TMI Blog1999 (8) TMI 539X X X X Extracts X X X X X X X X Extracts X X X X ..... ncipal to principal basis and the appellants and dealers are not related persons within the meaning of Section 4 (4) (c) of the Central Excise Act. The title on the vehicle passes from the appellants to the dealers on sale thereof at the factory gate and the price is the sole consideration for the sale. The vehicles are sold at ex-factory price to the dealers and the assessable value determined under Section 4 (1) (a) of the Act for the purpose of payment of Excise Duty. The appellants had dealings with number of dealers numbering about 325 located in different parts of India. The dealers maintain their own Show room from where vehicles are sold in retail to the ultimate buyers/customers. These dealers inter alia are also required to maintain the inventory of spare parts and render after sales services and attend to their individual customers complaints. For this purpose, the dealers employ mechanical and technical persons on their roll. From time to time some dealers request for the service of the engineers of the appellants for supervising their repair jobs undertaken by the dealers and to train mechanical and technical staff so as to attend to customer complaints and so as to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith Shri V.S. Nankani and Ms. Shailaja Kher, Advocate appeared for the appellants. Mr. Deepak Kumar SDR appeared for the revenue. 6. Shri Hidayatulla, learned Sr. Counsel argue that the charges for sending service engineers to the dealers is not a compulsory one as disclosed in the agreement between the appellant and the dealer. It is only optional at the discretion of the dealers. The goods are sold on a principal to principal basis. He stated that the decision of the Supreme Court in Civil Appeal No. 480/84 in the case of Vijaya Traders v. Bajaj Auto Ltd. wherein the Hon ble Supreme Court had held that the dealer was not an agent of the Appellant i.e. not an intermediary of the appellant as was held by the adjudicating authority and that the transaction between appellant and the dealer is on principal to principal basis. The entire operation of the after sales services in this case, it is argued by Shri Hidayatulla, was only for augmenting the sale of the product by the dealer who is the owner of the vehicle. It was emphasised by Mr. Hidayatulla that once the goods have been sold by the assessee to the dealer, what the dealer does is only to the enhance his business venture. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and enhances the sale it only augment the resources of the dealer and not of the manufacturer, because goods have been parted with to the dealers by means of sale at the factory gate. He also argued that the Supreme Court in Philips (India) Ltd. v. C.C.E., 1997 (91) E.L.T. 540 is relevant. As far as after sales service is concerned, it was held in paragraphs 6 7, that it will benefit both parties and the court wants the excise authorities to keep in mind the legitmate business consideration. There in that case the Supreme Court had dealt with the case where the after sale service was a compulsory one. Even in that respect thereof the court held in favour of the assessee. Shri Hidayatulla states that in view of the fact the same is optional as aforeasiad a fortiarari i.e. for stronger reasons, the assessee is entitled to get the relief here. 7. There is no nexus in this case between the manufacturer and the after sale service. In this connection he also invited our attention to paragraph 49 of the Bombay Tyre International s case to emphasis the fact that in that case the after sale service was given by the manufacturer. Here it is not so. Because after sale is given by the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acted below : 49. We shall now examine the claim. It is apparent that for purposes of determining the value" broadly speaking both the old s. 4(a) and the new s. 4 (1) (a) speak of the price for sale in the course of wholesale trade of an article for delivery at the time and place of removal, namely, the factory gate. Where the price contemplated under the old s.4 (a) or under the new s. 4 (1) (a) is not ascertainable, the price is determined under the old s. 4 (b) or the new s. 4 (1) (b). Now, the price of an article is related to its value (using this term in a general sense), and into that value how poured several component, including those which have enriched its value and given to the article is marketability in the trade. Therefore, the expenses incurred on account of the several factors which have contributed to its value upto the date of sale, which apparently would be the date of delivery, are liable to be included. Consequently, where the sale is effected at the factory gate, expenses incurred by the assessee upto the date of delivery on account of storage charges, outward handling charges, interest on inventories (stocks carried by the manufacturer after clearance, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The statements have been given in October, 1997 and the Show Cause Notice was dated 3-12-1997. The ld. advocate stated that the nature of transaction was known to the department as far as back 1987 (please see paragraphs 40 41 of the impugned order) the transactions have not been changed. 12. It is argued by the ld. DR that knowledge in respect of pre-delivery inspection cannot be termed as knowledge in respect of service charges. He stated that the consumer gets the service done through the medium of the dealer who is called as intermediary in paragraph 42 of the impugned order. Mr. Kumar specifically argued that instead of having directly spent by the manufacturer the amount has been spent indirectly by the manufacturers and they are trying to get the benefit of the same which is not warranted by law. This argument has to be stated to be rejected. In the first place the goods have been sold by the manufacturer i.e. the assessee to the dealer. What happened to the goods i.e post removal stage cannot be taken into consideration for the purpose of assessment. The cost incurred by the manufacturer before clearance at the factory gate which is admittedly had taken place in this ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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