1995 (11) TMI 241 - AT - Central Excise

Summary

Issues:
1. Inclusion of repair charges in the assessable value of compressors manufactured by the appellant.
2. Whether the repair charges were optional and not includible in the assessable value.
3. Limitation on the demand for duty prior to April 1985.

Analysis:
1. The appellant, a compressor manufacturer, changed its pricing method in February 1984, reducing prices and limiting the warranty period to one month. The department contended that the repair charges were not optional but formed part of the assessable value. The Collector upheld the demand for duty, stating that the change in warranty arrangement was a method to reduce duty liability. The appellant's argument that buyers had the option not to avail of repair charges was rejected, citing lack of unequivocal buyer categorization and simultaneous payment for goods and repairs.

2. The Tribunal noted that the appellant had provided a list of buyers who did not avail of warranty charges, primarily wholesale dealers or O.E. buyers, constituting a small percentage of total buyers. The Tribunal reasoned that such buyers fell under Part I price lists where prices were negotiated, indicating an optional arrangement for repair charges. The burden of proving the defense baseless shifted to the department, which failed to establish that these buyers were not covered by Part I price lists.

3. Regarding limitation, the Tribunal found in favor of the appellant. The appellant had clearly communicated the pricing changes and warranty limitations to the department, fulfilling the essential information requirement under Rule 73C. The Tribunal rejected the department's argument of contravention of law, stating that unless a specific law prohibited the arrangement, intentions could not be considered. Consequently, the demand for duty before April 1985 was deemed unsustainable based on limitation grounds.

In conclusion, the Tribunal allowed the appeal, ruling in favor of the appellant concerning the inclusion of repair charges in the assessable value, establishing the optional nature of the charges, and limiting the demand for duty prior to April 1985.