2018 (10) TMI 958 - AT - Central Excise

Valuation - includibility - expenditure on sales promotion activities namely distribution of diaries and calendars to the buyers jointly with the appellants and while 50% of the expenditure had been borne by the appellant, remaining 50% had been borne by the dealers - Held that - Tribunal in the case of Maruti Suzuki India Ltd. Vs. CCE, Delhi/Bhopal 2008 (8) TMI 118 - CESTAT NEW DELHI which is with regard to the provisions of Section 4 as it stood during the period w.e.f. 01.07.2000 and also taking into account the definition of transaction value in new section 4, has held that when the sales promotion expenses are jointly incurred by the assessee as well as his dealers and a part of expenses of the promotion activities are borne by the dealer and incurring such expenses on sales promotion is optional and not compulsory, to the extent such expenses are incurred by the dealers, the same would not be includible in the assessable value. Also, there is no evidence brought on record by the department to prove that the dealers in terms of their agreement with the appellant were under obligation to share 50% of the expenses on distribution of diaries and calendars to the customers as promotion gifts. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against demand of duty, interest, and penalty under Section 11AC of the Act, 1944.
- Inclusion of expenses on sales promotion activities in the transaction value of goods sold by the appellant.
- Interpretation of provisions regarding jointly incurred sales promotion expenses by appellant and dealers.
- Applicability of previous judgments on similar cases to the current scenario.

Analysis:
1. The appellant challenged an order confirming duty demand, interest, and penalty under Section 11AC of the Act, 1944. The dispute arose from expenses on sales promotion activities, specifically distribution of diaries and calendars by dealers jointly with the appellant. The department argued that the expenses should be part of the transaction value of goods sold by the appellant.

2. The Tribunal reviewed the case history, where the Additional Commissioner initially dropped the proceedings based on previous judgments. However, the Commissioner (Appeals) later set aside this decision, confirming the duty demand, interest, and imposing a penalty. The appellant then filed an appeal against this order.

3. The appellant contended that the sales promotion scheme was optional for dealers, with 50% of the expenses borne by them. Citing previous cases like CCE, Mysore Vs. Reid & Taylor, the appellant argued that such expenses, when not compulsory and reimbursed to dealers, should not be included in the assessable value. Similar views were upheld in cases like TVS Motor Company Ltd. Vs. CCE, Chennai and Maruti Suzuki India Ltd. Vs. CCE, Delhi/Bhopal.

4. The department, represented by the Ld. AR, supported the findings of the impugned order, emphasizing the inclusion of expenses in the transaction value.

5. The Tribunal considered the arguments and examined the precedents set by previous judgments. It noted that when sales promotion expenses are jointly incurred, optional, and not compulsory, the expenses borne by dealers should not be included in the assessable value. Since there was no evidence of dealer obligation to share expenses, the Tribunal applied the judgments of previous cases to the current scenario.

6. Consequently, the Tribunal set aside the impugned order confirming the demand, interest, and penalty on the appellant, allowing the appeal with consequential relief. The decision was dictated and pronounced in the open court by the Tribunal members.