9911796707
TMI Blog1988 (4) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... t"). The respondents herein M/s. Kelvinator of India Ltd. in these appeals manufacture refrigerators. They market these through their four exclusive wholesale dealers, namely, M/s. Gem, M/s. Leonard, M/s. Expo Machinery and M/s. Tropicana. The respondents gave one year warranty for the complete refrigerator and all parts thereof (except the light but band the crisper glass). During this warranty period, they provide free repair and replacement for defects in material and workmanship under normal use and service. This free service is available only within the municipal limits of the area served by an office of the wholesale dealer of the authorised dealer from whom the refrigerator is originally purchased. The respondents include the cost of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) E.LT. 1896 (S.C.) ]=1984 1 SCR 347 where it was held that after sale service charges could not be deducted from the assessable value. The Assistant Collector confirmed the demands totalling Rs. 17,40,68,326.32 against the respondents (in Civil Appeal No. 962 of 1988) and Rs. 7,07,535 (in Civil Appeal No. 727 of. 1988). The respondents herein filed an appeal before the appellate Collector. The Appellate Collector upheld the decision of the Assistant Collector. There wasan appeal the Tribunal and the Tribunal held that the optional service charge during the second and third year after the expiry of the first year warranty period was not includible in the assessable value. The Tribunal allowed the appeals of the assessee with consequential r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service charges were not includible in the assessable value of the respondents herein. The principle under which these will be includible has been laid down in Union of India and Others v. Bombay Tyre International Ltd. (supra), where Pathak, J., as the learned Chief Justice then was, inter alia, observed as follows: [".......expenses incurred by the assessee up to the date of delivery on account of storage charges, outward handling charges, interest on inventories (stocks carried by the manufacturer after clearance), charges for other services after delivery to the buyer, namely, after-sales service and marketing and selling organisation expenses including advertisement expenses cannot be deducted. It will be noted that advertisement expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e which apparently would be the date delivery at the factory gate are liable to be included. The interest on the finished goods until the goods are sold and delivered at the factory gate would therefore necessarily, according to the judgment in Bombay Tyre International case (supra) have to be included but interest on finished goods from the date of delivery at the factory gate up to the date of delivery from the sales depot would be an expense incurred after the date of removal from the factory gate and it would, therefore, according to the judgment in Bombay Tyre International case (supra) not be liable to be included since it would add to the value of the goods after the date of removal from the factory gate. We would therefore have to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal also observed that the respondents herein offered the four years service by a stamped endorsement on their sale invoice, itself, it did not mean that the subsequent exercise of option by the buyer related back to the date of purchase itself. It was also found that there was no evidence to conclude that the service contract was a facade to split the true value of refrigerators into taxable and non-taxable components. 5. In that view of the matter, the Tribunal set aside the order of the Collector of Central Excise (Appeals) and allowed the appeals. The contract for four years warranty service was optional, which was entered into later on. This is clearly after-sale facility and cannot be includible in the assessable value of the refrig ..... X X X X Extracts X X X X X X X X Extracts X X X X
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