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Honda Motorcycle & Scooter India Pvt. Ltd. Versus CCE Gurgaon

Valuation - advertisement and publicity expenses - includibility - whether expenses incurred by the dealers of the appellant on advertisement and publicity activities undertaken by them is includible in the assessable value of finished goods manufactured by appellant or not? - Held that: - the above issue is no longer res-integra and has been settled in favour of the appellant in appellants own case in the case of the Honda Seils Power Products Ltd. Vs. CCE [2013 (10)450 - CESTAT NEW DELHI], whe .....

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mt. Krati Somani, Advocate for the Appellant Sh. Atul Handa, AR for the Respondent ORDER Per: Devender Singh The brief facts leading to these appeals are that the appellant is manufacturer of Scooters and Motorcycles chargeable to Central Excise Duty. They sell their final products through dealers appointed by them. It was observed that the dealers had incurred certain expenses on advertisement and publicity on behalf of the appellants and part of the said expenses were reimbursed to the dealers .....

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otices were issued for the period indicated above. In adjudication by the Commissioner, the demand of ₹ 2,98,71,073/- was confirmed for the period 01.01.2007 to 31.12.2007 along with interest and equivalent penalty and demand of ₹ 3,76,50,505/- was confirmed for the period 01.01.2008 to 31.03.2012 along with interest and imposition of equivalent amount of penalty under Section 11AC. Against the said orders of Ld. Commissioner, Appeal Nos. E/34/2009 and E/55370/2013, appellant have be .....

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penses or not, the price of the vehicles sold by the appellant to the dealers remains same. She contended that the issue stand decided in the appellants favour by the judgment of this Tribunal in the case of Honda Seils Power Products Ltd. Vs. CCE - 2015 (317) ELT 510 (Tri.-Del.) and Maruti Suzuki India Ltd. Vs. CCE 2008 (232) ELT 566 (Tri. Del.). Subsequent to the hearing, they submitted the copies of the dealership agreement between Honda Motor Company and a dealer covering the period in the a .....

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r attention to Paragraph 4.5, 10.1, 10.7, 12.1, 12.2, 12.3 and Paragraph 25 of the dealership agreement dt. 20.01.2009. He pleaded that in terms of the said provisions of the agreement, the appellant had enforceable legal rights and on failure of the dealers to perform any obligation under this agreement, the dealership can be terminated. 4. Heard the parties and examined the records. 5. The issue for decision in this appeal is whether expenses incurred by the dealers of the appellant on adverti .....

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he appellant's agreements with their dealers only have a clause which require the dealers to make efforts for promoting the sales of the appellant's products; and (b) during the period of dispute, the dealers had incurred expense on advertisement and publicity, a part of which had been reimbursed by the appellants to the dealers. The point of dispute is as to whether the expenses on advertisement and publicity expenses incurred by the dealers, which were borne by them, are to be added to .....

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ki India Ltd. reported in 2008 (232) E.L.T. 566 (Tri.-Del.). 6. 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 expenses on advertisement and publicity of the appellant's products. Just a Clause in the agreements requiring the dealers to make efforts for promoting sales of the appellant .....

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is Tribunal has held as under:- 11.1 Regarding the issue of reimbursement of cost of complimentaries in the case of M/s. Maruti Suzuki India Limited, as per the Ld DR, the same are done in pursuance of clauses 28, 29, 30 and 31 of the dealership agreement which are reproduced below : 28. PROMOTION : The Dealer shall at all times during the currency of this Agreement use its best endeavours to promote sales of the Products within the Territory and to secure and maintain the confidence of Customer .....

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will not advertise or promote the Products or Services in such a way as may annoy cause injury to or detract from the company or the Products or Services or other Authorised Dealers. Should the Company consider that any advertisement announcement or other advertising or promotional material to be undesirable. The Dealer shall immediately withdraw the same at its expense and not repeat it. 30. DISPLAY AT OUTLETS : The Dealer shall display signs at the outlets indicating its status as an Authorise .....

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ducts and the Services as the Company may specify for handing over to customers on demand . 11.2 We have not been shown that these sales of promotional materials are directly linked to sale of the vehicles. It has also not been shown that if the dealers do not buy such material for stocking and distributing them to the buyers any legal remedy is available to the manufacturer. The contention that there is no option available to the dealers does not stand proved. The stand of the department that t .....

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