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Issues involved: Determination of whether the expenditure towards cost sharing of advertisement expenses is includible in the value of imported goods u/s Rule 10(1)(e) of the Customs Valuation Rules, 2007.
Summary: The appellant, M/s. Samsonite South Asia Pvt. Ltd., imported goods from their collaborator M/s. Samsonite Corporation, USA, for manufacturing travel goods in India. The appellant shared in global advertising expenses with Samsonite Hong Kong, based on turnover, not related to imports. The department contended that the shared advertising expenses should be included in the value of imported goods. The appellant appealed against this decision. The appellant argued that the advertising expenses shared with Samsonite Hong Kong were not related to the import of goods. They shared expenses for a global advertising campaign, benefiting all group entities. The expenses were not a condition of sale for the imported goods. The Revenue reiterated the lower authorities' findings. The Tribunal found no evidence linking the shared advertising expenses to the imports made by the appellant. The expenses were based on sales turnover, including both imported and indigenous materials. The Tribunal concluded that the advertising expenses had no nexus with the import of raw materials. As the cost sharing was not a condition of sale for the imported goods, Rule 10(1)(e) of the Customs Valuation Rules, 2007, was not applicable. The Tribunal allowed the appeal, setting aside the impugned order.
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