Taxability in case of supplied certain gift items to its clients and recovered part of cost thereof in name of 'advertisement expenses'

CCE v. Grasim Industries Ltd - [2013] 38 taxmann.com 97 (New Delhi - CESTAT)

Facts of case:

The show-cause notice made allegation that there were certain gift items which were supplied to wholesalers, showrooms and retailers for sale promotion of their products and recovered part of the amount from the wholesalers and retailers towards the advertisement expenses. With this allegation, adjudication was made to raise the demand. However, Commissioner's finding in this regard is that there is no nexus between the consideration recovered from gift and sale of the goods cleared.

Revenue being aggrieved by the above conclusion of the Commissioner came in appeal on the ground that decision of the appellate authority has prejudiced Revenue.

Held:

There is no justification shown by the learned adjudicating authority to appreciate that there was depression to assessable value made through the process of supply of gift items and recovery of the part of the cost of the gift. While in one hand learned adjudicating authority says that the goods were gift items, on the other hand he says that there was a recovery of the part of the price thereof. It is inconceivable how a gift becomes sale? Adjudication has not brought out the nexus between gift and the goods cleared nor how part recovery of cash of gift items depressed value of clearance of excisable goods. In absence of nexus, it is not possible to uphold the adjudication order. Therefore, appellate order sustains and Revenue appeal is dismissed.