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TMI Blog2011 (7) TMI 983X X X X Extracts X X X X X X X X Extracts X X X X ..... the MRP, therefore, the OSC/RPP are includable in the assessable value - Decided against the assessee - E/661-662/2007-Mum - A/488-489/2011-WZB/C-II(EB) - Dated:- 1-7-2011 - S/Shri Ashok Jindal, P.R. Chandrasekharan, JJ. REPRESENTED BY : Shri A. Hidayatullah, Sr. Advocate with Ms. Shailaja Kher-Hidayatullah, Advocate, for the Appellant. Shri R.K. Mahajan, Jt. CDR, for the Respondent. [Order per : Ashok Jindal, Member (J)]. The appellants are in appeals against the impugned orders wherein demand of duty along with interest is confirmed and equivalent amount of penalty has been imposed under Section 11AC of the Central Excise Act, 1944 on account of charging consideration of Optional Service Charges (OSC in short) and Rust Proof Protection Charges (RPP in short) over and above the MRP of the impugned goods i.e. Refrigerators and Washing Machines. 2. The facts of the case are that the appellants are the manufacturer of Refrigerators and Washing Machines and clearing their goods to various depots located all over the country. The goods are to be charged Central Excise duty on the basis of MRP under Section 4A of Central Excise Act, 1944 after allowing the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs an OSC for a period of 4 years in the case of refrigerators and 3 years in the case of washing machines. The appellants also offered to its customers an optional 5 year RPP on select models of refrigerators. There are separate contracts for OSC and RPP. The contracts of OSC are in operation only after the expiry of one or two year warranty period. He also explained that the said option could be exercised by the buyer of the goods either at the time of purchase of the goods or at any time during the one or two year period of the warranty of the product. (iv) He also submitted that the customer exercised this option by actually declaring the said option on the body of the printed contract which was a part of the operations manual. A copy of the said contract was to be handed over to the customer and the original copy of the said contract was sent to the appellants service department for further reference. (v) He also submitted that the customer had right to opt out of the said contract during any time of the warranty period and on such opting out of the contract the amount of OSC would be refunded. Therefore, it is submitted that the amount of OSC was in no way an addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pex Court, Electrolux Kelvinator v. Commissioner - 2004 (170) E.L.T. 449 (T), Commissioner v. Electrolux Voltas - 2006 (193) E.L.T. 288 (T), Whirlpool of India, Faridabad - OIA No. 34-35/RH/Adj/2004 dated 29-9-2004, Godrej Boyce v. Commissioner - Order No. A/180/08/WZB/C-I/EB (Tri.-Mum.), Godrej Boyce v. Addl. Commissioner - OIA No. PII/PAP/223/2009 dt. 26-10-2009 and Godrej Boyce - Commissioner Chandigarh s order-in-original No. 58/CE/CHD/2006, dated 29-12-2006. (xiii) He further submitted that the issue whether OSC is an additional consideration or not has attained finality that OSC is not additional consideration affecting the value of the goods chargeable to duty under MRP valuation. Therefore the said principle is binding in this case. He further submitted that OSC is not a condition of sale and it is an unconnected, independent activity. Therefore, it cannot be an additional consideration for the purposes of valuation of the product. (xiv) It was also contented that the goods in question were always sold at a price much lower than the MRP declared on the goods. Therefore in any case the OSC was added to the price of the goods sold, the same will add up to a figure m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of optional warranty charges has been clearly dealt with that where such charges were/are collected over and above RSP, they are includable for the purpose of charging duty. He also submitted that the appellants are clearing the goods to their dealers and at the time of clearing goods, the appellants are charging OSC/RPP by separate invoices apart from the invoice on MRP basis of the product from the dealers. These charges are taken by the appellants from the dealers at the time of clearances of the product. Thereafter, the dealer sells these goods by issuing consolidated single invoice to the consumers which was inclusive of MRP as well as aforesaid OSC/RPP charges. Therefore, these charges found part of additional consideration over and above MRP of the product. He further submitted that the facts of Electrolux Voltas Ltd. (supra) are different and sub silentio therefore can change the decision. To support this contention he relied on the decision in the case of CCE, Calcutta v. Al Noori Tobacco Products - 2004 (170) E.L.T. 135 (S.C.). Therefore, the facts of Electrolux Voltas Ltd. blindly are not applicable to the facts of this case. Hence cannot be taken as precedent. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot relied upon the decision of Electrolux Voltas Ltd. therefore, first we have to examine whether the facts of the case of Electrolux Voltas Ltd. are identical to the facts of the case in hand before us or not? 7.2 The case of Electrolux Voltas Ltd. are reproduced here as under :- The assessee had filed a price declaration w.e.f. 1-3-2000 for clearing the goods on MRP based price under Section 4A of Central Excise Act, 1944 for various models of refrigerators. For the purpose of this Section, retail sale price meant the maximum price at which the excisable goods in packed form might be sold to the ultimate consumer included all taxes, local or otherwise, freight, transport charges, commission, payable to dealers all charges towards advertisement, delivery, packing forwarding the like as the case may be the sale price was the sole consideration for such price. The A.C.C. Ex Chandrapur, observed that the asssessee had recovered Rs. 200/- against each refrigerator towards Optional Service Contract (hereinafter referred as OSC for brevity sake) of 4 years commencing upon the expiry of stipulated one year warranty period from the buyers. This was nothing but an addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the refrigerators/washing machines are having warranty of 1 year/2 years and for the remaining period they have to pay optional service charges. It is also apparent on records that the appellants are clearing these refrigerators/washing machines to their dealers through two different invoices, one for the sale of the refrigerators/washing machines and another one for OSC/RPP. It is also the fact on record that when these refrigerators/washing machines were cleared by their dealers to retail customers, dealers issue a composite invoices for the sale price+OSC/RPP. Therefore, the facts of this case are distinguishable from the facts of the case of Electrolux Voltas Ltd., as the customer has to pay OSC/RPP to the dealer at the time of purchase. In case, the customer does not opt for OSC/RPP, the customer has to file refund claim. Hence the facts of Electrolux Voltas Ltd. is distinguishable to the facts of this case. 7.5 We have seen that the advertisement sticker showing 5 years warranty of the product sold by the appellants clearly affects the sale price of the product. Moreover, the optional service charges are to be optional to the customer to be paid separately at the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealers are clearing the product on MRP but no data is available that this MRP includes OSC/RPP charges which is not shown by the appellants in their costing data that the OSC/RPP are over and above cost of production while determining MRP. Therefore these OSC/RPP charges are includable in the assessable value. The contention of the appellants that the OSC is an additional consideration and is not affecting the value of the goods chargeable to duty under MRP valuation is not convincing as the goods were cleared by the dealers of the customers through consolidated invoices wherein the MRP+OSC and RPP are collected from the customers collectively. Therefore, the Board Circular No. 432/64/98-CX.3, dated 23-11-1998 is applicable to the facts of the case wherein it was clarified that where extra amounts are collected over and above the retail sale price declared are includable in the assessable value for the purpose of charging excise duty. 8. To sum up the above mentioned discussion we find that the facts of this case are distinguishable from the case of Electrolux Voltas Ltd. (supra) as discussed herein above and when the goods have been cleared to the customers/ultimate buyers thr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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