TMI Blog2008 (4) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... ion value', the expenditure so incurred by the dealers was includible in the assessable value of the motorcycles. Accordingly, he demanded from TVS a total differential duty of excise including education cess amounting to Rs. 4,70,40,835/-, interest due thereon and imposed equal amount of penalty on them. 2. The facts of the case are that in terms of the dealership agreement, each dealer of the assessee is required, inter alia, to maintain showrooms for the vehicles, keep up-to-date accounts relating to sale of vehicles and carryout the instructions issued by the assessee periodically. During the material period, dealers of the assessee incurred above Rs. 96 crores on various sales promotion activities. The assessee reimbursed this amount less an amount of Rs. 21,08,51,057/- by issuing credit notes to the dealers. The assessee carried out similar activities, incurred above Rs. 25 crores and issued debit notes for an amount of Rs. 10,10,15,565/- to the dealers. This amount included an amount of Rs. 1,35,20,000/- incurred on survey on 'customer satisfaction index at dealership' conducted by M/s. JD Power Asia Pacific Inc. The dealers had thus shared with the assessee the expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales inventory and to abide by the instructions of the assessee. These were all in the interest of maximizing sales of the assessee's goods. 4. The ld. Counsel narrated the evolution of the statute governing valuation of excisable goods. He explained the case law that occasioned and guided the legislative changes up to 1st July, 2000, when the new Section 4 was brought into force. The salient and historic reading of the case law in Supreme Court's judgment in A.K. Roy and Another v. Voltas Ltd. reported in 1977 (1) E.L.T. (J177) (S.C.), the Atic Industries Ltd. v. HH Dave, AC reported in 1978 (2) E.L.T. (J444) (S.C.) and the UOI v. Bombay Tyres International Ltd., reported in 1983 (14) E.L.T. 1896 was recalled. He explained how the value for assessment of excisable goods used to be misconstrued as comprising only manufacturing cost and manufacturing profit for a long time following the judgment in the Voltas case till the ratio was correctly interpreted by the Apex Court in its judgment in the Bombay Tyres International Ltd. case. According to the ld. Counsel, the Apex Court had clarified in the above judgment as to what were all the elements that would cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by TVS. 6. It was further submitted that contractual obligations of the dealers were enforceable. The Apex Court had not laid down a pre-condition that, to include the expenditure incurred by the dealer on advertisement etc. the assessee should have a legally enforceable right against the dealer to incur such expenditure. In Surat Textile Mills Ltd. (supra) Apex Court had only observed that the Tribunal had consistently held such a view. As the valuation provisions had not undergone any basic change by introduction of the concept of transaction value, the above reading of the law by the Tribunal applied to the subject transactions as well. He also referred to the judgment of the Apex Court in Mahindra Mahindra [1998 (103) E.L.T 606 (Tri.)] and Phillips India [1997 (91) E.L.T.540}. In Mahindra Mahindra case (supra), the Tribunal had held that no part of the cost incurred by dealers and no part of dealer's margin covering such cost is liable to be added to assessable value where the manufacturer shares the cost. This decision was affirmed by the Apex Court. In the Phillips India case (supra), the Apex Court reversed the Revenue's decision to disallow the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0) E.L.T. 289 (S.C.) cited by the Commissioner and the SDR, the Apex Court did not take a view on the issue but had remanded the matter. 10. We have studied the case records and the submissions by both sides. The demand relates to the period on and from 1-7-2000. Following the settled position of law on the issue prior to 1-7-2000, such expenditure had been treated to be not includible in the assessable value by the Department. In the new valuation provisions effective from 1-7-2000 expenditure incurred on behalf of the assessee by the buyer in connection with the sale of excisable goods is addable in the assessable value. The issue to be decided is whether the impugned expenses were incurred by the dealers on behalf of the assessee. 10.1 The dealers had incurred expenditure on sales promotion on their own freewill to promote their interest without an agreement with the manufacturer compelling them to undertake sales promotion measures. Hence the said expenditure is not includible in the assessable value. 10.2 In the case of CCE v. Bajaj Tempo Ltd. [2005 (180) E.L.T. 289 (S.C.)], the Apex Court observed in Phillips India and Mahindra and Mahindra cases, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s by the Tribunal: 1. Toyota Kirloskar Motors Ltd. v. CCE, Bangalore - 2007 (217) E.L.T.104 (Tri.- Chen.) 2. Ford India Pvt. Ltd. v. CCE, Chennai-III - 2007 (216) E.L.T. 530 (Tri.- Chen.) 3. CCE v. M/s. Gangadharam Appliances Ltd. reported in 2007- TIOL-372-CESTAT-MAD, 4. Amco Batteries Ltd. v. CCE, 2007 (207) E.L.T. 612 (Tri.-Bang.). 10.5 We find that in CCE v. Besta Cosmetics Ltd., case reported in 2005 (183) E.L.T. 122 (S.C.), the Apex Court had held that in the absence of an enforceable legal right with the assessee to insist on the advertisement under the agreement, the expenditure for the advertisement incurred by the customer was not liable to be included in the assessable value of the assessee's products. In the case of Mahindra Mahindra v. CCE, Bombay [1998 (103) E.L.T. 606 (Tri.)] this Tribunal held that advertisement cost incurred by dealers reimbursed by manufacturer to the extent of 50% covering such advertisement cost is not includible in the assessable value of the vehicles manufactured by the appellants. 11. Disposing a similar appeal in the case of Toyota Kirloskar Motors Ltd. v. CCE, Bangalore [2007 (217) E.L.T. 104 (Tri.- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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