By TIOL News Service

MUMBAI, OCT 13, 2015: THIS is a Revenue appeal.

The respondents are manufacturers of steel products and selling the same through various dealers. They were also getting “diaries and calendars” printed for the purpose of advertisement. The dealers were purchasing these diaries and calendars from the appellant and some amounts were being collected by the appellants from the dealers who purchased the goods.

Revenue is of the view that the amounts collected from the dealers is includable in Transaction value as the same are advertising costs.

The Commissioner(A) set aside the duty demand and, therefore, Revenue is before the CESTAT.

The AR submitted that the decision in Amco Batteries has been wrongly relied upon by the lower appellate authority inasmuch as in that case there was a dispute between dealers and manufacturers about advertisement expenses and there was a written contract between parties. However, in the instant case there was no such dispute and there was no such agreement between parties. Reliance is placed on the circular MF (DR) F. No. 354/81/2000-TRU dated 30.6.2000 which clarified that all amounts charged in relation to sale of goods will form part of assessable value.

The respondent assessee averred that the value of diaries and calendars can be added only if the purchase of such material is mandatory and not if it is voluntary; that only very few dealers bought the diaries and calendars.

The Bench adverted to the case law relied by the Commissioner(A) and inter alia observed -

"6. It is clear that what has been held is that unless purchase and distribution of such material by dealers is mandatory, the value of the same can not be added. Further more the transaction value will only contain the amounts collected in connection with sale of excisable goods. Every amount collected by the manufacturer from the buyer is not includible. Revenue has not been able to establish from fact that the amounts collected were in connection with sale of excisable goods. The respondents have clearly stated that the diaries and calendars are made and supplied at the request of dealers and it is not mandatory since only few dealers are buying these things. In view of above the revenue appeal is dismissed…."

(See 2015-TIOL-2183-CESTAT-MUM)