1987 (12) TMI 207 - AT - Central Excise

Summary

Issues:
- Challenge of inclusion of mark-up in the assessable value for passenger cars under the Central Excises and Salt Act, 1944.
- Interpretation of Section 4 of the Central Excises and Salt Act regarding the determination of the "normal price."
- Dispute over whether mark-up should be considered as part of the consideration for the sale of the vehicle.
- Application of judgments related to similar cases in determining the outcome of the appeal.

Analysis:

The judgment pertains to an appeal before the Appellate Tribunal CEGAT, New Delhi, regarding the inclusion of mark-up in the assessable value for passenger cars under the Central Excises and Salt Act, 1944. The appellants challenged the Central Board of Excise and Customs' decision, arguing that mark-up should not be considered part of the "normal price" as per Section 4 of the Act. The appellants contended that the net dealer price minus discount should form the basis of the assessable value for passenger cars sold under a rate contract with the DGS&D. The Collector of Central Excise had held that rate contract prices, including mark-up, should constitute the normal price, a decision upheld by the Central Board of Excise and Customs, leading to the appeal before the Tribunal.

In the appeal, the appellants, represented by Shri D.N. Mehta, argued that the mark-up amount should be excluded from the assessable value based on various judgments cited, including those of M/s. S.M. Chemicals & Electronics and Another v. R. Parthasarathy and Others. On the other hand, Shri V.H. Doiphode, representing the respondent, contended that any price charged should constitute the normal price under Section 4 of the Act. He argued against allowing a deduction for mark-up, citing judgments such as the one in the case of Union of India v. Bombay Tyres.

The Tribunal, after considering the arguments and examining the facts, found that the judgments cited by Shri Mehta did not support his position. Referring to the principles outlined in the Bombay Tyres case, the Tribunal concluded that expenses like mark-up and after-sale service costs should not be deducted from the assessable value. The Tribunal highlighted that such expenses contribute to the value and marketability of the article, as observed in the Supreme Court's judgment. Therefore, the Tribunal dismissed the appeal, stating that the mark-up and service charges cannot be allowed as deductions from the assessable value, as they are part of the initial warranty and contribute to the value of the goods.