2014 (3) TMI 519 - AT - Central Excise

Waiver of pre deposit - Valuation - inclusion of pool lifting charges into the value of motor vehicles - Held that - Scheme of pool lifting charges the dealers placed orders for number of vehicles and certain type, model, colour required by them in future for ultimate sale to their customers. But in case later on, they received more orders for the vehicles dealer can lift these vehicles from the pool created by the applicant. In order to receive these vehicles from this pool he has to pay extra charges to get these vehicles. The applicant is clearing the goods to their dealers on the invoices on which Central Excise duty has been paid. The dealers in turn sell these cars to their customers by adding their original invoice amount plus the pool lifting charges. We find that pool lifting charges are being recovered from the customers. Accordingly we are of the view that these charges prima facie are required to be added in the value under Section 4 of the Central Excise Act. Therefore the applicant does not have a prima facie case in their favour - Conditional stay granted.

Issues:

1. Stay application seeking waiver of pre-deposit and stay of recovery of certain amount and penalty.
2. Whether charges collected by the applicant from dealers are liable to be added in the price of goods for Central Excise duty.
3. Validity of Show Cause Notice issued based on audit objections.
4. Applicability of the extended period of limitation for the demand raised.
5. Whether pool lifting charges form part of the transaction value for Central Excise duty.

Analysis:

1. The case involved a stay application by M/s Maruti Suzuki India Ltd. to waive pre-deposit and stay recovery of a specific amount and penalty imposed by the Commissioner. The applicant was engaged in manufacturing motor vehicles and parts under Chapter 87 of the Central Excise Tariff.

2. The department found that the applicant collected additional charges from buyers/dealers, including penalty on dealers, income from pool cancellation and pool lifting charges, and cancellation charges for extended warranty. A Show Cause Notice was issued, confirming the demand on pool lifting charges but dropping proceedings on penalty and cancellation charges. The applicant argued that pool lifting charges should not be included in the assessable value for Central Excise duty.

3. The applicant contended that pool lifting charges were not covered under the exhaustive definition of transaction value in Section 4(3)(d) of the Central Excise Act. They also argued that the Show Cause Notice was based on audit objections without proper investigations, making it legally flawed, and claimed the demand was time-barred.

4. The Revenue argued that the charges collected by the applicant from dealers, including pool lifting charges, were part of the consideration for sales of motor vehicles. The Commissioner upheld the demand, stating that the charges formed part of the transaction value. The department supported the need for pre-deposit by the applicant.

5. The Tribunal found that pool lifting charges were indeed part of the consideration for sales, as dealers could lift vehicles from a pool by paying extra charges. These charges were added to the original invoice amount when dealers sold the cars to customers. Thus, the charges were deemed to be recoverable from customers and should be included in the value under Section 4 of the Central Excise Act. The Tribunal directed the applicant to make a deposit within a specified period and granted a stay on the balance dues pending appeal disposal.

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