9911796707
TMI Blog1993 (7) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... mits that the appellants M/s. Enfield India Ltd. manufacture motor cycles. For the purpose of sales they have appointed dealers, some sales are effected directly to Govt. Departments, DGS D and Canteen Stores Department (CSD). The appellants reimburse different amounts at different time to wholesale dealers for undertaking free after sales service and pre-delivery inspection. 4. Tracing the history of the case the Ld. Chartered Accountant submits that the appellant submitted his price list in 1974 and 1975 for approval by the Assistant Collector, stating inter alia that Rs. 150/- reimbursed to wholesale dealers for undertaking the after sales service and pre-delivery inspection may be permitted to be deducted from the price of motor cycles. The Assistant Collector while approving the price list under his order dated 21-2-1976 did not allow deduction of this amount from the assessable value on the ground that dealers were related persons and price to DGS D and CSD is contract price. That this order of the Assistant Collector was upheld by the Collector (Appeals) in appeal and the Govt. of India in revision. The appellant filed a writ in the Hon ble High Court at Madras who remande ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.) 8. Shri Prabhat Kumar, the Ld. SDR appearing for the Department, submits that there was sufficient case law which supports their contention that the after sales service charges as also the pre-delivery inspection charges reimbursed to the wholesale dealers in respect of sales to wholesale dealers as also to DGS D, CSD and Govt. Departments, should be included in the assessable value. In support of his contentions, he cited the case of Seshasayee Paper Board Ltd. v. Collector of Central Excise reported in 1988 (36) E.L.T. 611, wherein the Tribunal held that service charges paid to indentor to procure orders is not trade discount and that it is commission and is not deductible from the assessable value. He also referred to the judgment of Coromondal Fertilizers Ltd. v. Union of India [1984 (17) E.L.T. 670], wherein the Hon ble Supreme Court held that agreement which the appellants had with the selling agents clearly go to indicate that the selling agents, who are being appointed as the agents of the appellants for the sale of their product are agents; the agreement clearly provides that the selling agents will secure orders on behalf of the appellants; execute such orders on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The difference between the price at which the assessee clears the goods to main dealers and the price at which the main dealer sells to sub-dealers/other buyers are for (a) Rs. 252/- for (b) Rs. 272/-. Actually the difference in prices should have been Rs. 402/- in the case of (a) and Rs. 422/- in the case of (b). The Department has allowed out of Rs. 402/- and Rs. 422/-, Rs. 252/- in the case of (a) and Rs. 272/- in the case of (b) as the discounts to be abated, before arriving at the assessable value. This is to say that a portion of the difference between the price at which the assessee sells the goods to main dealers and the price at which the main dealer sells to other sub-dealers/other buyers was already abated for arriving at the assessable value. I find that no reason exists to alter the assessable value thus arrived at. This assessment satisfies the base norm of fixing assessable value under section 4. Next come to the assessment made for the two types of motor cycle sales to DGS D viz. (c) and (d) above. The marketing pattern in this case is that the assessee sells the goods direct to DGS D at the factory gate and at rate contract. The break-up of prices to DGS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount to be reimbursed to wholesale dealers for free after sales services and pre-delivery inspection. 13. We are not prepared to accept the plea of the appellants that these were the expenses incurred by them in their duty paid godown after the goods are cleared from the factory or that this amount was realised by the wholesale dealers long after clearance. This plea of the appellants is not relevant because it is not the realisation by the wholesale dealers which is material for consideration but it is the realisation of the amount by the appellants which is material. Moreover, the said charges do not cover any work done in the duty paid godown as they were for a specific purpose namely for undertaking pre-delivery inspection and free after sales services. The appellants have not produced any evidence that the said charges were incurred by them as expenses in godown. The appellants were realising this amount at the time of sale of its goods to wholesale dealers/DGS D/CSD. The wholesale dealer DGS D, CSD and Govt. Departments were paying the said charges at the time of delivery of the goods and transfer of title in goods to them. We therefore hold that the amount of the said ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt was not sole consideration. Now a very important point arises for our consideration. This point is whether these charges reimbursed to wholesale dealers can be termed as discount. For consideration of this point we have to examine the sale transactions closely. All sales can be divided into 2 categories, namely, sales to wholesale dealers and sales to Govt. Departments, DGS D and CSD. 17. On examination of the issue in the light of various pronouncements made by the Hon ble Supreme Court, the High Courts and the Tribunal in the case law cited earlier, we find that the transaction between the manufacturer appellant and wholesale dealers are transactions from principal to principal as the property in the goods in this case (motor cycle) passes on to the wholesale dealer the moment delivery of the goods is effected to them. There is no allegation that there is a flow back of the amount reimbursed to the wholesale dealers as expenses incurred on them free after sale services. The transactions between the manufacturer and wholesale dealers are not transactions between related persons. Therefore, the charges reimbursed to wholesale dealers in respect of sales to them will be admissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al . 20. We have held that price declared to the Department by the appellants in respect of sales to DGS D/CSD was not the sole consideration, therefore, we proceed to examine it under Rule 5 of the Central Excise (Valuation) Rules, 1975. In this connection, the appellants have cited the case of VST Industries v. Collector of Central Excise wherein the Tribunal held that the monetary value of the additional consideration should be added to the cum-duty price and the duty amount should be arrived at after working backwards. The respondents have cited the case of R. Gac Electrodes v. Collector of Central Excise reported in 1988 (33) E.L.T. 485 (Tri.) in which the Tribunal held that the monetary value of the additional consideration should be added to the assessable value. Having regard to the fact that the judgment in the VST Industries case is a recent one, coupled with the fact that while considering the issue the Tribunal had examined the ratio of the judgment in the case of R. Gac Electrodes, we would like to respectfully agree with the judgment in the case of VST Industries and order that the amount shall be added to the declared cum-duty price and then duty to be calculated b ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
