Advertisement expenses excluded from assessable value; related-person valuation cannot support demand without using the proper sale price basis.

Advertisement expenditure incurred by a buyer was held not to form part of the manufacturer's assessable value for central excise valuation, consistent with settled Supreme Court principles excluding such charges. The attempt to sustain the demand on a related-person theory also failed because valuation, if based on related-person dealings, had to be made on the price at which the related person sold the goods to customers. As that proper related-person basis was not adopted, the inclusion of advertisement expenses could not be justified. The assessee's appeals succeeded and the Revenue's appeal failed.

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Issues: Whether advertisement expenditure incurred by the buyer could be added to the assessable value of the goods for central excise valuation, and whether the demand could be sustained on a related-person theory.

Analysis: The valuation dispute turned on whether advertisement incurred by the buyer formed part of the manufacturer's assessable value. The applicable valuation principles did not permit inclusion of such advertisement expenses, and the cited Supreme Court authorities had already settled that advertisement charges are not includible in assessable value. The suggested related-person approach also did not sustain the demand because, even on that footing, the proper course would have been to assess the goods on the basis of the price at which the related person sold them to customers. Since that course was not adopted, the attempted inclusion of advertisement expenditure could not stand.

Conclusion: Advertisement expenses were not includible in the assessable value, and the demand was unsustainable. The assessee's appeals succeeded and the Revenue's appeal failed.

Ratio Decidendi: Advertisement expenditure incurred by a buyer cannot, by itself, be added to the manufacturer's assessable value for central excise purposes, and a related-person theory cannot sustain a valuation demand unless the valuation is made on the proper related-person basis prescribed by law.

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