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2020 (2) TMI 643 - AT - CustomsValuation of imported goods - import of ‘Li Ning’ brand goods from Singapore for the period February, 2012 to March, 2015 - inclusion of marketing, advertising, sponsorship and promotional expenses/ payments made by the appellant to promote the ‘Li Ning’ brand was a condition of sale - Rule 10(1)(e) of the Customs (Determination of Value of Imported Goods) Rules, 2007 (hereinafter referred as CV Rules) - HELD THAT:- There is nothing in the agreement that a fixed amount or fixed percentage of the invoice value of the imported goods, is obliged to be spent by the appellant as a condition of sale/ import. As per the stipulation in the agreement, the appellant is obliged to or responsible for sales and distribution in its territory of distribution and further to make such expenditure in consultation with the seller, does not attract the provisions of Rule 10(1)(e) of CV Rules. The said Rule 10(1)(e) provides for addition of all other payments actually made or to be made as a condition of sale of the imported goods, by the buyer to the seller or by the buyer to a third party to satisfy and obligation of the seller, to the extent that such payments are not included in the price actually paid (transaction value). There is total absence of the prescribed condition precedent as the appellant is not obliged to incur any particular amount or percentage of invoice value towards sales promotion/ advertisement. Further, the activity of advertisement and sales promotion is a post import activity incurred by the appellant on its own account and not for discharge for any obligation of the seller under the terms of sale. The interpretative note to Rule 3(b) provides, that activity undertaken by the buyer on its own account, even though by agreement, are not considered as direct payment, even though they might be regarded as benefit to the seller also. Further, in the facts of the present case, appellant has not paid any amount on behalf of M/s Sunlight Sports – seller. Further, the impugned order is also vitiated due to mistake of fact. Appeal allowed - decided in favor of appellant.
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