2017 (3) TMI 1407 - AT - Central Excise

Valuation - inclusion of charges for after Sales Service - Pre-Delivery Inspection (PDI) - Held that - an identical issue has come up in the case of CCE, Mysore v. TVS Motors Co.Ltd. 2015 (12) TMI 874 - SUPREME COURT , where the Hon ble Supreme Court has endorsed the view laid down in the case of Tata Motors Ltd. v. Union of India 2012 (9) TMI 244 - BOMBAY HIGH COURT and held that the expenses incurred by the dealer for PDI and said services has nothing to do with the term servicing mentioned in the transaction value and as such, the said expenses cannot be added to assessable value - demand set aside - appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against Order-in-Original regarding after-sales service and pre-delivery inspection subject to excise duty.

Analysis:
The appeal involved the issue of whether after-sales service and pre-delivery inspection (PDI) provided free by the dealer on behalf of the assessee were subject to excise duty. The department contended in the show cause notice that these services were dutiable, but the impugned order dropped the demand. The department, being aggrieved, filed an appeal. The Tribunal considered the arguments of both parties and referred to a similar issue in the case of CCE, Mysore v. TVS Motors Co.Ltd. The Supreme Court in this case endorsed the view from Tata Motors Ltd. v. Union of India, emphasizing that expenses for PDI and related services do not form part of the transaction value. The court clarified that the warranty provided by the petitioners is not linked to PDI expenses and services provided by the dealer. The court held that these expenses cannot be considered as consideration for sale or deferred consideration. The court also noted that the expenses for PDI and related services do not fall under the valuation rules and should not be linked to expenses for advertisement or publicity.

The Tribunal, relying on the legal precedent and reasoning from the Supreme Court cases, found no infirmity in the impugned order. It upheld the order based on the established legal proposition that expenses for after-sales services and PDI provided by the dealer do not form part of the assessable value for excise duty purposes. Therefore, the appeal filed by the department was dismissed, and the impugned order was sustained with the reasons provided therein.