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TMI Blog2018 (11) TMI 345X X X X Extracts X X X X X X X X Extracts X X X X ..... ch advertisements were being shared proportionately between the respondent and the distributors. Investigations were undertaken by the department, during the course of which the details of costs of such advertisements shared with distributors for the financial year 2000-2001 to 2004-2005 was collected from the respondent. Copies of the agreement with the distributors were procured as also a letter dated 05.05.2004 issued by the respondent by way of internal communication to one of the distributors of the respondent situated at Siliguri. In this connection the statement of Shri S.N.Banerjee who worked for the respondent was also recorded; in which he admitted that the advertisement cost was being shared by the respondent with the dealers/distributors. He stated that the distributors, after making payments to the advertising agency, submit the bill for reimbursement as per the agreed formula. The formula as per the letter dated 05.05.2004 was that the distributor's share was 50% of the advertisement expenditure. 2. On the basis of the investigation the department came to the conclusion that the distributors had borne a part of the advertisement cost which otherwise would have been i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... distributors. He further submitted that the agreement as well as the letter (supra) satisfied the condition prescribed by the Apex Court in the case of Commissioner of Central Excise, Surat vs. Surat Textitle Mills Ltd. (supra) to the effect that the respondent has an enforceable legal right against the customers to insist on incurring such advertisement expenditure. Finally he submitted that the impugned order may be set aside and the order of the original authority may be restored. 4. Ld. Senior Advocate, on behalf of the respondent, justified the impugned order passed by the Commissioner (Appeals). His main arguments are summarized below: i) He submitted that agreements executed by the respondent with the distributors does not confer any enforceable legal right on respondent against the customers to insist on incurring such advertisement expenses. The letter dated 05.05.2004, relied upon by the revenue, does not have the statutory effect of an agreement. ii) He relied among many cases, on the following case laws: a) Maruti Suzuki India Ltd. vs. CCE [2008(232) ELT 566(T)] b) Ford India Pvt. Ltd. vs. CCE [2017 (6) GSTL 273 (T)] c) Luminous Electronics Pvt. Ltd. vs. CCE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record a letter dated 05.05.2004 which is an internal communication to one of the respondent's distributors situated at Siliguri. In the statement recorded from Shri S.N.Banerjee, he has admitted to the fact that the advertisement cost is being shared @50% with the distributors and the share of the distributor is reimbursed to them by the respondent. On the basis of the above overall documentary and oral evidence, the original authority took the view that the respondent enjoyed enforceable legal right against the distributors to insist on the incurring of such advertising expenditure. 8. Revenue has relied on the decision of the Larger Bench of the Hon'ble Supreme Court in the case of Commissioner of Central Excise, Surat vs. Surat Textitle Mills Ltd. (supra), in which the Hon'ble Supreme Court has laid down the following yardstick subject to the satisfaction of which the advertisement expenditure incurred by the customer can be added to the manufacturer's sale price for determining the assessable value. The observations of the Hon'ble Supreme Court in this case are as under: "21.We have carefully perused the judgments and orders passed by the CEGAT which are impugned in these a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvertisements, 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 acceptable. Such cancellation cannot enable recovery of dealer's share of cost of advertisements. Therefore, this case is squarely covered by the decisions of the Hon'ble Supreme Court in the cases of Philips India Ltd. v. CCE, Pune reported in 1997 (91) E.L.T. 540 (S.C.) and the decision of Surat Textile Mills [2004 (167) E.L.T. 379 (S.C)] cited supra wherein it has been held that "the advertisement expenditure incurred by a manufacturers' customer can b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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