Advertising, Marketing, and promotion (‘AMP’) expenses incurred by Importer not required to be added in the value of imported goods; Appeal dismissed by SC
Case Details: Commissioner of Customs v. Indo Rubber and Plastic Works
The appellant was engaged in importing and distributing of ‘Li Ning’ brand of sports goods. There was nothing in agreement as a pre-condition of sale/import that a fixed amount or fixed percentage of the invoice value of imported goods was to be spent by the appellant on marketing, advertising, sponsorship and promotional expenses/payments. The department contended that Advertising, Marketing and promotion (‘AMP’) expenses incurred by the appellant were required to add in the value of imported goods.
However, the Tribunal held that mere making of marketing, advertising; sponsorship and promotional expenses/payments by the appellant in consultation with the Singapore seller did not attract provisions of Rule 10(1) (e). Moreover, the activity of marketing, advertising, sponsorship and sales promotion was a post-import activity and expenses/payments were incurred by the appellant on its own account and not for discharge of any obligation of the seller under terms of sale and the appellant had not paid any amount on behalf of the seller. Therefore, it was held that such expenses/payments made by the appellant to promote ‘Li Ning’ brand was not a condition of sale and, hence, same were not liable to be included in the value of imported goods in terms of Rule 10(1)(e).
The department challenged the order. The Apex Court observed that there was no merit in the appeal and accordingly, dismissed the appeal.
