Assessable value excludes buyer-incurred advertisement expenses unless the buyer is legally obliged to spend for the assessee.

Buyer-incurred advertisement and sales promotion expenditure is includible in assessable value only where the buyer is under an enforceable legal or contractual obligation to incur it on behalf of the assessee. In the absence of any agreement or other evidence creating such a right in favour of the assessee, reimbursement of dealer or showroom owner publicity cannot be treated as additional consideration or added to transaction value merely because it was reimbursed. The stated principle excludes voluntary buyer expenditure from assessable value unless its incurrence is legally attributable to the assessee.

---

---

Issues: Whether reimbursement of advertisement and sales promotion expenses incurred by dealers/showroom owners was includible in the assessable value of the goods in the absence of any legal obligation on the buyers to incur such expenditure on behalf of the assessee.

Analysis: The issue turned on whether the assessee could be said to have obtained an additional consideration through expenditure incurred by the buyers on advertising and sales promotion. The record did not show any agreement or other evidence creating an enforceable legal right in favour of the assessee to require the buyers to spend on such publicity. In the absence of a legal obligation on the buyers, the expenditure could not be treated as part of the transaction value merely because the assessee reimbursed it. The principle applied was that only such buyer-incurred expenditure as is contractually or legally obligatory on behalf of the assessee can be added to the assessable value.

Conclusion: The reimbursement of advertisement and sales promotion expenses was not includible in the assessable value, and the impugned order was unsustainable.

Ratio Decidendi: Buyer-incurred expenditure is includible in assessable value only when the buyer is under an enforceable legal obligation to incur it on behalf of the assessee; absent such obligation, it cannot be treated as additional consideration.

---