2016 (11) TMI 830 - AT - Central Excise

Valuation - inclusion of dealers margin in the assessable value on the ground as per the dealers agreement, dealer is supposed to incur expenses towards advertising, publicity, marketing, after sale services etc. which are required to be done by the respondent and the dealer is compensated for such expenses which is difference in margin and not dealer price - Held that - the issue of cost of advertising, marking, publicity incurred by the dealer from their margin cannot be included in the assessable value of the vehicle. As regards various other expenses on aftersale services, we find that the Apex Court in the case of CCE v. TVS Motors Co. 2015 (12) TMI 874 - SUPREME COURT has clearly held that such cost of pre-delivery inspection charges and free aftersale charges incurred by the dealer are not includable in the assessable value of the vehicle sold by the assessee. Appeal rejected - decided against Revenue.

Summary

Issues:
Inclusion of dealer's margin in assessable value for excise duty calculation.

Analysis:
The appeals revolve around the issue of whether the dealer's margin should be included in the assessable value for the calculation of excise duty. The Revenue authorities argued that as per the dealer's agreement, the dealer undertakes expenses for advertising, publicity, marketing, and after-sale services, which should be compensated and included in the assessable value. However, the adjudicating authority dropped the demand based on the precedent set by the Supreme Court in the case of Philips India Ltd. The Revenue contended that expenses incurred by the dealer should be added to the sale price for determining the assessable value, citing various Supreme Court judgments. The learned A.R. argued that the order-in-original was non-speaking and lacked proper analysis of evidence.

The Tribunal examined the facts and found that the demand was for the period April 2000 to June 2004, covering the dealer's margin for after-sale services, free delivery inspection charges, and advertising costs. Referring to a previous judgment in the respondent's case, the Tribunal held that the cost of advertising, marketing, and publicity incurred by the dealer from their margin should not be included in the assessable value. Additionally, the Tribunal cited the Supreme Court's decision in the case of TVS Motors Co., stating that after-sale service costs are not liable to be included in the assessable value for excise duty discharge.

Based on the above analysis, the Tribunal upheld the impugned order, stating that it was correct and legal without any infirmity. Consequently, the appeals filed by the Revenue were rejected.