2015 (5) TMI 594 - HC - Central Excise

Waiver of pre deposit - Valuation of goods - dealers of Maruti Suzuki are charging price over and above the ex-showroom price from the ultimate customers of the vehicles - whether part of the promotional discount paid from the dealer s margin is includible in the assessable value for the purpose of payment of central excise duty or not - Held that - Once the whole issue prima facie has been considered by the Tribunal and has been decided against the appellants, the Tribunal, thereafter, has given the benefit of reducing the deposit to the tune of ₹ 150 crores, out of the duty of ₹ 240,57,84,802/-, levied along with equal amount of penalty plus interest. Though the Tribunal also took into account the handling charges issue, which was not subject matter of the notice, but it has on merits also prima facie discussed the main issue of transaction value for the purpose of deciding the stay application and therefore, in the absence of any question of law arising, this Court would not interfere in the discretion which has been exercised, keeping in view the facts and circumstances of the present case - Under Section 35G of the Act, this Court would only interfere if there is a substantial question of law involved and the appeal is only to be heard on the questions so formulated. Keeping in view the above discussion, this Court is of the opinion that the substantial questions of law which have been raised by the appellant, do not arise for consideration of this Court in an appeal against an order of pre-deposit. - However, extension of time is granted.

Summary

Issues Involved:
1. Legality of the Tribunal's direction for pre-deposit of Rs. 150 crores.
2. Compliance with judicial discipline and propriety.
3. Delay in Tribunal's judgment and consideration of facts.
4. Applicability of the extended period of limitation.

Detailed Analysis:

1. Legality of the Tribunal's Direction for Pre-deposit of Rs. 150 Crores:
The appellant challenged the Tribunal's order directing a pre-deposit of Rs. 150 crores out of a total demand of approximately Rs. 240 crores. The Tribunal's decision was based on the interpretation of Section 4(3)(d) of the Central Excise Act, 1944, which defines "transaction value." The Tribunal held that the dealership margins and promotional schemes should be included in the assessable value. The appellant argued that the case was covered by favorable rulings from the Supreme Court and the Bombay High Court, specifically citing the judgment in Tata Motors Ltd. v. UOI, where similar circulars were quashed. However, the Tribunal noted that the transaction value definition came into force on 01.07.2000, and earlier judgments were not applicable.

2. Compliance with Judicial Discipline and Propriety:
The appellant contended that the Tribunal's direction breached judicial discipline as the case was previously decided in their favor by the Tribunal itself. The Tribunal, however, relied on its larger bench decision in Maruti Suzuki India Ltd. v. CCE, which held that pre-delivery inspection and after-sales services were part of the price of goods. The Tribunal found that the promotional schemes were mandatory for dealers and thus part of the assessable value.

3. Delay in Tribunal's Judgment and Consideration of Facts:
The appellant argued that the Tribunal failed to pass an order for more than five months and did not consider their submissions adequately. The Tribunal's order focused on whether the dealership margins offered as promotional discounts were includible in the assessable value. The Tribunal concluded that these margins formed part of the transaction value, rejecting the appellant's claim that dealers were independently implementing the schemes.

4. Applicability of the Extended Period of Limitation:
The appellant claimed that the demand was time-barred under Section 11A of the Act. The adjudicating authority and the Tribunal both held that the extended period of limitation was applicable due to the appellant's misstatement regarding the promotional schemes. The Tribunal noted that the schemes were organized by the manufacturer, not the dealers, and thus the extended period was rightly invoked.

Conclusion:
The High Court upheld the Tribunal's direction for the pre-deposit of Rs. 150 crores, finding no substantial question of law warranting interference. The Court noted that the Tribunal had appropriately exercised its discretion under Section 35F of the Act, taking into account the undue hardship and safeguarding the interest of the Revenue. The Court also granted the appellant three months to comply with the pre-deposit order. The appeals were dismissed, with the Court clarifying that the observations made would not affect the merits of the case during the final hearing.