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TMI Blog1980 (9) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... or different class of buyers including general sales. The price lists were filed in set of fours (three different class of buyers and one general sale) to be effective respectively from 11-6-1979, 18-7-1979, 1-9-1979, 5-10-1979, 3-11-1979, 3-12-1979, 22-12-1979 and 15-1-1980. In the said price lists, the appellants had claimed deduction on account of publicity expenses at the rate of ₹ 5.42/6.04 per fan, depending on the period in which clearances were effected. Under 32 different impugned orders, their claim for deduction towards publicity expenses has been disallowed. The appellants have preferred 32 appeals separately, details given in the annexure to this Order. Since the issue involved is identical, these are being taken up and d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Collector of Central Excise Writ Petition No. 4417 of 1978 decided on 25-1-1979 by the Madras High Court. (c) The Kerala High Court judgment in the case of Madras Rubber Factory Ltd. v. Asstt. Collector of Central Excise decided on 26-6-1979 and published in the Excise Law Times issue of August, 1979 [1979 (4) E.L.T. (J 397) (Ker.)]. (d) The Andhra Pradesh High Court in the case of Indo National Ltd. v. Union of India etc. decided on 25-4-1979 published in the Excise Law Times issue for July, 1979 [1979 (4) E.L.T. (J 334) (A.P.)], in which publicity expenses has been specifically mentioned as post-manufacturing expense. (e) The Gujarat High Court in the case of Cibatual Ltd. v. Union of India decided on 21-2-1979 and pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er than the duty of excise [1979 (4) E.L.T. J 397]. Similarly, the Andhra Pradesh High Court in the case of Indo-National Ltd. v. U.O.I. decided on 25-4-1979 - 1979 (4) E.L.T. (J 236) has held that under the charging Section 3, excise being a tax on manufacture, it can only be levied on manufacturing cost and manufacturing profits. If, the price charged by the manufacturer from his first buyer includes post-manufacturing costs or expense which are unrelated to the manufacture or production, the price must be relieved of such loading for the purpose of determining the assessable value under new Section 4, provided such expenses are actually incurred. If the "normal price" under new Section 4 is to be construed as to take within its ambit any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed for being allowed, must be wholly unconnected with and unrelated to the manufacture or production of the goods. It is needless to state that the authorities should be satisfied that the post-manufacturing costs or expenses claimed by the assessees are actually incurred." 7. It may be observed from the above that expenses for publicity or advertisement in connection with the sale of finished goods have been allowed deduction provided these are wholly unconnected with and unrelated to the manufacture or production of the excisable goods. Further, deduction is permissible only if the excise authorities are satisfied that the expenses claimed by the assessees were actually incurred. In other words, post-manufacturing expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... volve expenses for a manufacturer but all such expenses cannot be referred to or cannot have relation to the manufacturing activity. In our opinion, a part of it will have reference to manufacturing activity, while another part will have reference to the selling activity. In such a case, the Central excise authorities will have to apportion on some rational principle the advertisement expenses between the manufacturing activity on one hand and the selling or marketing activity on the other hand and would be justified in including in the manufacturing cost whatever advertisement expenses have been apportioned by them as relating to the manufacturing activity of the excisable goods." 8. Viewed in the context of the above legal decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... termine the publicity expenses on the basis of the fans sold within the country alone, notwithstanding that such expenditure in the case of fans exported might be relatively less, as contended by the appellants. Therefore, in order to determine the publicity expenses in terms of a unit fan, these should be computed on dividing the total publicity expenses by total number of fans cleared from the factory during the relevant period. Further, in terms of Gujarat High Court's decision in the case of Golden Tobacco Company Limited, referred to earlier, a part of such expenses has to be apportioned towards the manufacturing cost. The publicity or advertisement expenses are incurred not only to maintain the present level of turn over but to furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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