Customs, Excise and Gold Tribunal - Tamil Nadu
Cce vs Gangadharam Appliances Ltd. on 13 November, 2006
ORDER P.G. Chacko, Member (J)
1. This appeal of the department is against an order passed by the Commissioner (Appeals) holding that the cost of advertisement expenses incurred by the dealers and reimbursed to them by the assessee was not to be included in the assessable value, of the goods supplied by the latter.
2. After examining the records and hearing both sides, we find that the question whether such advertisement charges are includible in the assessable value of the goods is already covered against the Revenue by the Supreme Court's judgments in the cases of Philips India Ltd. v. CCE Pune and Alembic Glass Industries Ltd. v. CCE . The decision in Philips India case was followed by the lower appellate authority also. The appellant seeks to distinguish the present case from that of Philips India Ltd. by submitting that there was no agreement between the respondents and their dealers providing for advertisement by the latter and reimbursement of its expenses by the former, whereas in the case considered by the apex court, there was an agreement between the assessee and their dealers for reimbursement by the assessee of 50% advertisement expenses borne by the dealers. This distinction, sought to be drawn between the two cases by the Revenue in the present appeal is misconceived inasmuch as, in the present case also, there was an arrangement between the assessee and their dealers for sharing the cost of advertiser lent. The practice was that the dealers would initially bear the cost of advertisements and would subsequently issue debit notes to the assessee for reimbursement of 50% of such cost. We note that, in the case of Alembic Glass Industries Ltd. (supra) also, there was similar understanding between the assessee and their dealers and it was held to the effect that, where a manufacturer had no enforceable legal right against the customers to insist on incurring of advertisement expenditure by the customers, the advertisement cost would not be includible in the assessable value. In other words, for including advertisement cost in the assessable value, it should be shown that such cost was incurred by the manufacturer/customers compulsorily or mandatorily. We note that, in the present case, the Revenue has not satisfied these criteria. On the other hand, it is not in dispute that, where any cost of advertisement was borne by the dealer, 50% thereof would be reimbursed by the assessee and this arrangement benefited both the parties equally. On these facts, the apex court's decision in Philips India case was correctly followed by the lower appellate authority to hold that any part of the cost of advertisement was not includible in the assessable value of the goods.
3. In the result, the appeal stands dismissed.
(Operative part of the order was pronounced in open court on 13.11.06)