TaxTMI 
TaxTMI 
2022 (2) TMI 953
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....e case are that the Appellant Company is a manufacturer of Cosmetic and Ayurvedic products (final products) having its manufacturing facility in the North-East operating under exemption Notification No. 32/1999 dated 08 July 1999. The Appellant Company entered an agreement dated 3 December 1999 with the buyer, M/s. Emami Limited for manufacture and sale of the said final products bearing the brand name "Emami" and "Himani" owned by the buyer. Excise duty on the said final products was discharged by the Appellant Company on the basis of the negotiated rates i.e. the transaction value with the buyer under Section 4(1)(a) of the Central Excise Act, 1944. It has been alleged in the Showcause Notice dated 19 March 2008 that the transaction value at which the said final products were supplied by the Appellant Company to the buyer is not the sole consideration for sale as the buyer had purportedly provided unique product specifications, formulations, artwork, design work for each variety of the final product free of cost, which constitutes additional consideration, thereby attracting the provisions of Section 4(1)(b) read with Rule 6 of the Central Excise Valuation (Determination of Price....
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....f the Appellant and the buyer being related. Therefore, excise duty was correctly discharged by the Appellant on the transaction value being the sole consideration for sale. Rule 6 of the Valuation Rules has no application to the facts of the present case as specifications are not included therein (refer illustration 2) and the Commissioner's finding at para 15 of the OIO as regards brand name/trade name being covered by Clause (i) of Rule 6 at para is completely contrary to the Circular dated 1 July 2002 and the following authoritative pronouncements: (i) Sidhosons&Anr. Vs. Union of India &Ors. - 1986 (26) ELT 881 (S.C.) (ii) Kemwell Pvt. Ltd. Vs. Commr. of Central Excise, Bangalore - 2005 (189) ELT 457 (Tri. - Bang.) and 2006 (197) ELT A192 (S.C.) (iii) Kulwant Electrical Industries Vs. Union of India - 1999 (109) ELT 23 (S.C.) (iv) TTK Healthcare Ltd. Vs. Commr. of Central Excise, Guntur - 2007 (207) ELT 453 (Tri. - Bang.) (v) AdorMultiproducts Ltd. Vs. Commr. ofC.Ex., Bangalore - 2004 (176) ELT 612 (Tri. - Mad.) and 2005 (183) ELT A121 (S.C.) (vi) Commr. of C.Ex., Mumbai-II Vs. Hagel Capsule Industries Ltd. - 2007 (220) ELT ....
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....rating such expenses incurred during the relevant period to the total turnover of the buyer, and quantifying the differential duty at Rs. 1,01,228/- by applying the same proportion to the transaction value of the goods cleared by the Appellant on the superfluous ground that the brand name is the outcome of the expenditure incurred by the buyer consistently over years, more so when the value of such brand name/trade name could not otherwise be included in view of the Circular dated 1 July 2002. H. Facts and circumstances of the case does not justify imposition of any personal penalty upon the Directors of the Company, under Rule 26 of the Central Excise Rules 4. Shri K.Chowdhury, Ld.Authorized Representative for the Respondent Department on the other hand reiterates and supports the findings in the 'O-I-O'. 5. Heard both sides through video conferencing and perused the appeal records. 6. The issue involved in this case relates to valuation of goods manufactured by the Appellant based on the specifications/formulations provided by the buyer and bearing the brand name of the buyer. It is not in dispute that the transactions between the Appellant and the buyer were co....
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....nd the buyer, as per the said agreement. Moreover, the statements of Binita Agarwal, Manager Accounts and RanjitNath, Accounts Assistant relied upon by the revenue also confirms that the raw material and packaging material required for manufacture of the final products were directly procured by the Appellant; the art work and design work on the packaging material was only approved by the buyer but the cost thereof was incurred by the Appellant; the transaction was on a principal-toprincipal basis and the price charged was the sole consideration for sale. Therefore, the submission of the Appellant that revenue could not have done a pick and choose from the statement of the same very person, instead of accepting or rejecting the statement in totality, appears plausible. There is also no allegation or evidence of any flow back or extra-commercial consideration from the buyer to the Appellant aside of the negotiated price so as to discard the transaction value. 8. Even otherwise, it is in-conceivable as to how goods of different varieties and sizes, which are made to order can be manufactured without specifications being made available by the buyer. In so far as formulations are con....
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.... whom the brand name belongs and to whom the fruits of the goodwill belong. Excise duty cannot be assessed on the basis of the market value obtained by the buyers who also add to the value of the manufactured goods the value of their own property in the good-will of the brand name. Although, these decisions were rendered in the assessable value regime, the ratio thereof has been followed even under the transaction value regime. We notice that similar facts as is involved in this proceeding had fallen for consideration of the Tribunal in the case ofCCE Vs. Hagel Capsule Industries Ltd. reported in 2007 (220) ELT 220.In this case also the Respondent therein was engaged in the manufacture of medicines as per the orders and specifications placed by M/s. Glaxo India Limited under the brand name belonging to M/s. Glaxo India Limited, which had the right to inspect and reject goods not manufactured as per their specifications and the standards prescribed under the Drugs & Cosmetics Act. The period pertained to transaction value regime and excise duty was discharged by the Respondent under Section 4(1) of the Central Excise Act on the basis of the price charged by the Respondent to M/s.Gla....