2009 (4) TMI 355

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....ents are authorised to undertake joint publicity/advertisement and other sales promotion services. The respondent reimburses the said expenditure to an extent of 50% to the said dealers subject to a ceiling of 1% of the annual purchase of the dealers. It appeared to the lower authorities that as per the provisions of Section 4 of the Central Excise Act, all such expenses should form part of the value for payment of Central Excise duty. Therefore, on reasonable conclusion that there appears to be an undervaluation of the goods cleared during the period July, 2000 to January, 2002, a Show Cause Notice was issued for demand of the differential duty of Rs.27,08,649/-. The said Show Cause Notice was invoking the extended period and hence penalty....

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....alue. As per definition "transaction value" has to include the cost, which the buyer incurs or makes provision for, or on behalf of the assessee, for advertising or publicity charges. Court judgments delivered on this issue under the earlier Section 4 or the Rules made thereunder, will not apply w.e.f. 1-7-2000 in view of the definition of the "transaction value". (2) As per definition of "transaction value", if any amount paid or payable by the buyer to or on behalf of the assessee, on account of the factum of sale of goods, then such amount cannot be claimed to be not part of transaction value. (3) The advertisement and publicity material will have propaganda value for both the dealer and the assessee. It is said that it cannot be clear....

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....g) Ford India Pvt. Ltd v. CCE, Chennai-III - 2007 (216) E.L.T. 530 (Tri.- Chennai) (h) C.B.E.C. Circular No. 643/34/2002-C.X., dated 1st July, 2002. 5. We have carefully considered the submissions made at length by both sides and perused the records. The issue involved in this case is whether the amount of advertisement and publicity expenses incurred by the respondent by reimbursing the amount to the dealers is liable to be added into the valuation of the final products or not. 5.1 We find that the learned Commissioner (Appeals) has given the following finding. "Having regard to the fact of this case I find that in terms of Board's Circular relied upon by the department it is clear that costs incurred by dealers for advertising goods o....

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....unt and reasons of their own sale and there is no compulsion for them to agree to bear this cost. I further find that the respondent have fixed a ceiling of 1% of total purchase of the dealer from operation of the sharing scheme. It is therefore implied that it is not intended as devise for suppression of costs for mala fide undervaluation causing significant revenue loss. I am accordingly of the opinion that impugned order is required to be upheld as department has not been able to establish that cost borne by dealer is on behalf of the respondent and therefore includible in transaction value for those dealers who op for the cost sharing scheme. For finding so I place reliance on Hon'ble Supreme Court's decisions in the case of CCE Baroda....