COMMISSIONER OF CENTRAL EXCISE Vs. COMPUTER GRAPHICS LTD.

JUDGEMENT

(1.) THIS is an appeal filed by the Department based on the Review Order No. 167 -R/2004 dated, 21st September, 2004 passed by the Board. The issue involved in this case relates to the question of adding the reimbursed amount received from the brand owners (M/s. Konica) towards advertisement expenses incurred by the Respondents to the assessable value of film rolls manufactured and sold by the Respondents. The adjudicating Commissioner has passed a detailed speaking Order in this regard. She has given the following reasons for not including such amounts in the assessable value:

(2.) MS . Indira Sisupal, JDR appearing for the Department states that in addition to the price which the Respondents are getting from their customers, they are getting compensated by a further amount from M/s. Konica towards the advertising expenses incurred by the Respondents for the impugned goods. She states that the cost of advertising which is necessary to market the product is required to form a part of the assessable value as has been held by the Hon'ble Bombay High Court in the case of Coca Cola India Pvt. Ltd. v. CCE, Pune : 2009 (242) ELT 168 (Bom.). She cites para 19 of the said decision in this regard, which is as follows:

(3.) AFTER hearing both sides and perusal of the case records including the cited case law, we find that in this case the Respondents have purchased film from M/s. Konica and after slitting and packing they have sold the impugned goods in the market. They have claimed assessment on the basis of price at which they have sold the impugned goods to the customers. No doubt they have received extra amounts from the supplier of the raw material namely M/s. Konica towards reimbursement of advertising expenses incurred by the Respondents. However, we find from the rules cited in the Board's review Order that additional considerations flowing directly or indirectly from the buyer to the Assessee to be added to the price. In this case, there is no evidence to show that the reimbursements made by M/s. Konica is an additional consideration flowing directly or indirectly from the buyer of the impugned goods who are independent customers not connected with or related to M/s. Konica, the raw material supplier. M/s. Konica appear to be interested in advertising and improving sales of their branded films and hence, they are reimbursing the advertising expenses incurred by the Respondents. Viewed from another angle, whatever extra expenses the Respondents are incurring for advertising, they are getting reimbursement of the same from M/s. Konica. As such the cost of advertising is not a burden on the Assessee's manufacturer and the same does not form part of the cost of the impugned goods. In any way, in this particular case, the method of valuation is not based on the costing method but is based on the transaction value. Therefore, the price at which the Respondents are selling their product to independent buyers can be taken as the assessable value as they would recover their cost and profit from such independent buyers. The additional expenses incurred by them towards advertising for which they are receiving reimbursement from M/s. Konica has no relationship with the assessable value of the impugned goods sold to the independent customers, the same is not flowing back directly or indirectly from the buyers and as pointed out by the adjudicating Commissioner, the valuation rules do not provide for including such amounts in the assessable value. Hence, it is our considered view that the impugned Order passed by the adjudicating Commissioner requires no interference. Consequently, the Department's appeal is rejected.