TaxTMI 
TaxTMI 
TaxTMI 
2008 (8) TMI 118
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.... network of dealers. (b) The appellant is carrying out main advertisements at the national level at their own expenses. The amount of expenses so incurred is included in the selling price of the finished goods and excise duty is paid on such price. (c) The appellant has written agreements with their dealers which envisage that the dealers shall at all times during the currency of the agreement make efforts to promote the product and its reputation within the allotted territory. (d) The appellant used to undertake advertisement of local importance and used to collect part of the expenses from their dealers. However, this was replaced by scheme known as Joint Advertisement and Sales Promotion Policy (JASP) by which the dealers were required/ encouraged to undertake the advertisements and a part of expenses was reimbursed by the appellant-company out of the budget allotted for JASP. (e) The appellant allocates a small portion of their overall advertisement budget for JASP. (f) The Department held that the incurring of expenses by the dealers under JASP is arising out of the dealer's agreement and the JASP policy; the dealer incurs the expenses under the terms of the agreement; t....
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....on of sale. (b) There is no compulsion on the part of the dealer to undertake the advertisements. He filed statistics to show that among the dealers who have done local advertisements, some dealers have incurred expenses as low as Rs. 16/- per vehicle and some as high as Rs.575/- per vehicle. Some of the dealers have not incurred any expenses. (c) The extent of reimbursement depends upon the actual expenses incurred by them. At the same time, if any of the dealer, incurs beyond certain maximum limit the reimbursement is limited; the entire expenses are not shared. (d) If the dealers do not undertake any advertisements, the agreements do not provide for or empower the manufacturer to undertake such advertisement directly and to recover any share of the cost of such advertisement from such defaulting dealer. In other words, there is no legally enforceable right for getting the advertisement done. (e) The amount earmarked under JASP is a small percentage varying from 2% to 6% out of the total advertisement expenses undertaken by M/s. Maruti Suzuki India Limited. 6.2 He also relied on the following decisions: (i) Philips India Ltd. v. CCE - 1997 (91) E.L.T. 540 (S.C.)....
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....he position in respect of other appellants. 8. We have carefully considered the submissions and perused the records particularly the dealers' agreement with M/s. Maruti Suzuki India Limited and JASP for different years. 9. A perusal of the various judgments relied upon, on behalf of appellants, leads as to the following conclusion on the points of law. The advertisement for any product manufactured may fall under Rule 3 broad categories. First category is the advertisement done by the manufacturer on their own and at their own expenses. Such advertisements make the product visible and known to the prospective buyers. Such advertisement not only benefits the manufacturer but also the dealers. As such advertisements make the job of selling relatively easier. There are also advertisements which may be done exclusively by the dealer in their area out of margins received by them. Even such advertisements benefit both the dealers and to some extent the manufacturer. The joint advertisements are, therefore, can be considered to benefit both the dealers and the manufacturer. Such joint advertisement arises out of legitimate business consideration; this arises out of the mutual interest i....
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..... Maruti Suzuki India Limited, as per the Ld DR. the same are done in pursuance of clauses 28, 29, 30 and 31 of the dealership agreement which are reproduced below: "28. PROMOTION: The Dealer shall at all times during the currency of this Agreement use its best endeavours to promote sales of the Products within the Territory and to secure and maintain the confidence of Customers in the products and to enhance the reputation of the company and the products. 29. ADVERTISING: The Dealer shall advertise and/or promote products. Parts and Service facilities in detailed manner as to secure adequate and effective publicity to the satisfaction of the company at its own expense. 29.1 The dealer shall not engage in any form of sales promotion or publicity or release any advertisement without the prior, written approval of the company. 29.2 UNDESIRABLE ADVERTISING: The dealer will not advertise or promote the Products or Services in such a way as may annoy cause injury to or detract from the company or the Products or Services or other Authorised Dealers. Should the Company consider that any advertisement announcement or other advertising or promotional material to be undesirable. The ....