COMMISSIONER OF CENTRAL EXCISE, SURAT versus M/S. SURAT TEXTILE MILLS LTD. AND ORS.

Citation: [2004] SUPP. 1 S.C.R. 640 · Decided: 26-04-2004 · Supreme Court of India · Bench: S. RAJENDRA BABU · Disposal: Disposed off
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Judgment (excerpt)

A 
COMMISSIONER OF CENTRAL EXCISE, SURAT 
v. 
MIS. SURAT TEXTILE MILLS LTD. AND ORS. 
APRIL 26, 2004 
B [S. RAJENDRA BABU, DR. AR. LAKSHMANAN AND G.P. MATHUR, JJ.] 
-c 
Central Excises and Salt Act, 1944-Excise duty-Levy of-Inclusion 
of advertisement expenditure if¥:urred by manufacturers' customers in the 
assessable value of the goods of the manufacturers-In different appeals 
CEGAT decided in favour as well as against revenue-On appeal, matters 
remitted back to the Tribunal for reconsideration. 
In Civil Appeal Nos. 2357-236112002 Excise authorities held that 
expenses towards advertisement, which the owners of.the processed fabrics 
D incurred, but passed on to the dealers of these goods, were includible in the 
assessable value of the processed fabrics. Custom, Excise and Gold (Control) 
Appellate Tribunal (CEGAT) allowed the appeal of the assessees holding that 
such sales promotion expenses was not includible in the assessable value 
relying on Philips v. C.C.E., Pune, (1997) 6 SCC 31 and Mis. Ujagar Prints 
and Ors. v. U.O.I. and Ors., (19P9) 3 SCC 531. 
E 
In Civil Appeal Nos. 13400/1996, 4672/1997 and 4762/1997, the 
appellant-Companies were manufacturers of non-alchoholic beverage base. 
The beverage base was further sold to their customers who manufactured 
finished product i.e. aerated water. Excise authorities levied duty on the 
beverage base holding that the cost of advertisement. incurred by the 
F manufacturers of finished products was indudible in the assessable value of 
the beverage base. CEGAT decided in favour of revenue upholding the view of 
Excise authorities. Hence the present appeals. 
G 
H 
Disposing of the appeals and remitting them back to CEGAT, the Court 
HELD: Custom, Excise and Gold (Control) Appellate Tribunal failed to 
appreciate that in several earlier judgments, it consistently held that the 
advertisement expenditure incurred by a manufacturers customer can be added 
to the sale price for determining the assess!'ble value, only if the manufacturer 
has an enforceable legal right against the customer to insist on the incurring 
640 
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C.C.E v. SURAT TEXTILE MILLS LTD. 
641 
of such advertisement expenses by.the customer. In some cases, CEGAT failed A 
to appreciate that the appellants have acted honestly and under bona fide belief 
that the Beverage Base were exempted from excise duty. The CEGA T in the 
orders impugned in these appeals have also failed to appreciate and follow the 
ratio of several judgments of this Court wherein it has been laid down that if 
the assessee acts honestly and under the bona fide belief and manufactur~d B 
products are exempted from duty, the longer period of limitation is not 
attracted. Therefore, these matters require reconsideration by the CEGAT to 
arrive at a correct finding on the issues involved. [648-A-D) 
Government of India and Ors. v. Madras Rubber Factory Ltd and Ors., 
(1995) 4 SCC 349; Philips India Ltd v. Collector of Central Excise, Pune, C 
(1997) 6 SCC 31; Mis. Ujagar Prints and Ors. (lll) v. Union of India and 
Ors., [1989) 3 SCC 531; Pepsi Foods Ltd v. CCE, Chandigarh, (l003) 111 
ECR 776 (SC) = JT (2003) 9 SC 595; Union of India and Ors. v. Bombay 
Tyre International Ltd and Ors., [1984) l SCC 467; Assistant Collector of 
CentratExcise and Ors. v. Madras Rubber Factory Ltd etc., [1986) Supp. 
SCC 751; Assistant Collector of Central Excise and Ors. v. Madras Rubber D 
Factory Ltd, [1989) 3 SCC 238; Collector of Central Excise, Madras v. T.L 
Millers Ltd, Madras and T.L Diamond Chain, Madras, [1986) Supp. SCC 361; 
Collector of Central Excise, Hyderabad v. Mis. Jayant Oil Mills Pvt. Ltd, 
[1989) 3 SCC 343; Cosmic Dye Chemical v. Collector of Central Excise, 
Bombay, (1995) 75 ELT 721 (SC) and Amco Batteries Ltd C:ollector of Central E 
Excise, Bangalore, (2003) 153 ELT 7 (SC), referred to. 
CIVIL.APPELLATE JURISDICTION: Civil Appeal No. 2357-2361 of 
·2002. 
From the Judgment and Order dated 29.3.2001 of the Central Excise, F 
Customs and Gold (Control) Appellate Tribunal, West Zonal Bench, Mumbai 
in F.O. No. C-1/1064-1068/WZB/200 l in A. No. E/4563-4567 of 1995 SB(WR) 
WITH 
C.A. Nos. 13400/96, 4672 of 1997~ 
A.K. Ganguli, Joseph Vellapally, Dushyant Dave, Daleep Tandon, Ms. 
Nisha Bagehi, K.C. Kaushik, B.K. Prasad, D.N. Mehta, Ms. Suruchii Aggarwal, 
U.A. Rana, Arvind Kumar, Sadeep Khare!, P.H. Parekh, Sameer Parekh, S. 
Ramakrishnan and Ms. Ranjeet Rohtagi for the appearing parties. 
G 
H 
642 
SUPREME COURT REPOR
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