Valuation of colour televisions: buyer-supplied packing, advertisement costs and Modvat-linked duty were excluded from assessable value.

Free packing materials supplied by buyers were not includible in the assessable value of colour television sets, and buyer-incurred advertisement expenses and excise duty paid on inputs under Modvat credit were also excluded. Only notional interest on security deposits was to be considered in valuation. Even after including that interest, the assessable value remained below the notification threshold, so the concessional duty rate applied and the demand and penalties were unsustainable.

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Issues: Whether the value of free packing materials, advertisement expenses borne by buyers, excise duty paid on inputs on which Modvat credit was availed, and notional interest on security deposits were includible in the assessable value of colour television sets for the purpose of denying the concessional rate of duty under the relevant exemption notifications.

Analysis: The Tribunal followed its earlier final order in the same dispute and held that the cost of packing materials supplied free by the buyer was not includible in the assessable value. It also held that advertisement expenses incurred by the buyer and excise duty paid on inputs in respect of which Modvat credit had been taken were not required to be added. Only notional interest on security deposits was liable to be considered. On the figures recorded in the order, even after adding such notional interest, the assessable value of the television sets remained below the notification limit of Rs. 5,000 per set.

Conclusion: The assessee was entitled to the concessional duty rate under the notifications, and the demand and penalties were unsustainable.

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