2018 (8) TMI 602 - AT - Central Excise

Valuation - inclusion of Pre Delivery Inspection charges and Cost of free services incurred by the dealers in their assessable value - whether the value of Pre Delivery Inspection charges and After Sales Service charges incurred by the dealers on the motor vehicles purchased from the appellant be included in the value of the motor vehicles while determining the excise duty on the same? - Held that - It is the contention of the appellant that after 1.3.2003 they have not claimed deduction on account of Pre Delivery Inspection charges and After Sales Service charges incurred by their dealers in providing such services from the assessable value of vehicles sold even though the said amount was reimbursed to them. To this claim of the appellant the Revenue has not placed any contrary evidence. Also Hon ble Supreme Court in TVS Motors Co. Ltd. case 2015 (12) TMI 874 - SUPREME COURT observed that Pre Delivery Inspection charges and after Sales Service charges cannot form part of assessable value of motor vehicles. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether Pre Delivery Inspection charges and After Sales Service charges incurred by dealers should be included in the value of motor vehicles for excise duty determination.

Analysis:
The appeal was filed against an order passed by the Commissioner of Central Excise, Mumbai-II, alleging that the appellant, engaged in manufacturing motor vehicles, had short paid duty by not including Pre Delivery Inspection charges and Cost of free services in the assessable value. The demand for duty recovery was made, which was confirmed with interest and penalty, leading to the present appeal.

The appellant contended that post-1.9.2003, they did not claim deduction for Pre Delivery Inspection and After Sales Service charges incurred by dealers, as they were already included in the transaction value for duty payment. The appellant argued that the expenses borne by them and not claimed as deduction should not be charged excise duty again, even if reimbursed to dealers. Reference was made to a Supreme Court case, Commissioner of Central Excise, Mysore Vs. TVS Motors Co. Ltd., where it was observed that such charges cannot be included in the assessable value for duty determination.

The Revenue supported the Commissioner's findings, but upon hearing both sides and examining the records, the Tribunal found that the key issue was whether the charges incurred by dealers should be added to the value of motor vehicles for excise duty calculation. The Tribunal noted that the Revenue did not provide evidence contrary to the appellant's claim. Additionally, the Tribunal referenced the Supreme Court case mentioned earlier, which held that Pre Delivery Inspection charges and After Sales Service charges should not be part of the assessable value for excise duty payment.

Based on the circumstances and legal precedents, the Tribunal concluded that the impugned order lacked merit. Consequently, the order was set aside, and the appeal was allowed.