2009 (5) TMI 774 - AT - Central Excise

Valuation - discount offered by the appellant to the dealers - after sales service - includibility -

Summary

Issues:
Inclusion of discount in assessable value under Central Excise Valuation Rules, 2000.

Detailed Analysis:

Issue: Inclusion of discount in assessable value under Central Excise Valuation Rules, 2000
The case involved appeals against orders-in-appeal dated 31-7-2007 and 28-2-2008 concerning the inclusion of discounts allowed to dealers in the assessable value of dental equipment. The departmental audit raised objections, alleging that the discount included charges for services rendered by dealers, which should be part of assessable value under Rule 6 of Valuation Rules, 2000. The Commissioner (Appeals) upheld the objection, stating that discounts form part of consideration for sale and must be included in transaction value under Rule 6. The appellant argued that dealers provided after-sales services independently, similar to Maruti Udyog Ltd. case, and Valuation Rules were wrongly applied. The Revenue contended that discounts to dealers covered service charges and should be included under Section 4(1)(b) as price was not sole consideration.

The Tribunal analyzed the issue and found that discounts given to dealers did not flow back to the appellant as remuneration for services. As the goods were sold to dealers with discounts, Section 4(1)(a) applied directly, not 4(1)(b) for non-sale cases. The Tribunal emphasized that the remuneration for services was not part of the discount given to dealers. Referring to the Maruti Udyog Ltd. case, the Tribunal held that after-sale services value should not be included in transaction value, as it was covered by dealer discounts. Therefore, the impugned orders were set aside, and the appeals were allowed with consequential relief.

In conclusion, the Tribunal clarified that discounts given to dealers should not include remuneration for services provided, and such discounts should not be added to the transaction value under Central Excise Valuation Rules, 2000. The decision was based on the direct application of Section 4(1)(a) for sales transactions, distinguishing them from non-sale cases covered by Section 4(1)(b). The Tribunal's ruling aligned with previous judgments and upheld the appellant's position regarding the inclusion of discounts in the assessable value of goods.