M/S. ALEMBIC GLASS INDUSTRIES LTD. versus THE COMMISSIONER OF CENTRAL EXCISE

M/S. ALEMBIC GLASS INDUSTRIES LTD. versus THE COMMISSIONER OF CENTRAL EXCISE

There was no enforceable legal right or compulsion on the bulk purchaser to incur advertising expenses under any agreement with the appellant. The transaction was at arm's length on a principal to principal basis. Therefore, advertising expenses incurred by the bulk purchaser cannot be included in the assessable...

Source-derived case information.

Parties
Appellant: M/S. Alembic Glass Industries Ltd.; Respondent: The Commissioner of Central Excise
Jurisdiction
India
Judgment Date
14 August 2006
Procedural Posture
Civil Appeal / Appeal From Customs, Excise & Gold (control) Appellate Tribunal Decision
Outcome
Appeals allowed; impugned orders of CEGAT set aside.
Legal Topics
Central Excise Valuation, Arms Length Transaction, Assessable Value, Inclusion of Advertising Expenses in Excise Valuation
Taxation Excise Law Central Excise Valuation Arms Length Transaction Assessable Value Inclusion of Advertising Expenses in Excise Valuation

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Parties

M/S. Alembic Glass Industries Ltd.

Appellant

The Commissioner of Central Excise

Respondent

Procedural Posture

Civil Appeal / Appeal From Customs, Excise & Gold (control) Appellate Tribunal Decision

Legal Issues

  1. 1 Whether advertising costs incurred by a bulk purchaser should be included in the assessable value of goods for excise duty when there is no enforceable legal right or compulsion on the purchaser to incur such expenditure.

Ratio Decidendi

There was no enforceable legal right or compulsion on the bulk purchaser to incur advertising expenses under any agreement with the appellant. The transaction was at arm's length on a principal to principal basis. Therefore, advertising expenses incurred by the bulk purchaser cannot be included in the assessable value of the appellant's goods for excise purposes.

Court Disposition

Appeals allowed; impugned orders of CEGAT set aside.

Orders

  • The impugned orders of the Customs, Excise & Gold (Control) Appellate Tribunal are set aside.
  • Excise duty demand based on inclusion of advertising expenses incurred by M/s Darshak Ltd. in the assessable value is quashed.