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TMI Blog2015 (9) TMI 517X X X X Extracts X X X X X X X X Extracts X X X X ..... sement, delivery, packaging, forwarding and the like. Price which affixed on the package of CTVs is undisputedly maximum retail sale price and no deduction can be allowed from the said retail sale price other than the abatement as statutorily provided under the notification. In the instant case, the fact is that the RSP was declared by the appellant including the warranty charges and the same was affixed on the package. Thus as per the appellant's declaration itself the retail sale price includes the warranty charges. It that is so the abatement ranging from 30% to 35% as notified by the government shall only be allowed and in term of subsection (2) of section 4A no any other deduction is permissible to arrive at the assessable value. Therefore there is no provision under the law to exclude warranty charges from the retail sale price while computing the assessable value. Statutory provision under Section 4A cannot be altered or influenced merely because the appellant has chosen to discharge service tax on portion of the retail sale price. Therefore merely because the service tax was paid, deduction of the said value cannot be allowed as no such option has been provided eith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the package of TVs. However, while discharging the Excise duty liability, the appellant had worked out the assessable value as MRP minus warranty charges of ₹ 150/-. In view of the above a show cause notice dated 25/2/2010 was issued to the appellant demanding differential excise duty of ₹ 3,87,14,771/- under the provisions of proviso to Section 11A(1) of Central Excise Act, 1944 alongwith interest thereon under Section 11AB ibid. The notice also proposed to impose penalty on the appellant under the provisions of Section 11AC of the Central Excise Act read with Rule 25 of the Central Excise Rules, 1944. The said notice was adjudicated by the Commissioner of Central Excise, Aurangabad vide the impugned order and the Ld. Commissioner passed following order: (i) The valuation and assessment of the CTVs in question cleared by the assesse to M/s. ELCOT are required to be made with reference to their retail sale price under Sec 4A of the Central Excise Act, 1944, and not as proposed in the said Notice dated 1/4/2010 based on the purchase order price under Sec 4 of Central Excise Act, 1944. In consequence, the proposal in the Notice dated 1/4/2010, to demand differential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered by the appellants. In other words, the supply of warranty service is not a covenant for supply of CTV. (d) The Purchase Order has been divided in two parts, first part is a price for purchase/supply of CTVs and second part is for warranty service for 1 st /2 nd /3 rd (as the case may be) including service tax. (e) The appellants have rendered warranty services separately. The appellant have set up authorised service stations and call centers for fulfilling the obligation under the warranty bargain. The appellants have employed/appointed authorised technicians and arranged for spares and equipment for fulfilling the obligations under the warranty bargain. The fact that the appellants receive payment at the end of first year, second year and third year also go to show that obligation under contract for warranty service is separate obligation. The consideration for warranty is separate and received after the obligation is fulfilled. In view of the above, there are two separate contracts one for supply of CTVs and other for supply of warranty services. (f) If there is one consolidated price for two distinct supplies, then the consolidated price needs to be apportioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specifically includes all elements which are instrumental in bringing the goods at the point of purchase by the ultimate consumer. This is so because the aforesaid elements are integral convenants of sale of goods. (i) Specific mention in the inclusive portion of the definition is not decisive. Suppose certain charges are incurred for transporting the goods form dealer place to the consumer's place and for this activity, the dealer charges separately to the consumer over the above the retail sale price. It is nobody's case that this amount charged by the dealer should form part of retail sale price on the ground that transportation charges is specifically mentioned in the inclusive portion of the definition. This is rightly so because this amount is not part of the covenant of the sale of goods. This amount is for separate activity and bargain. For this proposition, the appellants rely upon the judgments of the Hon'ble Supreme Court in State of Karnataka vs. Bangalore soft drinks [2000 (117) STC 413]. Similarly in the present case, warranty services is not covenant for sale of CTV and hence, Explanation 1 to Section 4A does not cover the warranty services provided b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er consideration. The amount of service tax paid/payable is also more than the demand of excise duty. Under the facts, the amount of service tax already paid by the appellants should be adjusted and appropriated against the excise liability. Hence, no further demand would lie. (m) Even if it held that excise duty is payable on the warranty services, then this does not lead to the automatic conclusion that orders should be upheld. The Hon'ble Tribunal then as Court has to decide relief due to the parties involved. If such a conclusion is reached, then it would be clear that service tax has been wrongly paid and therefore the amount already paid as service tax should be adjusted towards the excise duty liability. The rate of service tax was always on the higher side during