of such transaction value and the amount of money value of any additional consideration flowing directly or indirectly from the buyer to the assessee. What constitutes additional consideration is explained in the Explanation to Rule 6 of the Central Excise Valuation Rules, 2000 and according to this Explanation, the additional consideration would be - (a) supply of goods and services by the buyer to the manufacturer either free of charge or at reduced rate, for use in the manufacture of goods; (b) val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 with regard to putting the restaurant in a befitting running condition which includes appointment of architects and other consultants and their remuneration, designing of food facilities, advice on functional design of food units, interiors, advice on sitting up of control systems of food unit, selection and training of staff etc. Thus, this amount of Rs. 3,00,000/- received by the appellant from franchisee is for certain services being provided by the appellant to the franchisees. Similarly, the monthly charges @ 8.5% of the gross sales excluding sales tax being colle ..... X X X X Extracts X X X X X X X X Extracts X X X X
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