AI Drafter 
TaxTMI 
TaxTMI 
2017 (3) TMI 408
X X X X Extracts X X X X
X X X X Extracts X X X X
.... from April 2005 to August 2008. During this period, the assessee were selling the two-wheelers and their spare parts to their dealers as per their all-India price list subject to the local taxes. In terms of Article V of the assessee's agreement with their dealers, the dealers shall vigorously promote, develop maintain sales of products and parts to the satisfaction of and in the manner required of Hero Honda and the dealer shall place firm orders for such products and parts as per the sales targets and will give estimates for forward requirements for such period and in such form as may be required on Hero Honda from time to time. In terms of Article XVI in the dealer's agreement, if Hero Honda, at any time, objects to the dealers ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....isement expenses initially incurred by the assessee and which were recovered from the dealers would be includible in the assessable value or not. The department taking the view that such advertisement expenses incurred by the assessee would be includible in the assessable value to the extent, the same were recovered from the dealers, issued a show cause notice dated 14.11.2008 for demand of duty for the period from 01.04.2005 to 31.08.2008 from them along with interest thereon under section 11AB and also for imposition of penalty. 4. The above show cause notice was adjudicated by which the Commissioner holding that the advertisement expenses incurred by the assessee in areas of certain dealers would be includible in the assessable value ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....39;s product in their respective area by incurring their own expenses. The department is not insisted on including these expenses incurred by the dealers in the assessable value. The dispute is only if those cases, where the dealers, for certain reasons, cannot organize the advertisement of the appellant's product in their respective areas and in this regard, they approach the appellant and the appellant in view of the dealer's request, organize the advertisement in the areas of those dealers by incurring certain expenses and since, the advertisements also mention that dealer's name and address and promote the dealer's sales also, a part of the expenses, up to about 40 per cent, are recovered from those dealers by the appell....
X X X X Extracts X X X X
X X X X Extracts X X X X
....from slightly different angle. In this regard, para 2 and para 3 of the judgment are reproduced below: 2. It appears appellant was conducting advertisement campaign in newspapers for the Hero Honda Motor Cycles and by an arrangement with the wholesale dealers printing the names and address of wholesale dealers also and collecting proportionate charges form the wholesale dealers. The same position obtained in regard to posters, cinema slides and other media of advertisement. Appellant was receiving security deposits from the wholesale dealers and the contribution of the wholesale dealers for the advertisement campaign was being adjusted. According to the show cause Rs. 12,50,000/- or so was thus collected from the wholesale dealers.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vities so as to attract more customers and to enhance their business. When they do so and in the absence of anything else on record, it cannot be said that the cost of such advertisement which also in a way enhances the marketability of the product should be added to the assessable value. 6.1. The above judgment of the Tribunal has been affirmed by the Apex Court by dismissal of the Civil appeal vide judgment reported in 1999 (105) ELT A126 (SC). In our view, the ratio of the above judgment of the Tribunal is squarely applicable to the facts of this case. Though the above judgment of the Tribunal is in respect of the period prior to 1/7/2000 and w.e.f. 1/7/2000, the section 4 has been substituted by a new section based on transacti....