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2016 (3) TMI 666 - CESTAT NEW DELHI

2016 (3) TMI 666 - CESTAT NEW DELHI - 2016 (338) E.L.T. 154 (Tri. - Del.) - Valuation of goods sold through dealers - inclusion of the expenditure incurred by the wholesale dealers in the assessable value of the goods sold by the appellant to such wholesale dealers - Held that:- Emphasis is laid by the Revenue on the clause that in the event that the wholesale dealer is not able to lift the specified quantities mentioned in the agreement, the appellant may increase the price based on the volume .....

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h presumptions. - Further, it is a clearly admitted fact that any publicity and advertisement by the dealer will certainly benefit them by higher sales and higher profit. To say such publicity is only to be treated as a beneficial act for the appellant is not tenable. There is no obligatory, legally bound expenditure by the dealer for such publicity. Considering the legal position we find the impugned order is not sustainable. See COLLECTOR OF CENTRAL EXCISE, BARODA Versus BESTA COSMETICS LT .....

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r-connected; hence they are taken up together for hearing. 2. The appellants are engaged in the manufacture of power inverters and UPS system liable to Central Excise duty. They clear goods with brand name Luminous , Safe Power and TEZ . The brand name TEZ belongs to M/s SAR Silicon Systems (P) Ltd. (SAR). The brand name luminous was owned by the main appellant till 31.01.2004 and thereafter was purchased by SAR. The appellant sell their finished goods to 3 types of customers. a) Wholesale deal .....

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rs, namely, SAR and Radiant also undertake advertisement and publicity activities on their own to promote their sales. Certain investigations were conducted by the officers of the Department. Based on the investigation, a SCN dated 28.04.2005 was issued to the main appellant demanding duty of ₹ 84,79,579/- for the period April 2000 to March 2004. The demand is with reference to the expenditure incurred by their wholesale dealers (SAR and Radiant) after reducing the amount of expenditure re .....

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have correctly discharged excise duty on clearances of the finished goods. They were not required to include the expenditure borne by wholesale dealers on advertisement and publicity in the assessable value. In respect of such advertisement activities by the dealers, benefit accrues both to wholesale dealers as well as the appellants. The appellants have included the expenditure incurred by them for advertisement of their own and the expenses reimbursed by them through the dealers for such adver .....

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ent activity is to promote the finished goods manufactured by the appellants, 100% expenditure are borne by the appellants. Where the advertisement activity benefits both the appellants as well as the dealers, the expenses are shared in the ratio of 60:40 between the appellants and the dealers. d) The wholesale dealers were entitled to market the goods in such manner as they think fit. The expenditure towards advertisement and publicity incurred by these wholesale dealers are not on behalf of th .....

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pay is of significance. In the present case there is no liability to pay any additional amount at the point of time when the goods are sold. e) Reliance was placed on various decided cases by the Tribunal and the Hon ble Supreme Court. 5. The Ld. AR reiterated the findings in the impugned order. He submitted that in the contract between the appellant and the wholesale dealers, there is a stipulation of minimum volume of sales. If the volume falls below the said threshold, the appellant can charg .....

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akes the dealers obliged to incur expenditure on advertisements so that he can avoid increase in the price. 6. We have heard both the sides and examined the appeal records carefully. 7. The point for decision is the inclusion of the expenditure incurred by the wholesale dealers in the assessable value of the goods sold by the appellant to such wholesale dealers. The case of Revenue is that only two wholesale dealers are dealing with the entire product of the appellants, and hence, they have comm .....

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expenditure are reimbursed by the appellant, these are included in the assessable value. When the expenses towards advertisement and publicity are solely borne by the dealers, the appellants are contesting the includibility of such expenditure in the assessable value. We find a similar issue came for consideration by Hon ble Supreme Court in TVS Motors Co. Ltd. [2016 (331) ELT 3(SC)]. The Supreme Court examined the scope of the term any amount that the buyer is liable to pay to . The Supreme Co .....

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the sale of the goods. The expression in connection with the sale of the goods would only mean that but for the payment of the additional amount, the sale of the goods would not take place. When we keep in mind the aforesaid legal position, we find no error in the view taken by the Tribunal giving benefit to the assessee. Both the sides were in unison in accepting the position that no major change had been incorporated w.e.f. 1-7-2000 with emphasis on the different transaction value from the as .....

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s. 8. In Honda Seils Power Products Ltd. vs CCE, Meerut-III [2015 (317) ELT 510 (Tri. Del)], the Tribunal examined the issue of inclusion of advertisement expenditures borne by the dealers in the assessable value. The Tribunal concluded that on going through the appellant s agreements with their dealers, we find that there is nothing in their agreements from which it can be concluded that appellants had enforceable legal right against the dealers to insist on incurring of certain amount of expen .....

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marketing agent in the assessable value. The Supreme Court held that when there is a discretion as to whether or not to advertise the assessee s products, there is no enforceable legal right with the assessee to insist on the advertisement under the agreement. 10. In Hero Honda Motors Ltd. [2014 (324) ELT 404 (Tri. Del)], the Tribunal examined the similar issue. It was observed that the contract required the dealers to vigorously promote, develop and maintain sales of the products and parts to t .....

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