TMI Blog2010 (8) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... inspection and after-sale-service by dealers from buyers of the cars are to be included in the assessable value of cars in the light of the definition of "transaction value" given in Section 4(3) (d) of the Central Excise Act, 1944?" 2. The above issue has arisen for consideration on account of the order passed by the Commissioner, Delhi on 30th April, 2008, whereby the charges towards pre-delivery inspection and free services for the period May 2005 to August 2007 are ordered to be included in the assessable value and the excise duty has been demanded on such assessable value from the appellants, while it was the claim of the appellant to the contrary contending that the issue had been settled by the Tribunal's order in appellants' own case decided on 16th April, 2004, and reported in 2004 (170) ELT 245. 3. It is the case of the appellants that the definition of the expression "transaction value" contained in the statutory provision existing prior to amendment makes no difference to the legal provision subsequent to 1st July, 2002 and considering the decision in appellant's own case reported in 2004 (170) ELT, that in Bombay Tyre International case reported in 1983 (14) ELT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he services to be rendered by the dealers which revealed provision for after sale service, the consideration for which was sought to be absorbed in the dealers margin but was decided and revised by the appellants, apart from their overall supervision over the sale activity of their cars made available to the dealers for the said purpose. It was the case of the department that while selling the vehicles to the customers after they are made available to the dealers, the dealers add their own margin known as the dealer's margin to the price at which the vehicles were made available to them by the appellants and the difference between sale price at which the vehicles are sold to the customers and the original amount paid by the dealers to the appellants, i.e. dealer's margin contained provision for rendering pre-delivery inspection and three after sale services. Taking into consideration the concept of "transaction value" under new Section 4 of the said Act, w.e.f. 1st July, 2000, which provided that whatever is recovered from the buyer by reason of or in connection with sale, whether payable at time of sale or any other time, directly or indirectly, to the manufacturer or paid on beha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the amount charged as price", under the definition of "transaction value" is 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 of the goods". In appellants case the ex-factory invoice price was the only amount which the buyer was liable to pay either to the manufacturer or on his behalf in connection with the sale of the goods. It was, therefore, contended that the distinction made in the impugned order between the replaced Section 4 and new Section 4 was contrary to the words of the new section themselves. The PDI and service charges remained included in the commission of the dealer and commission payable to him by the buyer were not payable to the manufacturer, and therefore, the collection of commission and rendering of services were entirely outside the scope of the sale of the automobiles by the manufacturer to the dealers. What is required to be included in the assessable value under the new Section is the value, including the cost incurred in relation to the manufacture and not the cost incurred on remuneration received by the dealer. The circular dated 1.7.2002 issued by the Board was not in conformity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of "money value of any additional consideration flowing directly or indirectly from the buyer to the assessee" should be added to the transaction value to find out the aggregate value of the goods. Again, additional consideration should be flowing "directly or indirectly from the buyer to the assessee". Thus, the definition and Rule 6 will have no application to considerations not flowing to the assessee. In the present case, admittedly, nothing flows to the assessee, MUL from the consideration towards PDI and after sale service. For that reason, cost of these charges cannot form part of the assessable value of the automobiles in question. While on this issue, it would be appropriate to recall that valuation provisions under Section 4 constitute the machinery provision for levy and collection of duty and a machinery provision cannot be interpreted to grossly exceed the scope of the levy." (Emphasis supplied) 12. Bare perusal of the said order dated 6th April, 2004 would disclose that the Tribunal decided the matter on admitted facts of the case and did not decide the issue which arise for consideration in the matter in hand. The findings that "In the present case, admittedl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion "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,........" Apparently, the transaction value does not merely include the amount paid to the assessee towards price but also includes any amount a buyer is liable to pay by reason of or in connection with the sale of the goods, including any amount paid on behalf of assessee to the dealer or the person selling the vehicles. Measure of levying is expanded and its composition is broad based to bring all that a buyer is liable to pay or incur by reason of sale or in connection on therewith. Clearance of goods subject to fulfilment of sales conditions contribute to the assessable value by the amended definition of transaction value. The transaction value, therefore, is not confined to the amount actually paid and is not restricted to flow back of consideration or part thereof to the assessee directly but even for discharge of sales obligations both in present and future. It would include even the amount paid by the buyer to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion "transaction value" is neither restrictive in nature nor exhaustive but illustrative and inclusive. The definition clause uses terms like "means", "includes", "including, but not limited to", and "but does not include". The word "includes" has been suffixed by the phrase "in addition to". Apparently, it is a definition of extensive nature and at the same time it is restrictive and exhaustive in relation to the items to be excluded therefrom. It discloses to be of vary wide and extensive in nature and it is evident from the use of the expressions like "includes in addition to" and "including but not limited to". At the same time, it precisely pinpoints the items which are excluded therefrom, with the prefix as "but does not include". Exclusions being defined no presumption for further exclusions is permissible since measure of levy is revenue yield base. There appears no ambiguity to say that the amendment made w.e.f. 1.7.2002 has to cover all factors/elements integrally connected with sale of excisable goods to contribute for determination of assessable value thereof. 