TMI Blog2008 (8) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst the order of the Commissioner (Appeals) dated 14/20-3-2006. 1.3 Excise Appeal No. 875 of 2008 is by the Department against the order of the Commissioner (Appeals) dated 31-1-2008. 2. Heard both sides. 3.1 The relevant facts, in brief, relating to Excise Appeal Nos. 641 and 721 of 2008 are as follows:- (a) The appellant, M/s. Maruti Suzuki India Limited, is a manufacturer of motor vehicle and parts thereof. They market the goods through their network of dealers. (b) The appellant is carrying out main advertisements at the national level at their own expenses. The amount of expenses so incurred is included in the selling price of the finished goods and excise duty is paid on such price. (c) The appellant has written agreements with their dealers which envisage that the dealers shall at all times during the currency of the agreement make efforts to promote the product and its reputation within the allotted territory. (d) The appellant used to undertake advertisement of local importance and used to collect part of the expenses from their dealers. However, this was replaced by scheme known as Joint Advertisement and Sales Promotion Policy (JASP) by which the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re; such a provision can be seen in almost every agreement between a manufacturer and their dealers. The main advertisement is invariably done by the manufacturer at their own expenses. The dealers in their own interest are required to undertake advertisements/sales promotion activities within the area. As a measure of encouraging such activities, part of the expenses are being reimbursed by the manufacturer. This joint advertisement has no nexus to the sale and it is not condition of sale. (b) There is no compulsion on the part of the dealer to undertake the advertisements. He filed statistics to show that among the dealers who have done local advertisements, some dealers have incurred expenses as low as Rs. 16/- per vehicle and some as high as Rs.575/- per vehicle. Some of the dealers have not incurred any expenses. (c) The extent of reimbursement depends upon the actual expenses incurred by them. At the same time, if any of the dealer, incurs beyond certain maximum limit the reimbursement is limited; the entire expenses are not shared. (d) If the dealers do not undertake any advertisements, the agreements do not provide for or empower the manufacturer to undertake such adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SP envisages punitive action on the dealer who does not confirm the stipulated condition. 7.2 Regarding the issue of reimbursement of cost of complimentaries, he submitted that in terms of dealership agreement, the dealers of M/s. Maruti Suzuki Udyog Limited are under clear obligation to buy the company promotional materials and give them as gifts to the buyers. Therefore, he submits that they are liable to pay excise duty on the value of such gift articles. Similar is the position in respect of other appellants. 8. We have carefully considered the submissions and perused the records particularly the dealers' agreement with M/s. Maruti Suzuki India Limited and JASP for different years. 9. A perusal of the various judgments relied upon, on behalf of appellants, leads as to the following conclusion on the points of law. The advertisement for any product manufactured may fall under Rule 3 broad categories. First category is the advertisement done by the manufacturer on their own and at their own expenses. Such advertisements make the product visible and known to the prospective buyers. Such advertisement not only benefits the manufacturer but also the dealers. As such adve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 of the incurring of such advertisement expenses by the customer". 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 Customers in the products and to enhance the reputation of the company and the products. 29. ADVERTISING: The Dealer shall advertise and/or promote products. Parts and Service facilities in detailed manner as to secure adequate and effective publicity to the satisfaction of the company at its own expense. 29.1 The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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