TMI Blog1991 (8) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... the customers and enter into agreements under which the primary responsibility of the authorised representatives are as follows : (a) Booking orders from individual customers; (b) Receiving payments for the ordered vehicles; (c) Transmit the customers order and payments to the appellant s Marketing Division; (d) To receive the vehicle from the appellants factory/Branch, together with all clearance, documents made out in the name of the customer; (e) Carry out Pre-delivery Inspection of the Vehicles; (f) Assist the customer in respect of registration and insurance; (g) Render Seven services of the vehicle without any additional charge and any other assistance which the customer may be in need of; (h) Maintain a show-room and repair workshop together with technically qualified staff. 3. The basis on which the deduction of Rs. 5100/- is claimed is that had they appointed the wholesale dealers on principle to principle basis instead of authorised representatives, they would have been given the said margin amount. The remuneration, thus, payable to the authorised representative, would be equal to the margin which would have been payable to the wholesale dealer and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed the claim of the appellants for MSPSD while he remanded the matter to the Asstt. Collector for considering de novo the break-up of the dealers margin claimed by the appellants. The Collector held that : I find that although the appellants have claimed their sales as retail sales they have appointed so-called authorised representatives who are actually dealers, performing certain functions on their behalf. It is not the case of the appellants that they are selling to wholesale buyers hence the findings of the Asstt. Collector that the amount of Rs. 5100/- cannot be allowed as Trade Discount" is justifiable in law. However, as pleaded by the appellants at the time of personal hearing, that, in the pattern of sale as followed by them, some deductions on account of dealers margin should be allowed to them. The appellants have filed price lists for retail price and to arrive at the assessable value in terms of statutory provisions of Rule 6(a) of Valuation Rules, 1975 some deductions on account of dealers margin could be considered. Now the question arises about the quantum of such deduction that could be allowed from the retail price in order to arrive at the deemed wholes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d representative does not incur any expenditure on account of publicity. Even services like after sale service would have been provided for by the wholesale dealer in any event. Since these are services to be provided by the wholesale dealer, the margin permitted to the wholesale dealer would have been fixed taking into consideration these services as stated above. Rule 6(a) clearly contemplates that if the goods were sold in wholesale, then what would be the wholesale price thereof. In other words, the margin to the wholesale dealer which would cover all expenses of services to be rendered by him of whatever nature as well as his profit would be allowable as a deduction under Rule 6(a) of the Valuation Rules. The authorised representatives of the appellant do not render any service pertaining to publicity and sales promotion which is entirely deducted by the appellants and the cost of which is included in the assessable value of the goods. The agreement entered into between the appellants and the authorised representative does not enjoin upon the authorised representative to undertake publicity and sales promotion activity either at his cost or on behalf of the appellant. 5. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other dealers are also rendering the similar services as the Authorised Representatives. He also submitted that the appeal should be remanded to the lower authorities as the comparability has to be examined from all. relevant angles and at a large measure. He also submitted that Rs. 2000/- towards MSPSD is compulsory and it is not clear whether the customer is aware that Rs. 2000/- is paid to the dealer towards the cost of the service material. If the customer is not aware that the said amount is towards the reimbursement of the cost of raw material to the authorised representatives, it should be added to the assessable value. He further states that it is a fit case for remand to the Asstt. Collector for reconsideration. 7. The question under the above circumstances is whether the amount of Rs. 5100/- and Rs. 2000/- towards the MSPSD is includible in the assessable value of the vehicle. 8. The undisputed facts are that the appellants are selling the goods in retail and that they claimed Rs. 5,100/- towards the dealers margin payable to their Authorised Representatives. The appellants themselves are rendering publicity and sale services to the customers and the cost of the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,500/- as against Rs. 1,06,000/-). In other words, though said to be comparable, the appellants machine was considerably higher priced. In absolute terms, therefor the dealers margin for the appellants machine should also be correspondingly higher." In other words, this Tribunal accepted in principle that the dealers margin given in respect of a comparable commodity can be given in respect of goods which are sold in retail. In the instant case, the retail price at which each vehicle was sold is Rs. 1,67,000/-. In the price list, they claimed Rs. 5100/- as deduction towards the dealers margin. It works out to about 2.9%. We may also consider the trade practice available on record. The appellants produced a Circular issued by the Association of Indian Automobile Manufacturers dated 17-10-1988 where under the Light Commercial Vehicles of Allwyn Nissan, the net dealers price was 1,34,725/- whereas the retail price was 1,39,725/-. Similarly, in the case of Swaraj Mazda, the net dealers price was 1,70,233/- and the retail price was 1,75,233/-. The above material shows that the trade practice is to allow the dealers margin of approximately of Rs. 5000/- from the retail price. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stt. Collector to predetermine the assessable value after obtaining the figures in break-up of Rs. 5100/-. In our view, the appellants are entitled for the deduction of Rs. 5100/- as dealers margin. 12. The next issue to be considered is whether the Department is justified in adding to the assessable value the Material Services Performance Security Deposit. In this context, the Confidential Circular issued by the appellants dated 14-5-1986 (Ref : EML/SV/6007) and the schedule thereof is relevant. The Circular has the following parts: (a) It provides for the schedule of services to be done; (b) The materials to be used; (c) Who has to do the service; (d) What service is to be done; (e) When service is to be done; (f) Procedure to be followed; (g) Reimbursement. We are in this appeal concerned with the reimbursement procedure and it reads as follows: REIMBURSEMENTS : -Copies of FREE SERVICE COUPONS are to be sent to EML Marketing Division as indicated above in Clause 4. -For ease of working, it is suggested that coupons be sent to EML once a week with a covering letter mentioning the coupon serial number. -Within 10 days of receipt of the coupons at EML, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntered into the market recently. Therefore, the amount that is reimbursed to the authorised representatives in respect of the cost of the material is not liable to be included in the assessable value as it has no nexus to the manufacture of the goods namely Light Commercial Vehicles. We are, therefore, of the view that the appellants are entitled to claim deduction to the expenses/reimbursement made to the Authorised Representatives from out of the amount of Security Deposit deposited with them by the customers. 14. As regards the interest accrued to the appellants on the amount of Rs. 2000/- deposited with them admittedly has no nexus with the manufacture of the Light Commercial Vehicles. It relates to the cost of the material used in the servicing of the vehicle. If the appellant make profit out of an activity which has nothing to do with the production or manufacture of the goods in question, the Department cannot add that profit to the assessable value. Admittedly, the interest obtained on the Security Deposit has nothing to do with the manufacture of LMVs. Therefore, we are of the view that interest obtained by the appellants on the security deposits cannot be added to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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