Tribunal excludes dealer charges from duty calculation, citing goodwill impact The Tribunal allowed the appeal filed by the appellant, a two-wheeler manufacturer, regarding the inclusion of charges collected from wholesale dealers ...
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Tribunal excludes dealer charges from duty calculation, citing goodwill impact
The Tribunal allowed the appeal filed by the appellant, a two-wheeler manufacturer, regarding the inclusion of charges collected from wholesale dealers for an advertisement campaign in the assessable value for duty calculation. The Tribunal held that dealer involvement in the advertisement could enhance goodwill and attract customers, benefiting both the dealer and the manufacturer. Therefore, the charges collected from wholesale dealers for the campaign were not considered part of the assessable value.
Issues: The issues involved in the judgment are whether the extra amount collected by the appellant from wholesale dealers as advertisement and publicity charges should be treated as part of the assessable value for duty calculation.
Summary: The appellant, engaged in manufacturing two-wheelers, conducted an advertisement campaign for Hero Honda Motor Cycles in newspapers, posters, cinema slides, and other media, with the names and addresses of wholesale dealers included. The appellant collected charges from wholesale dealers for this campaign, contributing to the marketability of the product. The department sought to include the amount collected in the assessable value for duty calculation.
The lower authorities held that the advertisement campaign enhanced the marketability of the product, justifying the inclusion of charges in the assessable value. However, the Tribunal noted that when dealers are involved in the advertisement, the situation differs. Referring to a previous decision, it was highlighted that dealer advertisement can enhance the goodwill of dealers and attract more customers, benefiting both the dealer and the manufacturer. In such cases, the cost of dealer advertisement should not necessarily be added to the assessable value.
Based on the above analysis, the Tribunal set aside the order demanding the inclusion of advertisement charges in the assessable value, and allowed the appeal filed by the appellant.
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