Whether marketing, distribution and advertisement expenses are includible in case of sale to sister concern?

PJ/Case Laws/2012-13/1202

Case:-COMMISSIONER OF C. EL, MUMBAI-III Versus RAYMOND LTD.

Citation:-2012 (279) E.L.T. 431 (Tri.- Mumbai)

Issue:-Whether marketing, distribution and advertisement expenses are includible in case of sale to sister concern?
The Board circular which are clarificatory in nature have retrospective effect.

Brief Facts:-Revenue is in appeal against the order of Commissioner, who has set aside the adjudication order wherein while finalizing the provisional assessment, it was held that marketing, distribution and advertisement expenses are includible in the assessable value declared by the respondents.

Appellant Contention:-The Appellant submitted that the respondents are clearing the goods by adopting CAS-4 for clearance of goods to their sister unit which are captively used for manufacturing of final product but have not included the expenses incurred on account of marketing, distribution and advertisement. He further submitted that the Commissioner (Appeals) has relied on Board Circular No. 692/08/2003-CX dated 13-2-2003 to arrive at the assessable value as per CAS-4. In fact, in this case the period is April 2000 to September 2002, which is prior to issuance of said Circular. Therefore, the respondents are not entitled for the benefit of the above said Notification. Hence, the impugned orders are to be set aside.

Respondent Contention:-The Respondent strongly supported the impugned order by relying on the decision of Commissioner of Central Excise, Pune v. Cadbury India Ltd. reported in 2006 (200) E.L.T. 353 (S.C.) and Commissioner of C. Ex., Mumbai-IV v. Bombay Dyeing & Mfg. Co. Ltd. reported in 2009 (246) E.L.T. 390 (Tri.-Mumbai). He also submitted that the Revenue itself is relying on Board's Circular to arrive at the assessable value as per CAS-4 for the period prior to the issuance of the Circular dated 13-2-2003 in the case of Commissioner of C.Ex., Mittnbai v. Jalan Dyeing & Bleaching Mills reported in 2010 (253) E.L.T. 663 (Tri.-Mumbai). Therefore, the revenue's appeals deserve no merits and are liable to be dismissed.

Reasoning of Judgement:-The Tribunal found that in these matters, the short issue involved is that what should be the assessable value when the goods are cleared for captively use of their sister unit in the manufacturing of final product. In Board Circular No. 692/08/2003-CX dated 13-2-2003 it has been clarified that assessable value shall be arrived at by following CAS-4. The only dispute is that whether this Board Circular is having retrospective effect or not. As held by the Apex Court in the case of Cadbury India Ltd. (supra) that the Board Circular is having retrospective effect and the correct method to arrive at assessable value for the goods captively used by sister unit in manufacturing of final product is only CAS-4, therefore, the circular is clarificatory in nature. Therefore we do not find any merit in Revenue's appeal, accordingly, by upholding the impugned orders

Decision:-Appeal Dismissed.

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PJ/Case Laws/2012-13/1202

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