TMI Blog1999 (2) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... aring for the respondent Collector. 3. Appellants are engaged in the manufacture of heavy and sophisticated Electrical Electronics equipments and machinery which are designed as per the specific requirements of the customers. The terms and conditions of sale also contain a condition relating to warranty which provides for replacement of the items if they developed defects within a period of 12 months from the date of commissioning or 18 months from the date of despatch, whichever is earlier. An amount of 2.5% of the factory cost is set apart by the appellants as `complaint reserve in the contractual price entered into by them. The Central Excise duty is paid by the appellants on the total contract sale value. Where in terms of the warr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacturer the appellants could not have contracted for the supply of the main equipments and, therefore, the contract price would also include the duty element of replacements under the warranty clause. To the extent, the appellants had not informed the Department that they were clearing warranty replacements without payment of duty, the Collector also found that there was suppression on the part of the appellants and, therefore, penalty was also imposable on them. 6. Learned Counsel submitted that though the fact of clearance of replacements under the warranty clause made by the appellants was not disputed, it was also not in dispute that an amount of 2.5% had been added by the appellants to the factory cost in the contractual pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e considered the submissions. Admittedly, the Central Excise Act, the Central Excise Rules or the notifications issued do not contain any exemption from duty demand for replacements supplied by the manufacturer under a warranty clause irrespective of the fact that the contract price includes an added element to cover such replacements. Having regard to this undisputed position, we are unable to agree with the submissions made by the learned Counsel that on the basis of the international practice referred to in the commentary by the learned authors relied on by him the same principle would apply to cases under the Central Excise Act also. We have taken note of the submission of the learned Advocate that in the Customs side, there exists a no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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