2017 (12) TMI 163

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....nto contracts with their dealers/distributors for sale of their goods. As per the contract the dealers/distributors have been assigned rights for selling the goods in Mumbai area. One of the clause of the agreement is the sharing of 50% expenses incurred on account of sales promotion expenses namely advertisement expenses. According to which, clause provided that Henkel Loclite can provide display/demonstration material for special event on cost sharing basis (maximum of 50% of total cost and not more than 5% of previous year purchase)". The case of the department is that the 50% advertisement expenses incurred by the dealers/distributors should be included in the assessable value of the appellant goods on the ground that the 50% sharing bo....

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.... (ii) Commissioner of Central Excise, Vs. Besta Cosmetics Ltd. - 2005(183) E.L.T. 122(S.C.) (iii) Hercules Hoists Ltd. Vs. Commissioner of C. Ex., Mumbai-III - 2016 (343) ELT 449 (Tri.Mum.) (iv) Amco Batteries Ltd. Vs. Commissioner of C. Ex., Bangalore (v) Hero Honda Motors Ltd. Vs. Commissioner of Central Excise, Delhi-III - 2015 (324) ELT 404 (Tri.-Del.) (vi) Luminous Electronics Pvt. Ltd. Vs. Commissioner of C. Ex., Delhi-II - 2016 (338) E.L.T.154 (Tri.-Del.) (vii) Mahindra & Mahindra Ltd. Vs. Collector of C. Ex 1998 (103) ELT - 606 (Tribunal) (viii) Maruti Suzuki India Ltd. Vs. Commissioner of C. Ex., Delhi/Bhopal - 2008 (232) ELT 566 (Tri.-Del.) (ix) Yamuna Motors India....

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....The relationship between the appellant and the dealers/distributors is on principal to principal basis, therefore only consideration received by the appellant alone will form the transaction value, no further addition should be made. This issue is no longer res integra as decided in the various judgments which are reproduced below: (a) Philips India Ltd. (supra) held that- "3. In  Union of India v. Mahindra and Mahindra Ltd. - 1989 (43) E.L.T. 611, the High Court at Bombay emphasised the relationship between the parties, being of buyer and seller on principal to principal basis. The court observed that the manufacturer and its distributor had a mutual interest in maximising the sale of the products. The provisions in ....

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....ts. There was no enforceable legal right with the assessee to insist on the advertisement under the agreement." (c) Hercules Hoists Ltd.(supra) held that- "4.1 As per the said definition, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, etc. Thus, if any amount is spent by AMA or dealer for advertisement or publicity, the same will form part of the transaction value. However, in the present case, we note that AMAs are not advertising the goods per se....