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2012 (7) TMI 509 - AT - Central ExciseWaiver of pre-deposit Valuation - manufacture and sale of cars - dealers were given fixed discount for selling cars of the appellant company and dealers have to provide Pre-Delivery Inspection (PDI) and two free services from such dealers margin - Whether charges in respect of PDI and free service charges are to be added to the transaction value of the cars Held that - Charges towards Pre-Delivery Inspection and after sales services by dealers from buyers of the cars are to be included in the assessable value of the cars in the light of the definition of transaction value given in Section 4 (3) (d) of the Central Excise Act, 1944 - In favour of the Revenue - applicant directed to deposit 50% of the duty Waiver of pre-deposit - Scope of term undue hardship - held that - Two significant expressions used in the provisions are undue hardship to such person and safeguard the interests of revenue . Therefore, while dealing with the application twin requirements of considerations i.e. consideration of undue hardship aspect and imposition of conditions to safeguard the interest of Revenue have to be kept in view.
Issues Involved:
1. Waiver of pre-deposit duty, interest, and penalty. 2. Inclusion of Pre-Delivery Inspection (PDI) and free service charges in the transaction value under Section 4 of the Central Excise Act, 1944. 3. Interpretation of "transaction value" under Section 4 of the Central Excise Act, 1944. 4. Reliance on Board's Circulars and previous judicial decisions. 5. Financial hardship plea for waiver of pre-deposit. 6. Revenue's reliance on Board's Circular and judicial precedents. 7. Application of Section 35F of the Central Excise Act, 1944. Issue-wise Detailed Analysis: 1. Waiver of Pre-Deposit Duty, Interest, and Penalty: The applicant sought a waiver for the pre-deposit of duty amounting to Rs. 3,11,27,740/-, along with interest and penalty. The tribunal noted that the applicant did not plead any financial hardships. 2. Inclusion of PDI and Free Service Charges in Transaction Value: The demand was confirmed on the grounds that charges for PDI and free services should be added to the transaction value of cars as per Section 4 of the Central Excise Act, 1944, and Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. The applicant contended that these charges incurred by dealers from their margin should not be included in the transaction value. 3. Interpretation of "Transaction Value": The applicant argued that the "transaction value" under Section 4 of the Central Excise Act, 1944, includes any amount that the buyer is liable to pay to the assessee or on behalf of the assessee, including charges for advertising, publicity, marketing, servicing, warranty, or any related matter. They emphasized that since the manufacturer did not charge anything for PDI and free services from the ultimate buyers, these should not be included in the transaction value. 4. Reliance on Board's Circulars and Previous Judicial Decisions: The applicant relied on Board's Circular No. B-10/1/2000-TRU dated 12.5.2000 and other circulars, which clarified that amounts recovered in connection with the sale are included in the transaction value. They also cited decisions in Ford Motor India Ltd, A.K. Roy vs Voltas Ltd, Mahindra & Mahindra Ltd, and Telco Ltd., arguing that expenses incurred by dealers for PDI and after-sale services should not be added to the assessable value. 5. Financial Hardship Plea for Waiver of Pre-Deposit: The applicant did not present any plea of financial hardships, which is a significant consideration under Section 35F of the Central Excise Act, 1944, for granting a waiver of pre-deposit. 6. Revenue's Reliance on Board's Circular and Judicial Precedents: The Revenue cited Board's Circular No. 643/34/2002-CX dated 01.07.2002, which clarified that after-sale charges and PDI should be included in the assessable value. They relied on the Larger Bench decision in Maruti Suzuki India Ltd vs CCE, Delhi III, which favored the Revenue. They also cited the Supreme Court decision in Benara Valves Ltd vs Commissioner of Central Excise to support their stance. 7. Application of Section 35F of the Central Excise Act, 1944: The tribunal considered the provisions of Section 35F, which requires the deposit of duty or penalty pending appeal unless it causes undue hardship. The Supreme Court's interpretation in Benara Valves Ltd emphasized that undue hardship must be established by the applicant and that the tribunal must safeguard the interest of revenue. Conclusion: The tribunal concluded that the applicant did not make a case for a complete waiver of pre-deposit. Given the Larger Bench decision in Maruti Suzuki India Ltd favoring the Revenue, the tribunal directed the applicant to deposit 50% of the duty amount within eight weeks. Upon compliance, the pre-deposit of the balance of duty, interest, and penalty would be waived, and recovery stayed during the appeal's pendency. Compliance was to be reported on 06.09.2012.
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