ORDER
U.L. Bhat, J. (President)
1. Appellant, engaged in the manufacture of Two-wheelers, has wide a net-work of wholesale dealers. On the basis of price list provisionally approved appellant was clearing the goods on payment of duty. Subsequently, the department came to know that some extra amount was being collected by appellant from the dealers as advertisement and publicity charges. On being called upon to furnish particulars, the same were furnished. Thereafter, notice was issued to appellant to show cause why this extra amount should not be treated as part of the assessable value and differential duty should not be demanded. Appellant resisted the notice. How-,ever, the Assistant Collector confirmed the demand. Collector (Appeals) having confirmed the order of the Assistant Collector, the present appeal has been filed.
2. It appears appellant was conducting advertisement campaign in newspapers for the Hero Honda Motor Cycles and by an arrangement with the wholesale dealers printing the names and addresses of wholesale dealers also and collecting proportionate charges form the wholesale dealers. The same position obtained in regard to posters, cinema slides and other media of advertisement. Appellant was receiving security deposits from the wholesale dealers and the contribution of the wholesale dealers for the advertisement campaign was being adjusted. According to the show cause Rs. 12,50,000/- or so was thus collected from the wholesale dealers. Both the lower authorities held that the advertisement campaign contributed to the marketability of the product and therefore, the charges collected were to be added to the assessable value.
3. Advertisement no doubt contributes or enhances the marketability of the product. Where the dealer is not in the picture and the advertisement campaign is conducted by the manufacturer, that can certainly be regarded as contribution wholly or exclusively to the marketability of the product but where there is a dealer in the picture and the advertisement helps the dealer part from helping the product of the manufacturer the matter has to be looked at from a slightly different angle. Our attention has been inivited to a decision of the Tribunal in Racold Appliances v. COCE 1994 (69) E.L.T. 312. Under an agreement between the manufacturer and the dealers, the dealers were to spend upto 2% of the total purchases for advertisement and 1.5% was to be returned by the dealers to manufacturer and the dealers were to bear 0.5%. The department took the stand that this amount of 0.5% should be added to the assessable value. The Tribunal did not accept this view as correct. The advertisement through newspaper media, cinema slides and the like was basically for the manufacturer and the finished product. The names of the dealers were to be furnished in these materials. This would certainly go to enhance the goodwill of the dealers. It is not unknown for dealers to advertise their business activities so as to attract more customers and to enhance their business. When they do so and in the absence of anything else on record, it cannot be said that the cost of such advertisement which also in a way enhances the marketability of the product should be added to the assessable value.
4. For the reasons indicated above, we set aside the impugned order and allow the appeal.