19. If one peruses the definition clause of the expression "transaction value", it refers to "any amount th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the purpose of deciding the issue relating to the assessable value of the manufactured goods. It essentially denotes the total consideration payable by the buyer for the product which is to be considered while calculating the assessable value of the goods for the purpose of determining the duty liability under the said Act. It is totally different from the liability relating to sale tax. This is apparent from the scheme of the Act as well as the intent and spirit of the Section 4 itself. 22. Section 4(1) (a) of the said Act provides that where under the said Act, the duty of excise is chargeable on any excisable goods with reference to their value, then, on each removal of the goods, such value shall in a case where goods are sold by the assessee, for delivery at the time and place of removal, the assessee and the buyer of goods are not related and the price is the sole consideration for the sale, be the transaction value. All the expressions used in this provision of law are sufficiently explained in the said section itself. 23. The expression 'transaction value' is the guiding principle in the process of ascertaining the assessable value of a product. The sale price, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant" should not have been given a wide meaning and should have been interpreted according to the common understanding in commercial circle among persons who deal in plant and machinery. While rejecting the said contention, the Apex Court held thus:- "6. Now it is well settled that where the definition of a word has not been given, it must be construed in its popular sense if it is a word of every day use. Popular sense means "that sense which people conversant with the subject matter with which the statute is dealing, would attribute to it". In the present cae, S. 10(5) enlarges the definition of the word "plant" by including in it the words which have already been mentioned before. The very fact that even books have been included shows that the meaning intended to be given to "plant" is wide. The word "includes" is often used in interpretation clauses in order to enlarge the meaning of the words or phrases occurring in the body of the "statute". When it is so used, these words and phrases must be construed as comprehending not only such thing as they signify according to their nature and import but also those things which the interpretation clause declares that they shall incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, the Apex Court held thus:- "The amendment, therefore, was clearly in favour of the widening the definition of "seasonal factory". The amendment is in the nature of expansion of the original definition as it is clear from the use of the words "include a factory". The amendment does not restrict the original definition of "seasonal factory" but makes addition thereto by inclusion. The word "include" in the statutory definition is generally used to enlarge the meaning of the preceding words and it is by way of extension, and not with restriction. The word "include" is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used, these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import but also those things which the interpretation clause declares that they shall include." (Emphasis supplied.) 28. In P. Kasilingam and others vs. P.S.G. College of Technology and others, reported in AIR 1995 S.C. 1395 the Apex Court clearly brought out difference in the meaning between the terms "means", "means and includes" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s shows that the legislature intended to give a very wide an all comprehensive definition of premises and did not intend to give it a residential meaning. The opening part of the definition of the word "premises" in Section 2(c) employs the word "any". "Any" is a word of very wide meaning and prima facie the use of it excludes limitation. (See Angurbala Mullick vs. Debabrata Mullick, AIR 1951 SC 293 at 297). The definition of premises in Section 2(c) uses the word "includes" at two places. It is well settled that the word "include" is generally used in interpretation clauses in order to enlarge the meaning of the words or phrases must be construed as comprehending, not only such things, as they signify according to their natural import, but also those things which shall include. (See Dadaji v. Sukhdeobabu, AIR 1980 SC 150; Reserve Bank of India v. Pearless General Finance and Investment Co. Ltd., AIR 1987 SC 1023 and Mahalakshmi Oil Mills v. State of Andhra Pradesh, AIR 1989 SC 335). The inclusive definition of "district judge" in Article 236 (a) of the Constitution has been very widely construed to include hierarchy of specialized Civil Courts viz. Labour Courts and Industrial Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) ELT 540 (S.C.) , Collector of Central Excise vs. Mahindra Mahindra Ltd., reported in 1999 (111) ELT A 126 (S.C.), and Maruti Udyog Ltd. Vs. CCE, Delhi-III, reported in 2004 (170) ELT 245 (Tribunal) as well as the appellate order therein reported in 2006 (201) ELT 28 , held that the settled legal position is that free after-sale service provided by the dealers to the ultimate buyers for which they are reimbursed by the assessee is not a consideration flowing from dealers to the assessee, and therefore, could not be included in the assessable value. The finding is squarely based upon the decision in the appellants' own case referred to above. Surprisingly the Tribunal therein has observed that the judgment in the appellants' own case was upheld by the Supreme Court in the order reported in 2006 (201) ELT 28. We have already quoted above the order of the Apex Court which clearly discloses that the appeal was dismissed, not on merits, but only on the ground that there was inordinate delay in filing the appeal. Such an order cannot be construed as amounting to upholding the decision of the Tribunal. 33. In Commissioner of Central Excise, Coimbatore vs. Texmo Industries, reported ..... X X X X Extracts X X X X X X X X Extracts X X X X
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