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TMI Blog2014 (12) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... ans that from the total retail sale price only the abatement of 30% to 35% can be deducted to arrive at the assessable value. There is no provision whatsoever under the law to exclude warranty charges from the retail sale price while computing the assessable value. The ld. Advocate has contended that since they are paying service tax on the warranty charges they should be permitted to exclude the same from the assessable value. This contention is again totally irrelevant. Appellant did not inform the department about the exclusion of warranty charges from the retail sale price nor did they declare the same in ER-1 return filed with the department. In fact the appellants were earlier paying duty on the value inclusive of warranty charges and in the ER-1 return what is reflected is only the assessable value and not the MRP/RSP. In view of the above, we are prima facie of the view that the appellant has suppressed the fact of excluding the warranty charges from the MRP to arrive at the assessable value and, therefore, the extended period of time has been rightly invoked. We also notice that the case laws relied upon by the department, namely, Gujarat Goldcoin Ceramics Ltd. [200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of Central Excise, Aurangabad vide the impugned order and the ld. Commissioner held that warranty charges have been incorrectly deducted by the appellant from the MRP while arriving at the assessable value under Section 4A of the Central Excise Act, and accordingly he confirmed the duty demand of ₹ 3,87,14,771/- being the duty not paid on the total quantum of warranty charges incorrectly deducted by the appellant while arriving at the assessable value under Section 4A of the said Central Excise Act. He also confirmed interest on the above duty demand under the provisions of Section 11AB of the Act and also imposed a equivalent penalty under Section 11AC ibid. Hence the appellant is before us. 3. The ld. Counsel for the appellant makes the following submissions : 3.1 The scope of retail sale price does not include warranty charges and, therefore, warranty charges are not includible in the MRP on which statutory abatement is permissible by way of notification issued under Section 4A. The warranty is a bargain separate and distinct from sale of goods and warranty is a supply of service while CTV is a supply of goods. Thus, the appellant had undertaken two activi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... warranty charges in the retail sale price of the goods. Therefore, what can be deducted from the said price is only the amount of abatement provided for in the notification issued by the government. No other deduction is permissible for arriving at the assessable value under the provisions of Section 4A. The fact that the appellant receives warranty charges in two instalments, one at the end of the 1st year and the balance at the end of the 2nd year is not a factor relevant for determination of assessable value under Section 4A. Similarly, the fact that the appellant pays service tax on the warranty charges is also not relevant for the purpose of determination of value under Section 4A. The ld. AR relies on the following judicial pronouncements in support of his arguments, namely, Gujarat Goldcoin Ceramics Ltd. v. CCE, Rajkot, - 2007 (216) E.L.T. 527 (Tri.-Ahmd.) and Sony India Ltd. v. CCE, New Delhi - 2000 (120) E.L.T. 644 (Tri.) which was upheld by the Hon ble Apex Court in the same case reported in 2004 (167) E.L.T. 385. 4.1 As regards the time bar plea raised by the appellants, the ld. AR submits that the appellant had never disclosed to the department that they were excludi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice shall be deemed to be the retail sale price for the purposes of this section. Explanation 1. - For the purposes of this section, retail sale price means the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer and includes all taxes, local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like and the price is the sole consideration for such sale : Provided that in case the provisions of the Act, rules or other law as referred to in sub-section (1) require to declare on the package, the retail sale price excluding any taxes, local or otherwise, the retail sale price shall be construed accordingly. Explanation 2. - For the purposes of this section, - (a) where on the package of any excisable goods more than one retail sale price is declared, the maximum of such retail sale prices shall be deemed to be the retail sale price; (b) where the retail sale price, declared on the package of any excisable goods at the time of its clearance from the place of manufacture, is altered to increase the retail sale price, such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of sub-section (2) of Section 4A, what can be deducted is the abatement of 30% to 35% notified by Central Government. This means that from the total retail sale price only the abatement of 30% to 35% can be deducted to arrive at the assessable value. There is no provision whatsoever under the law to exclude warranty charges from the retail sale price while computing the assessable value. The ld. Advocate has contended that since they are paying service tax on the warranty charges they should be permitted to exclude the same from the assessable value. This contention is again totally irrelevant. For e.g., the retail sale price includes freight/transport charges, commission payable to dealers, charges towards advertisement, delivery, packing, forwarding etc. On some of these elements the service tax is payable for e.g., in respect of freight/transportation charges. Similarly, the commission payable to dealers attracts service tax under business auxiliary services/Service charges paid towards advertisement will also attract service tax under the category of Advertising agency services. Merely, because certain elements in the price is liable to service tax, that is no reason for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat case, it was held by the Tribunal that the charges towards installation, commissioning cannot be levied to excise duty. In respect of HCL Info-systems Ltd. case also, the issues were more or less identical and in that context it was held by the Tribunal that installation charges cannot be included in the assessable value of the goods supplied for the purpose of excise levy. None of these cases pertain to valuation under Section 4A, which is based on retail sale price of the goods. Therefore, the ratio of the judgments rendered in a different context altogether cannot be made applicable to the facts of the present case, which deals with the levy under Section 4A of the Act, which is based on retail sale price . 11. In view of the above, we do not find any merit in the arguments advanced by the ld. Advocate for the appellants. As regards the time bar plea raised by the ld. Advocate, it is seen that the appellant did not inform the department about the exclusion of warranty charges from the retail sale price nor did they declare the same in ER-1 return filed with the department. In fact the appellants were earlier paying duty on the value inclusive of warranty charges and in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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