TMI Blog1988 (4) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... rators into taxable and non-taxable components. In that view of the matter, the Tribunal correctly 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 refrigerators. - Civil Appeal No. 727 and 962-74 of 1988 - - - Dated:- 20-4-1988 - Sabyasachi Mukharji and S. Ranganathan, JJ. Kuldeep Singh, Additional Solicitor-General (A.L. Ganguli, Senior Advocate, Mrs. Sushma Suri and K. Swami, Advocates, with him), for the appellant. F.S. Nariman, Senior Advocate (Ravinder Narain, A.K. Verma and D.N. Misra, Advocates, wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the service contract with the dealer from whom he buys his refrigerator. The service is rendered by the respondents and the entire contract money accrues to them. It is on evidence that during the material period the four dealers referred to hereinbefore entered into service contract in respect of a total of 91% of their purchases. The remaining 9% did not enter into such contract. This is optional. 2. The Assistant Collector by his order dated 18th August, 1986 held that four year service charge is includible in the value of the refrigerator for the purpose of assessment of central excise duty under Section 4 of the Act. The Assistant Collector further held that for all intents and purposes this charge was not optional as it was not exer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lers entered into service contract in respect of 91% of their purchase. They did not make the contract for the remaining 9%. It is also not necessary that the contract should be made right at the time of purchase of the refrigerator from the respondents. In fact, it was found as a fact that some time contract was made only in less than 10% of the sales. For the remaining 81 % of the purchases, the dealers took time from one week to over six months from the date of purchase. It was explained by the respondents that depending upon the demand pattern in a particular area, the dealer purchased about 10% of the refrigerators straightaway with the service contract; for the remaining purchases, he exercised the option letter, as and when the deale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the factory gate to the place or places where it is sold. The cost of transportation will include the cost of insurance on the freight for transportation of the goods from the factory gate to the place or places of delivery." This aspect was later clarified by this Court in Assistant Collector of Central Excise and Others v. Madras Rubber Factory Ltd. and Others 1987 (27) E.L.T. 553, where Bhagwati, C.J, at page 562 of the report observed as follows: "Interest on finished goods from the date the stocks are cleared till the date of the sale was disallowed by the Assistant Collector, Kottayam. This head has again been urged for our consideration as a proper deduction for determination of the assessable value. As quoted in our judgment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all but the statement of sales filed before us for the five year period (1981,86) shows that the number of refrigerators in respect of which the option was not exercised was in thousands, ranging from over 18,000 to over 39,000 per year. We find no force in the department's pleading that the service charge, for all intents and purposes, was a compulsory one. As to what machinery the appellants devised for extending this service is not material. If any customer did not like to have the service, there was no compulsion on him to go in for it. That is the important thing. Once we reach the conclusion that the post-warranty service activity could not be subjected to excise, it ceases to be material that 91% of the customers had opted for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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