- (1.) The issue in this case is whether the advertisement expenses incurred by M/s. Soft Drinks and Advertising Marketing Services, pvt. Ltd. (SAMS, for short) to advertise the aerated products and manufactured by the third party bottlers could be includible in the assessable costs of the non-alcoholic beverages (NABB) manufactured by the respondent. NABB is a concentrate which is sold under agreements to various bottlers throughout the country who after processing the concentrate bottle the outcome and sell the same under various brand names all of which, at the material point of time belonged to the respondent. Under the agreement between the bottlers and the respondent, the respondent was required to advertise the finished products. In 1988, sams was set up by the bottlers as a centralised agency for advertising finished products of the bottlers. The shareholders of sams are the representatives of the bottlers and its Directors are also representatives of the bottlers.
(2.) The department on the allegation that the respondent was in fact deriving benefit from the sale of the final product and also that the respondent was in some cases insisting on the bottlers to pay their contribution to SAMS towards the advertisement expenses, issued show case notices to the respondent in respect of clearance of NABB made for the period 1-3-1989 to November, 1993.
(3.) Both the departmental authorities relied on the decision of this Court in Union of India and others etc. v. Bombay Tyre International ltd. etc. , 1984 (10) SCR 347as well as Phillips India v. C. C. E. , 1997 (91) ELT 540 to hold that the advertisement costs incurred by SAMS under its agreement with the bottlers was includible in the assessable costs of the NABB for the purposes of S. 4 of the Central excise and Salt Act, 1944 (as it then stood).;