TMI Blog2024 (3) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned order dated 16.12.2014 passed by the Commissioner of Central Excise, whereby the learned Commissioner has confirmed the demand of duty of Rs.58,70,602/- under Section 11A of the Central Excise Act, 1944 (hereinafter referred to as the Act ) along with interest and also imposed equivalent penalty under Section 11AC of the Act. 2. Briefly stated facts of the case are that the appellant is engaged in the manufacture of two wheeler vehicles and parts thereof falling under Chapter 87 of the First Schedule to the Central Excise Tariff Act, 1985 and clearing the same on payment of excise duty. The appellant sells their final product through a network of dealers appointed by them through dealership agreement, which is placed on record. The dealers purchase the vehicles from the appellant at an ex-factory price and sell them to the ultimate customer after including dealer's margin at price not exceeding maximum price. All final products sold by the appellant are subject to manufacturers' warranty for any manufacturing defects. It is further alleged that in order to avail the warranty claim, customers are required to fulfill certain pre-conditions as mentioned in the cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided on the basis of the principles laid down by the Tribunal in the appellant's own case vide order dated 08.11 2023. 4.3 She also submits that the issue of inclusion of value of PDI and ASS in the assessable value has also been settled by various judicial forums and it has been held that the cost of ASS shall not be includible in the assessable value of the goods. 4.4 She also submits that such expenses are incurred by the dealers after the appellant has sold his goods to the dealers. The dealer thereafter provides ASS to the customer and incurs expenditure on that; therefore, it cannot be added back to the sale price charged by the manufacturer from the dealer for computing the assessable value. She further submits that the price paid by the dealers to the appellant is the sole consideration for computation of assessable value in terms of Section 4(3) of the Act and no additional consideration is given to the appellant. 4.5 She further submits that the PDI and free ASS provided by the dealers are as per the obligations provided under the dealership agreement, which is placed on record. Further, the appellant reimburses the amount of expenses incurred by the dealers for AS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is cited supra. We also find that this issue is no more res integra and has been settled by various judicial forums as relied upon by the appellant cited supra. It has been consistently held that the cost of ASS shall not be includible in the assessable value of the goods. Here, it is relevant to reproduce the relevant findings in the appellant s own case for the previous period decided by this Tribunal as cited supra, which are reproduced herein below: 8 . Heard both sides and perused the records of the case. We find that the show-cause notice mentions at Para 2 that: During the course of audit of the Noticee s records by the Internal Audit Team of the Commissionerate from 19th to 22nd January 2011, it was noticed that the Noticee was not including the After Sales expenses reimbursed to the dealers in the assessable value. It is a well-known fact in case of motor vehicles manufacturers that After Sales service and pre-delivery inspection (PDI) are services provided free by the dealer on behalf of the assessee, the cost towards this is included in the dealer s margin (or reimbursed to him). This is one of the considerations for sale of the goods (motor vehicles, consumer items etc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imbursed by the appellants are collecting the same from the customers. Learned Counsel for the appellants counters the claim and submits that dealer s margin is paid by the appellants to their customers. The Show Cause Notice seeks to demand duty on expenses reimbursed by the appellants to their dealers. It is beyond our imagination as to how these amounts constitute flow of additional consideration unless it is evidenced either that the appellants are allowing the dealers to collect the margin payable, by the appellant to the dealers, from ultimate customers or that the additional amounts charged by the dealers from ultimate customers is actually flowing back to the appellants. Only under these two conditions the said expenses can be held includable in the assessable value even under the old or amended definition of Section 4 of CEA, 1944. We find that Adjudicating Authority also finds at Para 17.3 of the impugned order as follows: I find that from the perusal of Rule 6 ibid and Clause (a) of sub section (1) of section 4 of the CEA 1944 it becomes clear that the After Sales expenses reimbursed to the dealers by the Noticee were includible in the assessable value and by not doing s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reover, we find that the two sample invoices demonstrated by the Authorized Representative during the hearing are of different dates. Hence, we are of the opinion that the same cannot be compared. In case the dealer has defaulted on the Dealership Agreement, the same in itself cannot be a reason to include such amounts, collected by the dealer from the customers, in the assessable value. 13. It is not forthcoming from the show-cause notice or from the records of the case that the amount recovered by the dealers over and above the listed price sanctioned by the appellants is towards the amount reimbursable by the appellants to the dealers. It is also not established that the amount extra collected is towards the PDI and ASS. There is no evidence to prove that the amount charged extra by the dealers is flowing back towards the appellant. In view of this, we find that the impugned order as well as the arguments of the learned Authorized Representative and to some extent, argument of the Counsel also is beyond the scope of the show-cause notice. No case is made for the inclusion of after sale expenses reimbursed to the dealers by the Noticee except for a bland averment in Para 2 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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