Per Justice U.L. Bhat :

Order dated 16.8.90 passed by the Additional Collector of Central Excise, Faridabad is under challenge in this appeal.

2. Appellant, engaged in the manufacture of ceramic tiles, was also getting small quantity of the tiles printed and distributed to dealers and collecting Rs. 9.50 per tile from the dealers and also distributing a small quantity of printed tiles to Govt. Departments and individuals free of cost. It was found that during the period in question i.e., 1985 to 1989, some amounts were collected by the appellant from dealers towards cost of display board and hiring of stall. Some amount was also collected from a sister concerned as their share of cost of joint advertisement. All these particulars were furnished by the appellant when sought by the Department. It was found that during the period in question Rs. 4,20,877 was so collected but without including the same in the assessable value and without paying duty thereon. Accordingly, show cause notice dated 14/3/90 was issue alleging suppression of material facts with intent to evade duty and proposing demand of differential duty on the aforesaid value. Though the appellant resisted the notice, the Additional Collector confirmed the demand. This order is now challenged.

3. Bulk of the amount leading to the impugned demand relates to part of cost of printed tiles recovered by the appellant from dealers to whom printed tiles were distributed. By printed tile is meant the ordinary ceramic tile with a calendar printed thrown. Printing work was got done through job worker. According to the appellant even though the cost of printed tile was much more than Rs. 9.50, only this amount was being collected from dealers. According to the Department since the distribution of printed tiles amounts to advertisement and publicity, the above cost recovered from the dealers should form part of assessable value since it would add to the marketability of the product. So far as dealer share of advertisement charges is concerned, Supreme Court in the case of Philips India Ltd. 1997 (91) ELT 540 (SC) has held that such advertisement benefits the manufacturer and the dealer and, therefore, 50% of the cost borne by the appellant could not be added to the assessable value. In our opinion, this principle would apply to the part of the cost of printed tiles recovered by the appellant from the dealers. Tribunal has held in Appeal No.s E/2270/90-A and 3003/92-A by final order Nos. 1060 & 1061/95-A, that a part of the cost of gift articles collected by the manufacturer from the dealer cannot be included in the assessable value. In this view Rs. 9.50 per tile collected by the appellant from the dealers cannot be included in the assessable value.

4. Part of amount collected by the appellant from dealers was in respect of hiring stall and display board for exhibition for sale. Share collected from the dealers cannot also be included in the assessable value. Rs. 37,880 was collected from sister concern towards their share of newspaper advertisements in respect of product of both concerns. This is only an apportionment of cost between the two manufacturers. We fail to see how the cost borne by other manufacturer can be included in the assessable value of the appellants products.

5. For the reasons indicated above, the impugned order cannot stand and is setaside.

6. The appeal is allowed.