TaxTMI 
TaxTMI 
2008 (4) TMI 194
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....lership agreement, each dealer of the assessee is required, inter alia, to maintain showrooms for the vehicles, keep up-to-date accounts relating to sale of vehicles and carryout the instructions issued by the assessee periodically. During the material period, dealers of the assessee incurred above Rs. 96 crores on various sales promotion activities. The assessee reimbursed this amount less an amount of Rs. 21,08,51,057/- by issuing credit notes to the dealers. The assessee carried out similar activities, incurred above Rs. 25 crores and issued debit notes for an amount of Rs. 10,10,15,565/- to the dealers. This amount included an amount of Rs. 1,35,20,000/- incurred on survey on 'customer satisfaction index at dealership' conducted by M/s. JD Power Asia Pacific Inc. The dealers had thus shared with the assessee the expenditure incurred on various schemes intended to promote sales of the assessee's product. These schemes included exchange mela, road tax, gift scheme, scratch card scheme, free insurance scheme, discount, subvention scheme, finance scheme etc. The Commissioner demanded duty on dealers' share of the expenditure on the above schemes, finding that vide Circular No. M.F.....
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....s brought into force. The salient and historic reading of the case law in Supreme Court's judgment in A.K. Roy and Another v. Voltas Ltd. reported in 1977 (1) E.L.T. (J177) (S.C.), the Atic Industries Ltd. v. HH Dave, AC reported in 1978 (2) E.L.T. (J444) (S.C.) and the UOI v. Bombay Tyres International Ltd., reported in 1983 (14) E.L.T. 1896 was recalled. He explained how the value for assessment of excisable goods used to be misconstrued as comprising only manufacturing cost and manufacturing profit for a long time following the judgment in the Voltas case till the ratio was correctly interpreted by the Apex Court in its judgment in the Bombay Tyres International Ltd. case. According to the ld. Counsel, the Apex Court had clarified in the above judgment as to what were all the elements that would constitute the assessable value for the purpose of Section 4 and did not qualify for deduction from the sale price of the manufacturer. He stated recounted the items the Apex Court had identified as not deductible from price such as storage expenses, interest on inventory, marketing and selling organization expenses and advertisement expenses. He submitted that the Section 4 enacted effe....
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....e Tribunal had consistently held such a view. As the valuation provisions had not undergone any basic change by introduction of the concept of transaction value, the above reading of the law by the Tribunal applied to the subject transactions as well. He also referred to the judgment of the Apex Court in Mahindra & Mahindra [1998 (103) E.L.T 606 (Tri.)] and Phillips India [1997 (91) E.L.T.540}. In Mahindra & Mahindra case (supra), the Tribunal had held that no part of the cost incurred by dealers and no part of dealer's margin covering such cost is liable to be added to assessable value where the manufacturer shares the cost. This decision was affirmed by the Apex Court. In the Phillips India case (supra), the Apex Court reversed the Revenue's decision to disallow the discount of 2% of the price for the reason that the dealers were allowed the same in consideration of the expenditure incurred by them on advertisements. The Apex Court had observed that the terms and conditions between the manufacturers and the dealers were as between principal and principal and denying abatement of discount on account of the advertisement which the dealer had made at its own cost and benefited the a....
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....nt. In the new valuation provisions effective from 1-7-2000 expenditure incurred on behalf of the assessee by the buyer in connection with the sale of excisable goods is addable in the assessable value. The issue to be decided is whether the impugned expenses were incurred by the dealers on behalf of the assessee. 10.1 The dealers had incurred expenditure on sales promotion on their own freewill to promote their interest without an agreement with the manufacturer compelling them to undertake sales promotion measures. Hence the said expenditure is not includible in the assessable value. 10.2 In the case of CCE v. Bajaj Tempo Ltd. [2005 (180) E.L.T. 289 (S.C.)], the Apex Court observed in Phillips India and Mahindra and Mahindra cases, the Court had found if similar expenses as impugned had been incurred by the assessee, on his own account, or, by the dealer, on his own account. In the absence of such a finding in the case impugned before it, the Court remanded the matter for making such a finding. We find that the Commissioner incorrectly observed that the decision of the Apex Court in Phillips India case had not attained finality. 10.3 The Commissioner found that the deale....
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....x Court had held that in the absence of an enforceable legal right with the assessee to insist on the advertisement under the agreement, the expenditure for the advertisement incurred by the customer was not liable to be included in the assessable value of the assessee's products. In the case of Mahindra & Mahindra v. CCE, Bombay [1998 (103) E.L.T. 606 (Tri.)] this Tribunal held that advertisement cost incurred by dealers reimbursed by manufacturer to the extent of 50% covering such advertisement cost is not includible in the assessable value of the vehicles manufactured by the appellants. 11. Disposing a similar appeal in the case of Toyota Kirloskar Motors Ltd. v. CCE, Bangalore [2007 (217) E.L.T. 104 (Tri.- Chen.)], we had held as follows: 6. We have carefully considered the rival contentions. We find that, the assessable value of the manufactured goods is the total consideration the manufacturer receives from the buyer in an arms length transaction, for delivery of the goods at the factory gate. This basic concept of central excise levy has remained unchanged even after the measure of levy has shifted from a deemed normal price to the transaction value………………....