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2016 (3) TMI 158

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..... 120 - SUPREME COURT OF INDIA ) and the decision of Surat Textile Mills [2004 (4) TMI 81 - SUPREME COURT OF INDIA] wherein it has been held that ‘the advertisement expenditure incurred by a manufacturers’ customer can be added to the sale price for determining the assessable value, only if the manufacturer has an enforceable legal right against the customer to insist of the incurring of such advertisement expenses by the customer - Decided in favour of assessee - Appeal No. E/1658/05 - A/85730/16/EB - Dated:- 10-2-2016 - SHRI SS. GARG, MEMBER (JUDICIAL) AND SHRI RAJU, MEMBER (TECHNICAL) For the Petitioner : Shri S. Narayanan, Advocate For the Respondent : Shri V.K. Shastri, AC (AR) ORDER PER: RAJU The appellants .....

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..... er/distributor by sharing such costs in their own business interest gets benefited in equal degree. (9) In order to maintain uniformity in the advertisements of products to ensure that customer do not understand the product sold differently, in terms of quality and nature and commercial aspects of products sold and including the manner, style, and standard of sales promotion measures which needs to be consistent with business ethics, RTPL suggests in mutual interest of business, prior approval of the mode and message of the advertisement. 2. A demand show-cause notice was issued to the appellant seeking to add the amount recovered from the dealers in respect of the advertisements cost to the assessable value. The demand was conf .....

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..... ing these option. That being so, it can safely be concluded that it is not mandatory for the dealers to take the advertising materials from the appellants and to share the cost of such materials. In these circumstances, the Tribunal s decision in case of Maruti Suzuki India Ltd. (supra) becomes squarely applicable. Para 9 and 10 of the said decision reads as follows: - 9. A perusal of the various judgments relied upon, on behalf of appellants, leads as to the following conclusion on the points of law. The advertisement for any product manufactured may fall under Rule 3 broad categories. First category is the advertisement done by the manufacturer on their own and at their own expenses. Such advertisements make the product visible and k .....

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..... ch advertisements, the extent of expenses does not get linked to or proportionate to number of vehicles sold by them; it was claimed that the dealers have incurred expenses varying from 0.0070% to 0.2333% of total sale value. In view of the above, it appears that these advertisements cannot be held to have been carried out by the buyers on behalf of the manufacturer; that the assessee has no enforceable legal right to insist on incurring such advertisement expenditure. The contention of the Department that there is no option available to the dealers does not stand proved. The stand of the department that the failure on the part of the dealer may lead to the cancellation of dealership and therefore there is a enforceable legal right is accep .....

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