TaxTMI 
TaxTMI 
2026 (1) TMI 402
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.... on sales promotion and advertisement of the goods imported by the appellant, but the expenditure was not included in the assessable value of the imported goods. 3. A show cause notice dated August 17, 2016 was issued to the appellant by the Directorate of Revenue Intelligence alleging that the amount incurred by the appellant towards advertisement and sales promotion of the imported goods should be included in the assessable value in terms of rule 10(1)(e) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 [the 2007 Valuation Rules]. To support this contention, the show cause notice placed reliance upon the statement made by the Managing Director of the appellant under section 108 of the Customs Act, 1962 [the Customs Act] wherein he stated that though initially they were under an impression that the expenditure incurred after the import was not required to be included in the transaction value, but later on, after seeking instructions they believed that it was to be added and that is why they deposited part differential duty during investigation. 4. The Additional Commissioner, by order dated August 10, 2018, confirmed the demand proposed in the ....
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....at : (i) The statement made by the Managing Director under section 108 of the Customs Act cannot be considered as relevant in the absence of the procedure contemplated under section 138B of the Customs Act having been followed; and (ii) The expenses incurred by the appellant towards the marketing and promotion of the imported goods are not covered under rule 10(1)(e) of the 2007 Valuation Rules. In support of this contention, learned counsel placed reliance upon the decision of the Tribunal in Commissioner of Customs, Patparganj, Delhi vs Adidas India Marketing Pvt. Ltd.- 2020 (374) ELT 394 (Tri.-Del) 7. Shri M.K. Shukla, learned authorized representative appearing for the department, however, supported the impugned order and submitted that the appellant did not add the expenses incurred towards advertisement and marketing which was required to be added in the assessable value and, therefore, the Commissioner (Appeals) was justified in confirming the demand under rule 10(1)(e) of the 2007 Valuation Rules. In support of this contention, learned authorized representative placed reliance on the decision of the Tribunal in Giorgio Armani India (P) Ltd.....
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....ub-section (1) of these two sections makes it evident that the statement recorded before the concerned Officer during the course of any inquiry or proceeding shall be relevant for the purpose of proving the truth of the facts which it contains only when the person who made the statement is examined as a witness before the Court and such Court is of the opinion that having regard to the circumstances of the case, the statement should be admitted in evidence, in the interests of justice, except where the person who tendered the statement is dead or cannot be found. In view of the provisions of sub-section (2) of section 9D of the Central Excise Act or sub-section (2) of section 138B of the Customs Act, the provisions of sub-section (1) of these two Acts shall apply to any proceedings under the Central Excise Act or the Customs Act as they apply in relation to proceedings before a Court. What, therefore, follows is that a person who makes a statement during the course of an inquiry has to be first examined as a witness before the adjudicating authority and thereafter the adjudicating authority has to form an opinion whether having regard to the circumstances of the case the statement ....
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....or of the appellant under section 108 of the Customs Act could not have been relied upon in view of the aforesaid decision of the Tribunal in Surya Wires. 13. This apart, instead of considering the submissions made by the appellant, the Commissioner (Appeals) noted that these submissions were considered by the adjudicating authority and the appellant could not make out any case in its favour. 14. Even the cases referred to by the appellant have not been considered and a general statement has been made that they are confined to the facts of the case. 15. This issue relating to addition of the amount incurred by the appellant towards advertisement and sales promotion to the assessable value was examined at length by a Division Bench of the Tribunal in Adidas India. After examining the provisions of rule 10(1)(e) of the 2007 Valuation Rules and Note to rule 3 contained in the Schedule, the Tribunal held : "17. Section 14(1) of the Customs Act provides that the value of the imported goods and export goods shall be the transaction value of such goods, which would be price actually paid or payable for the said goods, where the buyer and the seller of the goods are not r....
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.... (a) such payments actually made or to be made as a condition of sale of the imported goods by the buyer to the seller to satisfy an obligation of the seller; Or (b) such payment actually made or to be made as a condition of sale of the imported goods by the buyer to a third party to satisfy an obligation of the seller. 20. What also needs to be noticed is that in both the aforesaid two situations there are two requirements. The first requirement is that the payment should be made as a condition of sale and the second requirement is that they should be made to satisfy an obligation of the seller which can be towards the buyer as contemplated in (a) or towards a third party as contemplated in (b). Both the aforesaid twin requirements have to be satisfied before any payment made by the buyer to the seller or the buyer to a third party can be added to the price actually paid by the buyer to the seller for determining the transaction value. In other words, whenever such a payment is made either by the buyer to the seller or the buyer to a third party, the payment should necessarily be made as a condition of sale of the imported goods to satisfy an obligatio....