Page 273 - ELT_15th July 2020_Vol 373_Part 2

2020 ] INDO RUBBER AND PLASTIC WORKS v. COMMISSIONER OF CUSTOMS, NEW DELHI 255

ignoring the expenditure incurred for promotion of ‘Vicky’ brand has also vitiat-
ed the impugned order. Further, under the facts and circumstances, invocation of
extended period of limitation is not available, as no case of suppression of facts,
etc. is made out.
14. It is further urged that under the facts and circumstances, penalty is
not attracted under the provisions of Section 114A, hence penalty imposed be set
aside. Accordingly, Learned Counsel prays for allowing their appeal with conse-
quential benefits.
15. Opposing the appeal, Learned Authorised Representative for Reve-
nue urges that any sponsorship/promotion/endorsement charges incurred by
appellant-importer on behalf of the supplier, is includible in the assessable value
of the imported goods, as provided in 1st proviso to Section 14(1) of Customs
Act. The said proviso prescribes that any amount paid or payable for cost and
services, on behalf of the seller, is addable to the transaction value, to the extent
in the manner specified in the Rules made in this behalf. The only requirement
for addition in the import value, under Rule 10(1)(e) is that obligation to incur
expense by the buyer or any amount paid by the buyer to a third party to satisfy
obligation of the seller should be a condition of sale between the seller and buyer.
All such ingredients are available in the instant case. It is further contented that
the argument of the appellant that their transaction value is higher than that of
other importers in respect of import of same/like goods and hence their transac-
tion value is at arm’s length and does not attract the charge of undervaluation is
not tenable. Further, the contention of the parties, being not related, both the con-
tentions are misplaced because in the impugned order, addition of sponsor-
ship/promotional expenses have been ordered to be added to the transaction
value under Rule 10(1)(e) of the CV Rules, and there is no rejection/acceptance of
transaction value. Further, the contention of appellant that such expenses are in
the nature of post-importation activity does not hold good in view of Article 7 of
the Distribution Agreement. Further, promotion contract dated 12-9-2012 and
national players sponsorship agreement dated 1-2-2014, have been entered into
between the supplier of goods and the sports association/player, and hence
serve interest of the supplier. Further, the said agreement are signed by the rep-
resentative of the appellant and also the expenses have been borne by the appel-
lant. Further, in the promoters contract M/s. Sunlight and ‘Li Ning’ are referred
as promoters in Agreement with Karnataka Badminton Association. Further, in
the said agreement the appellant is obliged to supply free products to KBA, but
such expenses for goods are admittedly incurred by the appellant. Similarly, in
the ‘national players sponsorship agreement’ is a tri-partite agreement between
the supplier and Ms. P.V. Sindhu and Sporty Media. Not only this agreement is
signed by the appellant’s Manager, but the products, cash, equipment sponsor-
ship, tournament bonus, is borne by the appellant. This is contrary to para 4 of
the agreement wherein M/s. Sunlight Sports is supposed to provide and make
available the sponsorship benefits and make payments. Thus, it is established
that pre-condition for addition of the promotion expenses in dispute, to the as-
sessable value under Rule 10(1)(e) of CV Rules, are available in the instant case. It
is further urged that mutuality of interest is not a criteria for non-clubbing of
such expenditure. Further, reliance is placed on the ruling of this Tribunal in Ree-
bok India Company v. Commissioner of Customs, Patparganj - 2018-TIOL-561-
CESTAT-DEL = 2018 (364) E.L.T. 581 (Tribunal) wherein Coordinate Bench of
this Tribunal under the fact that Reebok India was importing from ‘Reebok

EXCISE LAW TIMES  15th July 2020  273