Judgment

MOHAN, J.:- This is an appeal under S. 35L of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act) directed against the order of Customs, Central Excise and Gold (Control) Appellate Tribunal (hereinafter referred to as CEGAT) dated 30th September, 1993 in Final Order No. 500/93-A in Appeal No. E/2407/91-A. In and by the said order the Tribunal allowed he review/appeal filed by the Excise Department and set aside the order of the Collector of Central Excise dated 30th May, 1990 and remitted the matter for a fresh decision.

2. The facts are as under:

The appellant, M/s. M. G. Shahani & company (Delhi) Ltd. are engaged in the manufacture of shampoos falling under sub-heading No. 3305-09 of CET, 1985. The manufacture is under the brand names "Hallo" and "Palmolive". The shampoos were sold by the appellant exclusively to the owner of the brand name of M/ s. Colgate Palmolive. These two, the appellant-company and Colgate Palmolive are independent Companies Colgate Palmolive in order to promote its own trade names and marks, incurred advertisement and publicity expenses in respect of the said branded products. Further Colgate Palmolive also incurred certain testing expenses, in order to enable it to decide whether to accept or to reject the goods manufactured by the appellant.

3. On April 15, 1985, the appellant-company submitted price lists to the Excise Department valuing the said goods manufactured by it, on the basis of the value at the appellant-companys factory gate. After making detailed enquiries, the Excise Authorities duly approved the said price lists.

4. On July 3, 1989, show cause-cum- demand notice was issued by Collector proposing to raise a demand for excise duty, on the appelant in respect of the period 1-4-1985 to 31-12-1988 on the ground that the said advertisement and publicity expenses and testing expenses were includible in the, assessable value of the appellants products.

5. On October 28, 1989, reply was sent by appellant to the said show cause notice dated 3-7-19". The appellant pointed out that the said advertisement and publicity expenses and testing expenses incurred by Colgate Palmolive could not possibly be included in the assessable value of the appellants products. It was also pointed out and submitted that there was no warrant at all to invoke the longer period of limitation under the proviso to S. 11 A of the Act.

6. On March 19, 1990, the Collector afforded the appellant a personal hearing., The appellant submitted detailed written submissions on all points raised in the show cause notice.

7. The Collector rendered the following finding:

"The department has not disputed the fact that M/s. MGS manufacture the goods in their own factory and have all the infrastructure or the said manufacturing activity. It is also not the case of the department that there was any relationship between M/s. MGS and M/s. CP other than that of the seller and buyer. It has also not been alleged that the brand names belonged to M/s. MGS or that M/s. CP were obliged to incur any expenditure on advertisement and publicity at the instance of M/s. MGS. The case of the Collector of Central Excise v. Kerala Electric Lamp Works Ltd. decided by the Tribunal has been relied by the learned counsel and I find that this decision supports the case of the notice. The distinction drawn by the learned counsel in the matter of treating manufacturer brand owner and buyer brand owner situations with reference to various judgments is well laid down and taken care of. I do not find any reason to disagree with the said proposition.

I observe that the letters under reference mention about terms and conditions of purchase These terms and conditions are contained in printed form of which reference will be made later. In the letters dated 17-1-85 and 2-5-85, it is clearly spelt out that M/s. MGS will have no right to sell the goods under the brand name of Palmolive to anybody other than M/s. CP and M/s. MGS will pot be entitled