RELIANCE INDUSTRIES LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) WE heard both sides. The issue relates to re -imbursement of advertisement and sales promotion expenses incurred by the big show room owners or dealers on the fabric or goods supplied by the appellant. It is alleged 'to form as component of assessable value in terms of Section 4 of Central Excise Act, 1944. The appellant manufactures and sells fabric to Dealer / Distributor and Retailers. The Ld. Counsel for the appellant interalia submitted that when the appellant got entered into authorized show room agreement with the dealers, in the said agreement there is no condition compelling the dealer to advertise appellant's product. They have for the benefit of their sales exclusives circulated an internal policy guiding them to compensate to the dealer, if the dealer approaches the appellants, with a request to compensate to him advertisement expense incurred by him for the publicity of his own show room. The ld. Counsel submitted that the appellant has failed to bring on record any evidence which shows that the appellant compelled the dealer to spend amount on advertising on behalf of the appellant. The ld. Counsel relied on the decision of the apex court in the case of Collectors v. Besta Cosmetic Ltd (Supreme Court) wherein it is held that where there is no " enforceable legal lights " rested in the seller to insist on advertisement by the buyer, no inclusion or addition can be made to the assessable value for amounts spent on the advertisement by the buyer. The ld. Counsel discounted the provision of Rule 6 of the Central Excise valuation Rules interalia on the ground that the price recovered is sole consideration for sale and there is no additional consideration flowing in from the dealer or having made him legally obliged to spend any amount on advertisement on behalf of the appellant. He also discounted CBEC circular dated 1st July 2002 on the ground that there is no written or oral agreement. He also negated the clarifications dated 30.6.2000 given by CBEC on the ground that there has to be an amount which the buyer is obliged to spend on behalf of the assessee which is not present in this case. The ld. Counsel relied on the decision of the apex court in the case of Commissioner of Central Excise v. ACER India Ltd and referred to paragraph 55 of the said judgment which is reproduced as under:

(2.) THE ld. DR appearing on behalf of the Revenue reiterated the impugned order and has submitted interalia that the goods supplied were within the warrantee period, then such expenses are borne by the appellant and are includable in the assessable value as per the decision .

(3.) IT would be pertinent to mention that no evidence has been brought on record to show that the buyers were under legal obligation to bear such expenses, as such following the ratio of the decision in the case of ACER India Ltd. The Appeal deserves to be allowed.