The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, has allowed the appeal filed by Triumph Motorcycles (India) Pvt. Ltd., setting aside a customs demand of ₹21.85 crore, along with interest and penalty, which had been imposed by the Directorate of Revenue Intelligence (DRI).
The bench of Justice Dilip Gupta (President) and Hemambika R. Priya (Technical Member) that neither Advertisement and Promotional Expenses (APE) nor Management Service Fees (MSF) paid by the Indian subsidiary could be added to the transaction value of imported motorcycles and parts under Rule 10(1)(e) of the Customs Valuation Rules, 2007.
The appellant/assessee, Triumph Motorcycles India imports motorcycles, accessories, and branded merchandise from its related group entities in the UK and Thailand. The company had entered into a Distributor Agreement, requiring it to promote Triumph products in India, and a Management Services Agreement, under which Triumph UK provided business support services for which Triumph India paid MSF.
Following an investigation, the DRI concluded that the Management Service Fees, and the Advertisement & Promotion Expenses were incurred as a condition of sale of imported goods and were therefore required to be included in the customs valuation. The DRI demanded ₹21.85 crore as differential duty, along with interest and penalty, also declaring the goods liable for confiscation.
The Tribunal categorically rejected DRI’s reasoning and held advertisement expenses are not a condition of sale
CESTAT noted that Triumph India incurred promotional expenses on its own account to develop its market. It did not do so to fulfil any legal obligation owed to the foreign exporter.
“Even though the agreement required the distributor to promote the brand, promotional activities carried out on one’s own account cannot be added to the import value,” the Tribunal observed.
Management Fees Were for Independent Business Services
The Management Services Agreement covered back-office and managerial support like finance, HR, IT, and warranty coordination.
The Tribunal noted these services had no nexus with import of goods, and payments were taxed under service tax/GST.
“These services are independent of import activity and cannot be added to transaction value,” the order stated.
No Basis to Invoke Extended Limitation or Impose Penalty
Since the payments were declared in tax records and the Special Valuation Branch had earlier accepted pricing, the Tribunal held there was no suppression of facts.
The CESTAT quashed Rs. 21.85 crore differential duty demand, interest under Section 28AA is cancelled, penalty under Section 114A is struck down and no addition required to customs value for APE and MSF.
Case Details
Case Title: M/s. Triumph Motorcycles (India) Versus Addl. Director General (Adjudication)
Case No.: Customs Appeal No. 50212 Of 2021
Date: 29.10.2025
Counsel For Appellant: Rohan Shah, Senior Advocate
Counsel For Respondent: Mihir Ranjan, Special Counsel
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