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Value For Total Recall

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It is time to "open happiness". That was the reaction of consumer and pharma firms to the Bombay High Court judgement that gave relief to Coca-Cola India against the Central Excise department in a service tax case. The department had argued that Coca-Cola, which makes concentrates and gives to bottlers to make soft drinks, is not eligible for Cenvat credit in the form of service tax benefits on advertising expenses. However, the court upheld Coca-Cola's appeal that the cost of advertising is an input cost, so service tax credit should be allowed.

This will benefit brand owners in setting off the tax paid on advertisements against payment of excise duty, says Vikram Nankani, partner of Mumbai-based Economic Laws Practice.

Big advertisers are also happy. "It will help the industry in removing the cascading effect of taxes," says Milind Sarwate, chief strategist at Marico Industries, which has an advertising budget of Rs 200 crore.

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STRICTLY BUSINESS

Quelling hopes of a speedy recovery, the official index of six core infrastructure industries registered a yearon-year growth of a lacklustre 1.8 per cent in July. In June, the core sectors grew 6.8 per cent. Oil contributed much of the deceleration in July as production of both crude oil and refined petroproducts fell by 0.4 per cent and 14.4 per cent, respectively.

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(This story was published in Businessworld Issue Dated 07-09-2009)


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