TMI Blog2014 (10) TMI 764X X X X Extracts X X X X X X X X Extracts X X X X ..... dvertising or Publicity, Marketing and Selling Organization Expenses, which are covered within the definition of ‘transaction value’ as provided under Section 4(3)(d) of CEA, 1944. Invocation of extended period of limitation - The ‘handling charges’ certainly seems to have been informally fixed by the appellants as the appellant during the course of investigation admitted that the dealers do not have any association by the name of Maruti Dealers Association which means that the dealers did not have a common platform, where they could have fixed the handling charges with consensus. The appellants suppressed this fact from the department that the dealers are charging price over and above the ex-showroom price from the ultimate customers of the vehicles. Thus, Prima facie, the provisions for extended period of limitation have rightly been invoked when discount is compensated through handling charges collected by the dealers indirectly benefiting the appellant to under value the excisable goods while delivering to their dealers. prima facie view that the adjudication has force and pre-deposit is required to be directed in this case to protect interest of Revenue - stay granted partl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers through whom these schemes could be availed. These advertisements also bear the footnote stating, All offers brought to you by Maruti Suzuki Dealers. 2.3 In terms of Article -IV (Purchase of Products), Clause 22 of the Dealership Agreement the dealer margin is a consideration, which a dealer may charge from a customer for providing sale services while selling a product to him. The said amount may vary from model to model and shall not exceed the amunt notified by the appellant in respect of its various models from time to time. 2.4 The promotional schemes were designed, formulated and launched entirely by the appellant with the help of their regional offices and the role of the dealers in formulation of the schemes was nil or minimal. 3. Various promotional schemes by which the discounts were offered were as under:- (i) Corporate/institutional discount There are two types of corporate / institutional discount:- (a) Discount on Marutis invoice Some big corporate / institution who book bulk order and they negotiate with the noticee and they provide corporate / institutional discount to these customers. Normally, this discount is passed on to dealers throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n value as provided under Section 4 of Central Excise Act, 1944. 5.1 The appellant contended that the question of deducting discounts from the assessable value has long been decided by the Hon ble Apex Court in the case of Union of India and others vs. Bombay Tyres International Ltd.- 1984 (17) ELT 329 (SC), wherein it was held that for the purpose of valuation, discounts, by whatever name called would be deductible from the assessable value. The appellants also relied on the decision of the Hon ble Supreme Court in the case of Philips India Ltd. vs. Collector of Central Excise, Pune, 1997 (91) ELT 540, wherein the Hon ble Court observed that expenses such as advertisement and after sales service incurred by the dealer not only benefited the manufacturer, there also benefited the dealer inasmuch as the dealer was able to sell more and earn larger profit and accordingly the expenses so incurred by the dealer were not includible in the value of the goods. 5.2 The appellant further contended that since no extra consideration had flowed from the dealers to them and in any case the incidence of discount borne by the dealers had been passed on to the customers by way of discount, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1944 has been gone through. Definition reads as below:- (d) transaction value means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter; but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods. 8.3 The definition of the expression transaction value uses the expression any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including.......servicing, warranty, commission or any other matter,...... 8.4 From the expression above, the transaction value does not merely includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paying the discounts out of their margins. Revenues prima facie, case is that had the dealers not borne their share of discounts, the same would have been borne by the appellants, which would have reduced appellant s revenue. Thus the discounts borne by the dealers were indirect inflow of consideration for the appellants. In the adjudication order, this inflow has been elaborated in paragraph number 136. 8.8 All Maruti dealers were governed by the agreement between them and the appellant. One of the conditions of the agreement requires the dealers to follow whatever promotional schemes were devised by the appellants. Further, prima facie, it comes out from facts that dealers have not borne the discounts on their own accord. The dealership agreement is a legally enforceable agreement. During the personal hearing before the adjudicating authority the appellant admitted that the dealers were charging over and above the Ex-showroom price, which was not objected to by the appellant at any point of time. Dealers were recovering extra amount from ultimate buyers in the guise of handling charges. 8.9 Further, appellants contention that the dealers bear the discount on their own a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.12 In Maruti Suzuki India Ltd. vs CCE, Delhi-III, reported as 2010 (257) ELT (Tri.-LB), the Dealers of the appellant were required to carry out inspection of vehicles purchased from the appellants before delivery to the customers and provide three free services after delivery of the vehicles to the customers within the warranty period in terms of the Dealership Agreement. The Dealers while selling the vehicles to the customers after their purchase from the appellants was adding their own margin, which is known as Dealer s margin, the price at which the goods were sold by the appellants to them. The difference between the sale price and the amount paid to the appellants by the dealers i.e. Dealers Margin, contained provisions of rendering PDI and three After Sale Services. Thus a part of Dealers Margin was intended to cover the cost of PDI and After Sale Service charges whose benefit ultimately accrued to M/s Maruti Suzuki. 8.13 The Principal Bench (Larger Bench) of the Tribunal discussed in details about the Pre-delivery inspection Charges (PDI) and After Sales Service Charges ; and decided the issue in favour of revenue. In paras 15 18 of the said judgment, the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been informally fixed by the appellants as the appellant during the course of investigation admitted that the dealers do not have any association by the name of Maruti Dealers Association which means that the dealers did not have a common platform, where they could have fixed the handling charges with consensus. The appellants suppressed this fact from the department that the dealers are charging price over and above the ex-showroom price from the ultimate customers of the vehicles. Thus, Prima facie, the provisions for extended period of limitation have rightly been invoked when discount is compensated through handling charges collected by the dealers indirectly benefiting the appellant to under value the excisable goods while delivering to their dealers. 29. In view of above, we are of the prima facie view that the adjudication has force and pre-deposit is required to be directed in this case to protect interest of Revenue. It is therefore, ordered that an amount of ₹ 150 crores (Rupees one hundred fifty crores) be deposited by the appellant within 8 weeks (eight weeks) of pronouncement of this order and compliance to be made on 31.12.2014. 30. Subject to above p ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
