Excise

Valuation

— Expenses incurred on advertisement and sale promotion by bulk purchaser, if on facts, includible — Assessment period 1-1-1988 to 28-2-1990 — Prolonged strike in assessee manufacturer's factory resulting in stoppage of work and the assessee manufacturer curtailing expenditure on advertisement and on certain other items — A bulk purchaser of the assessee's products starting advertising to boost its sale in respect of the goods purchased from the assessee — During the assessment period, the bulk purchaser spending large amounts on such advertisements and the volume of sales too increasing several folds — However, on facts, the transaction between the assessee manufacturer and the bulk purchaser found to be on principal-to-principal basis — No material to show that there was any tacit understanding between the said two parties under which the bulk purchaser was incurring the advertisement expenses — No arrangement for reimbursement of such expenses either — In such circumstances, the advertising expenses incurred by the bulk purchaser, held, not includible in assessable value of the products of the assessee manufacturer — Department and CEGAT erred in holding otherwise and invoking R. 5 of Central Excise (Valuation) Rules, 1975, (2006) 7 SCC 395