2015 (10) TMI 767 - AT - Central Excise

Valuation - advertisement by the dealers - duty on the amount reimbursed by the appellant to the dealers - Held that - Any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses etc. Thus, if any amount is spent by AMA or dealer for advertisement or publicity, the same will form part of the transaction value. However, in the present case, we note that AMAs are not advertising the goods per se but what they are doing is to put an advertisement such as in Yellow Pages and in other places like bill-board so as to indicate that they are dealers of INDEF equipment. The appellant has produced copy of certain advertisement which have been made in the Yellow Pages or the bill board which have been put on the sides of the road. - advertisements are mainly to the effect that a particular dealer deals in the product of the appellant. Thus, these advertisements cannot be called as advertisements for the manufactured goods but are advertisements of the dealer. Undoubtedly, such advertisement indirectly helps the appellant and it is for this reason that they are reimbursing 50% of the expenses. - this is an amount which is paid by the appellant to its dealer out of the sale proceeds or the value already recovered or to be recovered by the appellant from its AMAs/dealers. Thus, the said amount cannot be considered as additional consideration. - Decided in favour of assessee.

Summary

Issues:
1. Whether the amount reimbursed by the appellant to dealers for advertisement expenses forms part of the transaction value for excise duty calculation.

Analysis:
The case involved a dispute regarding the excise duty liability of the appellant on the amount reimbursed to dealers for advertisement expenses. The appellant, engaged in manufacturing material handling equipment, reimbursed 50% of the advertisement expenses incurred by dealers. The Revenue contended that the reimbursed amount should be included in the transaction value for excise duty calculation. The appellant argued that the advertisement was not solely for their goods but to promote the dealers as sellers of the appellant's products. They emphasized that the advertisement indirectly benefited the appellant, leading to an increase in business for both parties. The appellant maintained that the reimbursed amount was not an additional consideration but a part of the sale proceeds already recovered or to be recovered from dealers.

The Revenue relied on the amended Section 4 of the Central Excise Act, which included amounts related to advertisement or publicity in the transaction value. They cited various case laws to support their argument, emphasizing that the transaction value could vary between buyers and that the nature of the advertisement expenses should be considered in the valuation.

The Tribunal analyzed the definition of transaction value under Section 4(3)(d) of the Central Excise Act, which encompassed amounts payable for advertising or publicity in connection with the sale. However, the Tribunal observed that the dealers' advertisements primarily highlighted their dealership of the appellant's products, rather than promoting the manufactured goods directly. The Tribunal reviewed sample advertisements provided by the appellant, which focused on the dealers' association with the appellant's brand. Consequently, the Tribunal concluded that the reimbursed amount was not an additional consideration but a part of the existing sale proceeds, as it was paid out of the value already recovered or to be recovered from dealers.

The Tribunal distinguished the case laws cited by the Revenue, stating that they did not align with the facts of the present case. The Tribunal held in favor of the appellant, allowing their appeals based on the findings that the advertisement expenses reimbursed to dealers did not constitute additional consideration and should not be included in the transaction value for excise duty calculation.