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TMI Blog2006 (5) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... nty remain included in the sale price. 2. In March, 2002 the appellant introduced and extended optional warranty for 3rd and 4th years. Under this scheme the owner of the car could purchase a warranty for 3rd and 4th year on payment of certain amount. This warranty was later on made available to cars which had been already sold also. The warranty scheme was administered through dealers, who obtain a commission for each sale of the extended warranty. 3. Under the impugned order the Central Excise authorities have held that the cost of extended warranty should also be the part of the assessable value of cars. Based on such a finding, duty demand amounting to over Rs. 18 crores have been made for the period April, 2002 to March, 2005. Pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arranty is that including buyers of the car and no payment towards the same made by the dealer. According to the learned Counsel, the condition relating to payment being made by the dealer is also not satisfied in the present case. 6. Learned Counsel has pointed out that an identical case in relation to preventive maintenance service for Volvo vehicles had come before the Tribunal and the Tribunal held that the preventive maintenance service in question was no in connection with the sale of the goods and the free service provided in terms of sale along was liable to be part of assessable value. It is the submission of the learned Counsel that the judgment of the Supreme Court in the case of Kelvinator of India Ltd. [1988 (36) E.L.T. 517 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cost of normal warranty for 2 years remains included and duty is being discharged based on that transaction value. The extended warranty is an agreement between the buyers of the cars and Maruti Udyog Ltd. The dealers figure in this only as commission agent for sale of the car. The purchase of such a warranty bear no condition for sale of the cars by the appellant manufacturer or the dealers. Thus the dealer who purchase the cars in wholesale or individual buyers of the cars are under no obligation to obtain the extended warranty. There is no direct or proximate connection between the sale of the car to the dealer and the purchase of extended warranty inasmuch as its purchase is not obligatory. It can also be purchased from any time an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the vehicle (identified in the agreement hereto) upon the terms and conditions mentioned under this agreement and the schedule hereto . Thus, it is a service sought by the customer and provided by Volvo. It is not a part of or implicit in the sale and purchase of the vehicle. There is, of course, servicing which forms part of the sale consideration and that is the free service which is available to every purchaser by reason of the purchase of the vehicle on completion of 10,000 Kms. or four weeks of run. This service is part of the sale consideration and its value remains included in the sale price. The service agreement in question is a separate transaction and the consideration for it is also separate. It is for the maintenance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale can alone be included in the sale transaction. In the present case that servicing is the free service provided upon 10,000 Km. Run and not the life-time service procured through a separate agreement. 9. In Philips India Limited v. CCE, Pune reported in 1997 (91) E.L.T. 540 (S.C.) = 1997 (6) SCC 31, dealing with the question of includability of advertisement expenditure by dealer in the assessable value of electronic goods, the Apex Court again cautioned as under :- 7. We think that in adjudicating matters such as this, the Excise authorities would do well to keep in mind legitimate business consideration. 10. In the present case, the terms and conditions between the manufacturer-appellant and his dealers make it clear that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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