TMI Blog2018 (11) TMI 345X X X X Extracts X X X X X X X X Extracts X X X X ..... e added to the assessable value. The Tribunal was considering, in that case, joint advertisements whose expenses were shared between the manufacturer and the dealer - it was held by the Tribunal that since extent of expenses of dealers is not linked to number of vehicles sold by them & advertisement is not done by all dealers, dealers expenditure on advertisements is not includible. Appeal dismissed - decided against Revenue. - E/14/2009 - FO/76829/2018 - Dated:- 30-10-2018 - Shri P. K. Choudhary, Judicial Member and Shri V. Padmanabhan, Member (Technical) Shri K. Choudhary, Suptd.(AR) for the Appellant Dr. Samir Chakraborty, Sr.Advocate and Shri Abhijit Biswas, Advocate for the respondent. ORDER Per Shri V.Padmanabhan : This appeal has been filed by revenue against the Order-in-Appeal No.184-185/JSR/2008 dated 24.10.2008. The respondent is engaged in the manufacture of various iron and steel products in their factory at Jamshedpur. The goods manufactured by them are sold through distributor/dealers situated at different parts of the country. The respondent comes up with advertisements for their products in various press/electronic media. The departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the grounds of the present appeal the ld.DR emphasized the following points: i) He referred to the decision of the Hon ble Supreme Court in the case of Commissioner of Central Excise, Surat vs. Surat Textitle Mills Ltd. [2004(167) ELT 379 (S.C.)] in which it has been held that the advertisement expenditure incurred by the manufacturer s 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 on incurring of such advertisement expenses. This view has been reiterated by the Apex Court in the case of Commr. Of Central Excise, Pune vs. Poona Bottling Co. Ltd. [2005(182) ELT 23 (S.C.)], Alembic Glass Industries Ltd. vs. Commissioner of Central Excise [2006(201) ELT 161 (S.C.)] and Collector of Central Excise, Baroda vs. Besta Cosmetics Ltd. [2005(183) ELT 122 (S.C.)]. ii) He submitted that the Commissioner (Appeals) ignored the above decisions in setting aside the demand. He submitted that the agreements entered into by the respondent with their distributors, makes it clear in Clause 2.12 (b) that all the advertisements in any media will be issued only after written ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs/dealers. The clause relating to Advertising/Brand Support in a sample agreement executed by the respondent with a distributor is reproduced below for ready reference: 2.12 Advertising / Brand Support: 2.12(a) the Company proposes substantial advertising and publicity for its products in DISTRIBUTOR s districts 2.12(b) All the advertisements in any media (including public notices) will be issued only after written approval of the Company. 2.12(c ) The DISTRIBUTOR shall advertise the said products in his districts to such extent and in such manner as may be considered necessary by the Company, the layouts of which shall be subject to the Company s approval and supervision. 2.12(d) The DISTRIBUTOR shall display conspicuously at, in or in his premises only such types of sign or signs as may be authorized by the Company and upon termination of this Agreement shall discontinue representing himself to be an authorized DISTRIBUTOR in the said products and shall forthwith remove all the said signs and return to the Company without compensation all such signs which may have been given to the DISTRIBUTOR by it. The DISTRIBUTOR will not be permitted to display an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated by the Supreme Court is satisfied or not? 10. We have carefully considered the relevant clauses of the agreements which deals with the obligation cause on the distributors for coming out with advertisement and publicity. The Clause 2.12 (c ) makes it clear that the distributor shall advertise the product of the respondent. There is a further stipulation that the advertisements will have to be approved by the respondent. However, after going through the entire agreement, we do not see any clause which deals with the expenditure on such advertisement. On the basis of the agreement it cannot be stated that the respondent has obligated the distributors to incur the advertisement expenses. Even the letter dated 05.05.2004 cannot be said to create such an enforceable legal right for the respondent against the distributor. 11. We note that the Tribunal had occasioned to consider a similar matter in the case of Maruti Suzuki India Ltd. vs. CCE (supra). In the above case the Tribunal examined whether the dealer s share of expenses can be considered as additional consideration for sale to be added to the assessable value. The Tribunal was considering, in that case, joint adver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r there is any legal obligation on the part of the dealer to incur the 25% expenses on advertisements. There is absolutely no evidence placed before us to establish that in case there is default on the part of the dealer to incur the 25% expenses on advertisement, the appellant, FIPL, has a legal right to recover the same. The learned AR has made a vain effort to contend that clause 8(a) of the agreement as reproduced above, as well as the terms and conditions regarding dispute resolution in the agreement, would imply a legally enforceable right existing on the part of FIPL. We have to say that the agreement does not make any whisper of the arrangement of buyer/dealer incurring the whole expenses and FIPL later reimbursing 75% only. This is an internal understanding. Clause 8(a) of the agreement states that the price to be paid by dealer include the advertisement charges. Here it is to be said at the cost of repetition, that 75% is reimbursed by FIPL and FIPL has included this amount in the assessable value; there is no dispute on this part. As to the remaining 25%, there is neither any obligation cast upon the dealer nor is there a right or remedy given to FIPL. At the most, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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