Custom, Excise & Service Tax Tribunal
M/S. Royal Enfield vs Commissioner Of Central Excise, ... on 15 June, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No. E/661/2004
(Arising out of Order-in-Appeal No.51/2004 (M-I) dated 24.2.2004 passed by the Commissioner of Central Excise (Appeals), Chennai)
For approval and signature:
Honble Ms. Jyoti Balasundaram, Vice President
Honble Dr. Chittaranjan Satapathy, Technical Member
1. Whether Press Reporters may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether the Members wish to see the fair copy of the Order?
4. Whether Order is to be circulated to the Departmental authorities?
M/s. Royal Enfield Appellants
Vs.
Commissioner of Central Excise, Chennai Respondent
Appearance Shri K.S.Venkatagiri, Advocate, for the Appellants Ms. Indira Sisupal, JDR for the Respondent CORAM Honble Ms. Jyoti Balasundaram, Vice-President Honble Dr. Chittaranjan Satapathy, Technical Member Date of Hearing: 15.06.2010 Date of Decision: 15.06.2010 Final Order No. ____________ Per Dr. Chittaranjan Satapathy Heard both sides.
2. The appellants manufacture motor cycles of various models. Apart from making direct sales, the appellants also sale motor cycles through dealers for which there are dealership agreements.
3. It is contended by Shri K.S. Venkatagiri, learned counsel for the appellants that under the agreements there is no obligation for advertising by the dealers but on voluntary basis dealers do advertising of the motor cycles and the appellants reimburse part of the expenses. He states that part of the advertising expense which is reimbursed by the appellant forms part of the cost of the product and therefore becomes part of the assessable value on which excise duty is being paid. The Department is seeking to include the part of the advertisement expense incurred by the dealers and not reimbursed by the appellants in the assessable value. He states that there is no warrant in law for doing so as the advertisement done by the dealers in the local areas etc. benefits primarily the local sales of the dealers. He argues that the advertisement expenses benefit the appellants as well as the dealers and dealers are also not under obligation under the contract to incur such expenditure. He states that in the case of Ford India Pvt. Ltd. Vs. CCE, Chennai 2007 (216) ELT 530, the Tribunal has held that when the dealers are promoting sales of products by advertising on their freewill without an agreement with manufacturer compelling them to advertise, the expenditure incurred by the dealers is not includible in the assessable value. He also cites a similar decision in the case of TVS Motor Company Ltd. Vs. CCE, Chennai 2008 (229) ELT 559. Further, he also relies on the Honble Supreme Courts decision in the case of Philips India Ltd. Vs. CCE, Pune 1997 (91) ELT 540 (SC). He further states that in the subsequent order passed by the Commissioner (Appeals) similar demands in respect of the appellants have been dropped against which no appeals have been filed by the Department.
4. Heard the learned DR Ms. Indira Sisupal for the Department, who supports the impugned order passed by the authorities below.
5. After considering arguments from both sides and the cited case laws, we are of the view that the two cited decisions of the Tribunal in the case of Ford India (supra) and TVS Motor (supra) squarely apply to the case at hand. The cited decision of the Honble Supreme Court in the case of Philips India (supra) also supports the case of the appellants. Moreover, the Department itself has accepted dropping of the demand on the same issue by the lower appellate authority. As such, applying the ratio of the cited decisions of the Tribunal, we hold that the advertisement expenses incurred by the dealers which is not reimbursed by the appellants is not required to be included in the assessable value as the advertising has been done by the dealers on voluntary basis without there being a legally enforceable stipulation in the relevant agreements between the appellants and the dealers. Accordingly, the impugned order is set aside and the appeal is allowed.
(Operative portion of the order was pronounced
in open court on completion of the hearing)
(Dr. Chittaranjan Satapathy) (Jyoti Balasundaram)
Technical Member Vice President
Rex
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