Advertisement and publicity costs borne by dealers are excluded from assessable value under the amended excise valuation scheme.

Advertisement and publicity expenses borne by dealers and franchisees were not includible in assessable value under the amended valuation regime of section 4 of the Central Excise Act, 1944, because shared advertising costs could not be treated as the manufacturer's expenditure merely due to their sales-promotion effect. The Tribunal held that the amended transaction value concept did not permit inclusion where the advertising activity also benefited the dealer and was not exclusively the assessee's liability. The departmental circular was found inconsistent with the statutory scheme as interpreted in earlier decisions, and the demands and penalties were set aside.

---

---

Issues: Whether advertisement and publicity expenses borne by dealers and franchisees are includible in the assessable value under the amended valuation regime of section 4 of the Central Excise Act, 1944.

Analysis: The Tribunal noted that the question had already been decided in earlier decisions holding that advertisement cost shared by dealers and manufacturers could not be treated as expenditure of the manufacturer merely because it promoted sales. The amended definition of transaction value did not justify adding such expenses where the advertising activity also benefited the dealer and was not exclusively a liability of the assessee. The Board circular relied upon by the department was found inconsistent with the statutory scheme as interpreted in the earlier decisions.

Conclusion: Advertisement and publicity expenses borne by dealers and franchisees were not includible in the assessable value, and the demands and penalties were set aside.

---