Post-Import Advertising Expenses not includible in assessable value for custom duty determination

Reliance Brands Luxury Fashion Private Ltd. Vs Principal Commissioner of Customs (CESTAT Delhi)

The case of Reliance Brands Luxury Fashion Private Ltd. vs. Principal Commissioner of Customs (CESTAT Delhi) revolves around the determination of the assessable value of imported goods for customs purposes. Here’s a detailed summary of the key points discussed in the case:

1. Agreements with Foreign Suppliers: The appellant (Reliance Brands Luxury Fashion Private Ltd.) had entered into agreements with foreign suppliers, granting them the right to import products for distribution and sale in India. However, the agreements required the appellant to incur expenses for advertising, marketing, and promotion of the products. The appellant was also obligated to use its best efforts to promote and develop the distribution and sale of the products.
2. Legal Obligation to Incur Expenses: The court emphasized that for advertisement expenditure to be added to the sale price for determining the assessable value, there must be an enforceable legal right to insist on incurring such expenses. Merely having a clause in the agreement requiring the appellant to promote sales does not impose a legal obligation to incur specific levels of advertising expenses.

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