Page 272 - ELT_15th July 2020_Vol 373_Part 2

254 EXCISE LAW TIMES [ Vol. 373
agreement explicitly provides that the post-import cost (for publicity at discre-
tion of appellant) whatsoever, shall be borne by the appellant. Such costs are at
the discretion of the appellant importer with further stipulation that the expendi-
ture made is in consultation with M/s. Sunlight Sports. Further, Article 7 of the
agreement provides that for any advertisement or sales promotion campaign at
the instance of M/s. Sunlight Sports, such costs shall be borne by M/s. Sunlight
Sports as per the pre-sanction budget. The appellant is only obliged to maintain
proper vouchers for expenses, if any, made on behalf of M/s. Sunlight Sports.
13. It is further urged that agreement with Sports Association, promi-
nent players etc. have been entered into by M/s. Sunlight Sports. M/s. Sunlight
Sports is a global brand with contacts in the sports management industry. M/s.
Sunlight Sports being a global brand is better placed to negotiate with prominent
players for sales promotion. Under the arrangement the appellant have paid the
sponsorship amount to the sports association/players by virtue of Articles 4 and
7 of the Agreement. The Agreement with players or association has to be inter-
preted in conjunction with the ‘Distribution Agreement’. A combined reading of
the Distribution Agreement with the players/association reveals that it is the
appellant, who is liable to pay the amount/provide goods to the play-
er/association. Accordingly, the Manager of the appellant has signed on the
agreement. Thus, the payment made to sports association and sportsman are by
the appellant and not on behalf of M/s. Sunlight Sports. Further, stipulation
mentioned in the agreement with the players, that they shall always use ‘Li Ning’
brand sports goods and wear, wherever they play in any part of the world, is to
safeguard the business interest of the appellant as well as conflict with other
brand owners. Further, the transaction between appellant and M/s. Sunlight
Sports does not attract Rule 10(1)(e) of CV Rules, as there is no pre-condition im-
posed on the appellant to incur any particular percentage or amount towards
sales promotion/advertisement. Thus, in the absence of the condition precedent -
payment actually made or to be made as a condition of sale of the imported
goods, being absent, no loading or enhancement of the assessable value is called
for. Further, in the facts and circumstances, there is no payment from the buyer-
appellant to seller or to third party to satisfy any obligation of the seller-M/s.
Sunlight Sports. Thus, in the facts and circumstances, the payment or expendi-
ture not being contingent to import transaction, does not call for addition to the
value of the goods. Further, reliance is placed on the ruling of the Hon’ble Su-
preme Court in Toyota Kirloskar Motor Pvt. Limited - 2007 (213) E.L.T. 4 (S.C.)
where it was held that fee paid for technical assistance having direct nexus with
post-importation activities and not to the import itself, are not to be included in
the transaction value since such fee are not paid as condition of sale. Appellant
also relied on the ruling of this Tribunal in Richemont India Pvt. Ltd. v. Commis-
sioner of Customs, New Delhi - 2016 (343) E.L.T. 209 (Tri.-Del.) where the facts that
Richemont was importing watches for distribution from foreign exporter located
in Dubai. The agreement included obligation to incur marketing expenses in the
territory of India. It was Revenues case that such marketing activities was a con-
dition of sale and hence such cost should be added to the value of the imported
goods. This Tribunal held in favour of the assessee recording the finding that the
distribution agreement does not specify any amount, which was required to be
so spent. Further, approval is to be obtained for incurring expenses, cannot be
read - to mean that the exporter had the right to dictate as to how much amount
the appellant was required to spend. Further, observed that such expenditure
was mutually beneficial to both the seller and importer. It is further urged that

EXCISE LAW TIMES  15th July 2020  272