Page 274 - ELT_15th July 2020_Vol 373_Part 2

256 EXCISE LAW TIMES [ Vol. 373

brand goods’ from RIL, England under Agreement for sale. The agreement pro-
vided that Reebok India was required to incur the expenditure on promotion,
equal to 6 per cent. of total invoice value and further under the facts that the par-
ties were related to each other. This Tribunal held that such sale transactions at-
tract provision under Rule 10(1)(e), as under the distribution Agreement - Ree-
bok India was to necessarily spend 6 per cent. of the invoice value on advertise-
ment and promotion, and further the seller was controlling every aspect of such
promotion and further Reebok India was obliged to provide the details of such
expenditure incurred periodically to RIL, England.
16. Having considered the rival contentions, we find that in the facts
and circumstances of the present case there is nothing in the agreement that a
fixed amount or fixed percentage of the invoice value of the imported goods, is
obliged to be spent by the appellant as a condition of sale/import. As per the
stipulation in the agreement, the appellant is obliged to or responsible for sales
and distribution in its territory of distribution and further to make such expendi-
ture in consultation with the seller, does not attract the provisions of Rule
10(1)(e) of CV Rules. The said Rule 10(1)(e) provides for addition of all other
payments actually made or to be made as a condition of sale of the imported
goods, by the buyer to the seller or by the buyer to a third party to satisfy and
obligation of the seller, to the extent that such payments are not included in the
price actually paid (transaction value). We find that there is total absence of the
prescribed condition precedent as the appellant is not obliged to incur any par-
ticular amount or percentage of invoice value towards sales promo-
tion/advertisement. Further, we find that the activity of advertisement and sales
promotion is a post-import activity incurred by the appellant on its own account
and not for discharge for any obligation of the seller under the terms of sale. The
ruling of this Tribunal in the case of Reebok India Company (supra) is not applica-
ble, as the facts in the present case are totally different and unlike Reebok India
Company, nowhere provides for any fixed expenditure towards sales and pro-
motion as a pre-condition of sale. Further, in the instant case, the parties are not
related to each other. Further, the appellant importer is not obliged to give any
account of expenditure incurred by it to M/s. Sunlight Sports, incurred by them,
unless such expenditure is incurred at the instance of M/s. Sunlight Sports under
stipulation of reimbursement. Further, we find that the interpretative note to
Rule 3(b) provides, that activity undertaken by the buyer on its own account,
even though by agreement, are not considered as direct payment, even though
they might be regarded as benefit to the seller also. Further, in the facts of the
present case, appellant has not paid any amount on behalf of M/s. Sunlight
Sports - seller. Further, the impugned order is also vitiated due to mistake of fact,
as noticed hereinabove.
17. Accordingly, we allow this appeal and set aside the impugned or-
der. The appellant shall be entitled to consequential benefits, including refund of
amount deposited during investigation. We further make it clear that such
amount deposited during investigation have taken the character of pre-deposit
ipso facto under Section 129E of the Customs Act. The appellant shall be entitled
to interest as per Rules on the refund amount, as found payable to them. Misc.
Application for E. Hearing, is also disposed.
(Pronounced on 13-2-2020)
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EXCISE LAW TIMES  15th July 2020  274