TaxTMI 
TaxTMI 
2003 (11) TMI 76
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....nce Agreement With Bottlers", the terms of which we shall advert to later. 2.For the period 1-9-1992 to 31-3-1993 (which is covered by C.A. No. 4051 of 1996) and for the period 1-4-1993 to 31-12-1993 (which is covered by C.A. No. 1385 of 1999), the appellant filed pricelists of their product. On perusal of the details furnished with the pricelist, the Department became aware of the fact that royalty charges were being received by the appellant under the terms of an agreement permitting the use of trademark 'lehar'. The Assistant Collector of Central Excise and Customs, Patiala issued show cause notices proposing the inclusion of the royalty charges in the assessable value and demanding duty on that basis. We are not concerned here with the advertising expenses which was also the subject matter of show cause notices issued for the earlier period. The objection filed by the appellant-assessee were overruled by the adjudicating authority and orders were passed approving the pricelists subject to the addition of royalty charges and advertising expenses and demanding differential duty for the clearances made during the said period. The adjudicating officer took the view that the sale o....
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....the findings of the Tribunal and contended that the price at which the beverage base is sold to the bottler is not the sole consideration and an additional consideration of 2.75% of the MRP on each bottle flows back to the appellant. It is contended that the sale of beverage base is inextricably linked to the use of the trademark on the beverage bottles when sold and they are not independent transactions. 5.Section 4 of the Central Excises and Salt Act, 1944 (as it stood at the relevant time) lays down the mode of valuation of excisable goods for the purpose of charging the excise duty. When such duty is chargeable under the Act with reference to the value of the goods, the value shall, subject to the other provisions of the Section, "be deemed to be the normal price" thereof, that is to say - "the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale." (emphasis supplied) The provisos are not relevant for our purpose. Clause (b) of Section 4 lays down that - "where the normal price of suc....
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....within 15 days of the end of each calendar month. At the end of each financial year, the bottler shall submit an audit certified statement showing the amounts payable by the bottler towards royalties. The bottler shall buy all units of concentrate required for the manufacture of the beverage only from Pepsico's approved manufacturer, PFL (the assessee), or a manufacturer approved in writing by Pepsico and PFL at a price and in accordance with the terms and conditions established by the seller. The bottler will strictly follow all instructions and directions issued by assessee Company from time to time for preparing, bottling, selling and distributing the beverage including the quality and standards of bottles, cartons and containers. The bottler will undertake appropriate advertising and sales promotion activities for the beverage. The agreement shall not create or to be deemed to create any relationship of agency, partnership or joint venture. The agreement shall terminate automatically upon the termination of the arrangement between Pepsico and the bottler for the use of the 'Pepsico Marks'. Upon the termination of the agreement in the manner provided for, the bottler will not us....
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....ncentrate. The assessee very well visualized that the consideration in the form of royalty would flow to it by virtue of supply of the concentrate. In our view, the substratum of the agreement regulating the terms of dealings between the parties unmistakably indicate that the invoiced price alone was not the sole consideration for the sale of concentrate. The finding of the Tribunal is, therefore, unexceptionable. 11.The fact that the royalty is charged for permitting the use of the trademark, but not as part of price for specific units of concentrate sold does not detract from the fact that the overall consideration for the sale of concentrate is not merely its price stated in the invoice. It is something more that that, namely, royalty to be received periodically. 12.Under the agreement, the obligation to buy the concentrate at the price fixed by the seller (appellant) and the obligation of the buyer to manufacture the bottled soft drinks, to sell the same by using the trademark of the appellant and to remit the prefixed royalty charges is inseparable from one another. 13.It is however contended that in respect of Soda manufactured by the bottlers on their own, the appellant c....
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.... agreement for the technical know-how and the determination of the price for supply of CKD packs/spares. The distinguishing features are many and the appellant cannot draw any support from that case. 17.The decision of CEGAT in Collector of Customs, Bombay v. Maruti Udyog Ltd. [1987 (28) E.L.T. 390] has also been relied upon. The special leave petition filed against this order was dismissed in limine by this Court on 26-4-1989 by a non-speaking order. This case also does not help the appellant. In this cases the contention of the Department that the import invoice price pertaining to components, assemblies and vehicles was not the sole consideration for the sale but the royalties relatable to the manufacture in India of Suzuki's component also constitutes the consideration for the purchase of the imported goods was not accepted. The Tribunal held that the royalty payments were relatable directly to the manufacture of goods in India and they had no nexus with the import of goods from Japan. It was observed that "neither royalty nor the trademark 'Maruti Suzuki' had anything to do with import of components, assemblies and vehicles from Japan". The ratio of that decision of CEGAT thu....