- (1.) FIRST , facts in brief. The Appellant is the Assessee which is manufacturing torches, apart from other goods. These torches are manufactured and marketed under the brand name 'NOVINO'. Indubitably, this brand name 'NOVINO' belongs to one M/s. Lakhanpal National Ltd. (hereinafter referred to as 'LNL') The said LNL has entered into an agreement with the Assessee under which LNL has allowed the Assessee to use the aforesaid brand name. For this purpose the Assessee is also paying royalty @ 2.5% in respect of sales of the aforesaid products to buyers, other than LNL.
(2.) IN fact, approximately 50% of the sales of the product 'NOVINO' manufactured by the Assessee are sold to other buyers and approximately 50% are sold to LNL. The Assessee received the show cause notice dated 02.10.1999 from the Commissioner of Central Excise in which it was mentioned that the Assessee was paying royalty @ 2.5% for use of the brand name to LNL and the Assessee was asked to show cause as to why the amount of royalty be not added to the price which was charged by the Assessee in the sale of the aforesaid product, to arrive at transaction value. The show cause notice indicates that while proposing such a step, the Commissioner had relied upon Rule 5 of the Central Excise (Valuation) Rules, 1975.
(3.) THE Assessee questioned the veracity of this show cause notice taking number of pleas/contentions. However, none of these contentions found favour with the Assessee. The Commissioner, who passed the Order -in -Original dated 02.08.2000, confirmed the demand made in the show cause notice. The appeal of the Appellant preferred against that order before the Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as 'CESTAT') met the same fate as the Tribunal has also relied upon the order of the Commissioner thereby dismissing the appeal. The order of the Tribunal is under challenge before us in these proceedings.;