2010 (8) TMI 49 - AT - Central Excise

Valuation - Whether the charges towards pre-delivery inspection and after-sale-service by dealers from buyers of the cars are to be included in the assessable value of cars in the light of the definition of transaction value given in Section 4(3) (d) of the Central Excise Act, 1944? Tribunal s earlier order on same issue in respect of same appellant based on admitted facts and not on point of law. Held that amount liable to be paid by buyer by reason or in connection with sale of goods including amount paid on behalf of assessee to dealer or person selling vehicle, includible.

Summary

Issues Involved:
1. Whether charges towards pre-delivery inspection (PDI) and after-sale services by dealers from buyers of cars are to be included in the assessable value of cars under Section 4(3)(d) of the Central Excise Act, 1944.

Detailed Analysis:

1. Background and Context:
The issue arose from the order passed by the Commissioner, Delhi, on April 30, 2008, which included charges towards PDI and free services in the assessable value for the period May 2005 to August 2007. The appellants contested this, citing a previous Tribunal order in their favor from April 16, 2004, and a Supreme Court dismissal of an appeal against that order.

2. Appellants' Argument:
The appellants argued that the definition of "transaction value" before and after the amendment on July 1, 2000, made no difference to their case. They relied on previous rulings, including the Bombay Tyre International case and their own case, which was dismissed by the Supreme Court due to delay, not on merits.

3. Respondent's Argument:
The department contended that the amended Section 4 of the Central Excise Act, 1944, incorporated the concept of "transaction value" replacing "normal wholesale price." They argued that any amount recovered from the buyer in connection with the sale, including servicing and warranty charges, should be included in the assessable value.

4. Tribunal's Analysis:
- Previous Tribunal Order (April 16, 2004): The Tribunal noted that the previous decision was based on admitted facts that no amount flowed to the manufacturer from PDI and after-sale services. Therefore, it did not address the legal point under the amended Section 4.
- Supreme Court Dismissal (April 3, 2006): The dismissal was due to delay, not on merits, and thus did not uphold the Tribunal's earlier decision.

5. Definition of "Transaction Value":
The Tribunal analyzed the definition under Section 4(3)(d), emphasizing that it includes any amount the buyer is liable to pay in connection with the sale, whether directly or indirectly, including servicing and warranty charges. This definition is extensive and inclusive, not limited to direct payments to the manufacturer.

6. Interpretation of "Transaction Value":
- The term includes any amount payable by the buyer, not just the price but also charges for services and warranties.
- The inclusive nature of the definition means it covers all amounts related to the sale, even if paid to dealers on behalf of the manufacturer.
- The Tribunal referenced various Supreme Court rulings to support this broad interpretation.

7. Conclusion:
The Tribunal concluded that charges for PDI and after-sale services collected by dealers from buyers are part of the assessable value. This is because they are payments made in connection with the sale of the vehicles, indirectly benefiting the manufacturer.

8. Final Judgment:
The point for consideration was answered affirmatively, including PDI and after-sale service charges in the assessable value of cars under the amended Section 4 of the Central Excise Act, 1944.

Pronounced on 13.8.2010