2016 (8) TMI 119 - AT - Central Excise

Valuation - inclusion of advertisement cost incurred by the dealers and promotional materials sold to the dealers - Held that - advertisement cost incurred by the dealers and promotional materials sold to the dealers are not includible in the assessable value. - Decided in favor of assessee.

Summary

Issues:
Appeal against demand of duty on advertisement cost and sale of promotional materials.

Analysis:
The appellant, a motor vehicle manufacturer, incurred advertisement expenses included in selling price for duty payment. Dealers promoted products as per agreements. Joint Advertisement and Sales Promotion Policy (JASP) replaced local advertisements, with dealers reimbursed from JASP budget. Department treated dealer expenses under JASP as consideration for sale, imposing duty and penalties. Appellant also provided promotional materials to dealers for sales promotion. Commissioner treated cost of materials as additional consideration, confirming duties and penalties. Appellant argued precedent where Tribunal held dealer expenses and promotional materials not includible in assessable value. Tribunal analyzed various judgments, concluding joint advertisements benefit both dealers and manufacturers, but dealer expenses not considered as additional consideration unless manufacturer has enforceable right. Tribunal found no legal obligation for dealers to buy promotional materials, setting aside impugned order and allowing the appeal with consequential relief.