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2018 (9) TMI 307 - CESTAT CHENNAIValuation - inclusion of price of warranty services in assessable value - contract entered into between the appellant and State Bank of India and their associates - Banks were required to make payment for warranty services half-yearly in arrears, the price of which was not included in the price of the ATM and was required to be paid separately by the banks - Held that:- While the transaction value would bring within its scope not the price actually paid but that which is actually payable. Amongst the other ingredients, charges towards warranty in connection with the sale, whether payable at the time of the sale or at any other time, etc., will form part of the transaction value. Only then will the transaction value become the assessable value for levy of Central Excise Duty. What comes to the fore is that the price of warranty services is not included in the price of the products and is payable separately by the bank as per agreed rates. Not only that, after expiry of warranty period of two years, the second line maintenance charges will also kick in. Discernibly, without agreement on payment of warranty charges for two years and second line maintenance charges after expiry of that period for another three years, the ATM machine is not sold. Evidently, the agreement to pay these warranty charges and their actual payment is nothing but a condition precedent to the same. It is mandatory for the buyers of the ATMs to also accept the warranty agreement referred to above and pay warranty charges for the first two years and second line maintenance charges for the next three. Although the amounts become payable only later, in our view, this would still come within the scope of the definition of the type of warranty charges that would be required to be incorporated into “transaction value” for the purposes of Section 4(3)(d) of the Act. Time Limitation - Penalty u/s 11AC - Held that:- The ingredients of attracting invocation of extended period, in particular suppression, are very much present in this case and hence, not only will the extended period of limitation provided under the Central Excise Act be applicable but also equal penalty under Section 11AC imposable. However, the penalty of ₹ 10,000/- imposed under Rule 25 of the Central Excise Rules, 2002 is unjustified and therefore, set aside. Appeal allowed in part.
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