2007 (1) TMI 316 - AT - Central Excise

Valuation - F.S.E. salary - Monsoon packing for scooters - Shared advertising - Booking form for scooters

Summary

Issues Involved:
Differential duty demand and penalty arising from a dispute about the correct assessable value for scooters manufactured and sold by the appellant between Jan. '84 to May '87.

Detailed Analysis:

1. Excess Recovery of Insurance and Excess Freight Recovery:
The appellant's contention that recoveries from buyers for insurance and freight should not impact the valuation of manufactured goods was supported by judgments from the Hon'ble Supreme Court. The Tribunal found no merit in the demands related to these items due to the legal precedent set by the Supreme Court.

2. Forwarding Charges:
The forwarding charges collected by the appellant for despatching scooters to outstation buyers were deemed not to be part of the assessable value since they were incurred beyond the factory gate, aligning with established principles that costs up to the factory gate should be included in the assessable value.

3. F.S.E. Salary:
The contribution made by the appellant towards the cost of service engineers employed by dealers was held not to be part of the manufacturing cost or assessable value, as the engineers were not directly employed by the manufacturer. The Tribunal accepted the appellant's argument that such subsidies should not be added to the assessable value.

4. Monsoon Packing:
The additional supply of plastic items for protecting scooters from rainwater was considered not to be part of the assessable value, as it was not common practice to pack scooters before delivery at the factory gate.

5. Oil Supply:
The cost of oil supply for servicing scooters at dealers' ends after clearance from the factory was excluded from the assessable value, as it occurred post-sale and was not part of the ex-factory sale price used for assessment during the relevant period.

6. Shared Advertising:
The manufacturer's share of local advertising costs reimbursed to dealers was not added to the sale price for assessment purposes, as the total sale price already covered all costs incurred by the manufacturer, aligning with the valuation measure under Section 4(1)(a) of the Act.

7. Cost of Booking Form:
The cost of booking forms charged separately from the scooters' sale price was held not to be part of the assessable value, as it was a distinct item unlinked to the scooter's cost, similar to other stationery items.

8. Retention Charges:
Charges collected for delayed collection of scooters were deemed unrelated to the sale price and were considered as additional storage costs, not forming part of the assessable value based on the legal provisions and the specific circumstances of their collection.

9. Conclusion:
The Tribunal found no justification for adding any of the disputed items to the assessable value, setting aside the impugned order and allowing the appeal with consequential relief to the appellant. The absence of short-levy of duty rendered the imposition of penalty unwarranted.