TMI Blog2014 (3) TMI 709X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of Section 4(3)(d) of the Central Excise Act, 1944. In the case of Tata Motors Ltd. [2012 (9) TMI 244 - BOMBAY HIGH COURT], HC had taken note of the decision of the Larger Bench in the case of MARUTI SUZUKI INDIA LTD [2010 (8) TMI 49 - CESTAT, NEW DELHI] and yet came to the conclusion favourable to the appellants in that case. - Decided in favor of assessee. - E/2565/2011-DB, E/2566/2011-DB, E/2567/2011-DB, E/2568/2011-DB, E/2569/2011-DB, E/2570/2011-DB, E/2571/2011-DB, E/2572/2011-DB, E/3150/2011-DB, E/25703-25705/2013 - Final Order No. 20193-20204/2014 - Dated:- 7-2-2014 - SHRI B.S.V. MURTHY AND SHRI S.K. MOHANTY, JJ. For the Appellant : Mr. K.S. Ravi Shankar Mr. N. Anand, Advocates For the Respondent : Mr. A.K. Nigam, Addl. Commissioner (AR) JUDGEMENT Per : B.S.V. Murthy, Even though some of the appeals listed involved consideration of stay applications and some of them have been listed for regular hearing, all the appeals are taken up together for final hearing, since in all the appeals issue involved is same and only the periods are different. The total amount involved and the periods involved, are as under: S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Appellant is engaged in the manufacture of motor vehicles. Appellant clears motor vehicles for sale on payment of duty to the dealers located all over the country. Appellant has been paying Central Excise duty on the transaction value charged to the dealers. Taking a view that the pre-delivery inspection charges and free maintenance expenses incurred by their dealers should also be added to the assessable value, proceedings were initiated which has culminated in confirmation of the demands as listed above. 3. The learned counsel submitted that the case of the department is based on clarifications issued in CBEC Circular No.643/34/2002-CX dated 1.7.2002. Sl. No.7 of the table in the Circular is relevant. He submits that the decision of the Hon ble High Court of Bombay in the case of Tata Motors Ltd: 2012 (286) E.L.T. 161 (Bom.) covers the issue and the issue is no longer res integra. 4. On the other hand, learned AR relies upon the decision of the Larger Bench in the case of Maruti Suzuki India Ltd. (MSIL): 2010(257) E.L.T. 226 (Tri.-LB) to submit that in that case it was held that where pre-delivery services and after sale services are borne by the dealer, it has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturers for the expenses incurred by them. In such a case, naturally the obvious conclusion would be that such expenses form part of the assessable value when the vehicles were cleared by the manufacturer. However, in the case of Tata Motors Ltd., the Honble High Court of Bombay has considered a case where the dealers were incurring the expenses out of the margin provided to them by the manufacturer and there was no reimbursement. This would amount to recovery of such charges from the customers since the reimbursement is not made by the manufacturer and in such an event, naturally the margin of the dealer has to include these two items which would mean that the cost of vehicle to the buyer would go up to this extent. However, we find in the case of Tata Motors Ltd. circumstances were exactly the same. Para 5 and 6 of the decision explain the facts of the case and are reproduced below: 5. Between the petitioners and each dealer, an agreement is executed thereby appointing such a person as a dealer on terms and conditions mentioned in the said agreement. According to the petitioners, the petitioners decide the maximum price at which the dealer has to sell the car. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o pay Excise duty as well as interest and penalty more particularly stated in the said order dated 13th December, 2011. After taking note of the facts and considering the Circular issued by the Board, the Hon ble High Court came to the conclusion that the PDI and free service cost cannot be included. Paragraph 47, 48 and 49 containing the conclusions of the Hon ble High Court are relevant and are reproduced below. 47. This assertion viz. Expenses for the PDI and said services is not to be included in the assessable value is at variance from Circular dated 1st July, 2002. The Clause 7 of Circular dated 1st July, 2002, in our view wrongly proceeds to hold that the expenses incurred by the dealer towards PDI and said services are on behalf of the assessee hence, it is wrong to say that such expenses form as one of the considerations for the sale of goods. In our view, equating the expenses incurred towards PDI and said services with the advertisement and publicity charges is incorrect. In our view. Clause No. 7 of Circular dated 1st July, 2002 is not in conformity with the provisions of Section 4(1)(a) r/w Section 4(3)(d) of the said Act. 48. The matter can be looke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeal, if any, filed against the order-in-original. Learned counsel also took us through the dealership agreement entered into by the appellant in this case. According to the dealership agreement, there are two paragraphs relating to free services and PDI and after sales service. The relevant paragraphs are reproduced below. Free Services The dealer shall provide such number of free services to the retail customers, as may be directed by the Company. In the event of any free service being rendered or provided by a different dealer (Servicing Dealer) other than the one who sold the CBU (Selling Dealer), the Selling Dealer shall promptly pay the bills for free services of the Servicing Dealer. If such payment is delayed beyond 4 (four) weeks of receipt of the claim by the Selling Dealer, the Company shall be entitled to debit the Selling Dealer and credit the Servicing Dealer with the claimed amount and including a penalty, as liquidated damages, as may be decided by the company. Pre-delivery inspection and after sales service 1) The Dealer shall ensure that the pre-delivery inspection and after-sales service for CBUs are carried out fully and efficiently in acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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