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TMI Blog1987 (5) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals) did not agree with the submissions of the appellants but upheld the order of the Assistant Collector of Central Excise Cal-E DIVN, order-in-original No. 33A/3/48 to 53/AC/Cal/E/ 1985, dated 27-9-1985. This is the dispute in this appeal. 2. The learned counsel for the appellants, Mr. Jyoten Ghosh, argued that there was no law by which expenses incurred beyond the warranty period which they charge their customers should form part of the assessable value. These charges were purely optional to the customers and the customers were free to avail them or not. The after-sale service charges were charges that have no relation to the production or manufacture of the excisable goods and, therefore, their inclusion in the assessable value is beyond the excise levy and is violative of Article 265 of the Constitution. The demands confirmed by the adjudication order of 27-9-1985 and affirmed by the Collector (Appeals) in order dated 31-1-1986 were time-barred and not maintainable. There had been no suppression of facts to evade duty and the findings that there was such suppression and evasion is totally perverse and showed a non-application of mind. It was not correct that the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no law anywhere that a charge for maintenance after the warranty period stands on a different footing from a charge during the warranty period. If there is a difference between the two, we at least are not able to discern it. The Assistant Collector and the Appellate Collector have written pages discussing the problem, and they were quite right. The Appellate Collector in his order dated 31-1-1986 reproduces passages from the order of the Supreme Court in Bombay Tyre International case 1983 E.L.T. 1896 which contains some very apt words and they are very pertinent to this dispute. The court observed : Charges for other services after delivery to the buyer, namely, after-sales service and marketing and selling organisation expenses including advertisement expenses cannot be deducted. It will be noted that advertisement expenses, marketing and selling organisation expenses and after-sales services promote the marketability of the article and enter into its value in the trade. 5. The Supreme Court ruled further that expenses which are incurred on account of the several factors which contribute to the value of the goods up to the date of sale, which obviously would be the dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all about what the manufacturers say about the extra charges that they derived from their sales but which they tried to conceal from the central excise. They did not make a clean and an honest declaration of their money transaction and the income they derived from their sales, but instead tried to hide their receipts on account of the sales behind a facade of so-called installation charges, transportation charges, maintenance, service charges after-sales, etc., etc., all to be incurred after the period of warranty, as if this was a magic that gets a charge excluded from the assessable value. It is well that the lower authorities have done what they did. 9. The Assistant Collector has already given certain concession in regard to the amounts of duties that he held were not payable; it is not possible for this Tribunal to give anymore. The assessees claim that there have been certain extra amounts demanded in the show cause notice. We will ask the Assistant Collector to recalculate and to refund or to desist from collecting, the excess amount, if there be any. 10. The claims regarding transportation charges are a little difficult to follow. It is not understood how there should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buyer, namely after-sales service and marketing and selling organisation expenses including advertisement expenses cannot be deducted. Hon ble judges in the said paragraph have further clarified that advertisement expenses, marketing and selling organisation expenses and after-sales service promote the marketability of the article and enter into its value in the trade. Where the sale in the coarse of wholesale trade is effected by the assessee through its sales organisation at a place or places outside the factory gate, the expenses incurred by the assessee up to date of delivery under the aforesaid heads cannot, on the same grounds, be deducted. But the assessee will be entitled to a deduction on account of the cost of transportation of the excisable article from the factory gate to the place or places where it is sold. It is thus manifest that the reference is to the normal trade practice. If the extra services cannot be said to be the normal trade practice, the reference to Hon ble Supreme Court s judgment cannot be justified. In fact the appellants in reply to the Show Cause Notice had clearly mentioned that the after-sale service after the expiry of warranty period were opt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ond and the third year. In my view this decision of the Tribunal has to be followed as it has considered relevant aspects of after-sale service. For the above reasons I am of the view that after-sale service beyond the warranty period cannot be included in the assessable value. 15. With regard to the other aspects namely installation charges, transportation charges I agree with the findings of my learned brother. I also agree with the findings of my learned brother that in any event the demand should be restricted to six months. In the result the appeal is partly allowed. 16. [Order per: I.J. Rao, Member (T) ]. -I have with great respect gone through the orders of my learned brothers. I have also very carefully gone through the orders of the Tribunal in Collector of Central Excise, Bhubaneshwar v. Konark Television Ltd. (Order No. 68-75/87-A, dated 3rd Feb., 87) [1988 (33) E.L.T. 481 (Tribunal)] and the relevant portions of the Supreme Court s judgment in the Union of India v. Bombay Tyres International. In view of the facts of the present matter, I agree with the orders of Shri Harish Chander, Member (J) as expressed in paras 14 and 15. - - TaxTMI - TMITax - Central E ..... X X X X Extracts X X X X X X X X Extracts X X X X
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