the period under consideration. The amount of service tax paid/payable is also more than the demand of excise duty. This contention as raised by the appellants before the adjudicating authority and there is no rebuttal as far these. The relief eligible to the parties involved has been considered in number of judgments. (n) In CCE vs. Telco [2006(196) ELT 308 (T)], the assessee availed credit on purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whereas, in the present case, as already submitted supra, warranty contract is a separate contract. Further, the Cestat did not have occasion to consider the effect of the case laws cited above. (q) The demand in the present case for the period December 2007 to January 2010 is beyond the normal period of limitation. The appellant submit that they have paid service tax on warranty charges and rate of service tax during the relevant period was higher than the rate of duty of excise. Therefore, the amount of service tax paid is higher than the demand of excise duty in the present case. Therefore, there cannot be any intent to evade payment of duty when the service tax already paid is higher than the excise duty now demanded. The extended period of limitation cannot be invoked when there is no intent to evade payment of duty. (r) The appellant further submits that they have properly filled and filed the ER-1 returns. There is absolutely no allegation that any particular information, which was required to be submitted in the return, was not submitted. The information which was not required to be submitted in law and therefore not submitted cannot be treated as suppression. In any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned order. He further submits that in this case, the main argument of the appellant is that both Central Excise duty and Service tax cannot be levied on the warranty charges and only one can be levied. He submits that it is nowhere mentioned in Central Excise Act or Rules made thereunder or in Finance Act, 1994 that there is a bar on levy of both Central Excise duty and Service tax on the same transaction. The system of taxation in India is that there many taxes like Central Excise duty, service tax, Sales tax, Octroi, purchase tax etc and many of them are levied on the same goods. There is no bar that once a particular tax has been levied, no other taxes can be levied on the same goods. Just because Central Excise duty and service tax are being administered by the same department, it cannot be said that both cannot be simultaneously levied when no such stipulation is there in the statute. As per Section 4 of Central Excise Act, 1944 the duty of Excise is chargeable on transaction value. From the definition of Transaction value, it is clear that Central excise duty is payable on advertising or publicity, marketing and selling organization expenses, storage, outward handling servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee is recovering ₹ 150/- after one or two years, it does not help the assessee and the concept of retail sale price will apply. Ld. A.R. relied on following case laws in this regard: (i) Hindustan Coca-Cola Beverage P. Ltd. Vs. CCE [2006 (199) ELT 718 (Tri-Del)] (ii) Gujarat Goldcoin Ceramics Ltd. Vs. CCE [2007 (216) ELT 527 (Tri-ahmd)] 4.4 Appellant has quoted certain case laws to show that excise duty and service tax cannot be levied simultaneously. Regarding Ericsson India Pvt. Ltd. Vs. CCE (supra). He submitted that the appellant had imported several components and procured certain indigenous components which were then assembled and installed to form Transmission Apparatus for Radio Telephony. Thus on the same activity of assembly and installation, the department was asking for excise duty and service tax separately. As there was no other activity involved, the Tribunal held that both cannot be charged. In the present case, the component of warranty of ₹ 150/- is very small part of the goods worth ₹ 2197/- and hence the case law is not applicable. The appellant also refers to Osnar chemicals Pvt Ltd. Vs. CCE (Supra), in this case, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paying duty on full MRP minus abatement. However, for the subsequent period, the assessee started taking deduction of ₹ 150/- towards warranty charges. There was no provision for deductions under Section 4A. Since Assessee was paying excise duty on warranty charges earlier, they should have approached the Department for clarification or at least intimated the department. However, the assessee chose not to do that and took a wrong deduction with intention to evade payment of duty. Thus, extended period is invokable in this case. 5. We have carefully considered the submission made by both sides and perused the record. 6. The issue to be decided by us is whether warranty charges can be allowed to be deducted from the MRP for the purpose of valuation under Section 4A. There is no dispute by both the sides that valuation of the CTVs sold by the appellant to the Tamil Nadu government enterprise M/s. ELCOT is under section 4A of Central Excise Act, 1944. The appellant's claim is that the warranty charges which is payable at subsequent stage of sale is not part of the retail sale price whereas the same is service independently on which the service tax also been paid. Since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 altered retail sale price shall be deemed to be the retail sale price; (c) where different retail sale prices are declared on different packages for the sale of any excisable goods in packaged form in different areas, each such retail sale price shall be the retail sale price for the purposes of valuation of the excisable goods intended to be sold in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the retail sale price at which the good is sold to the consumer. If the contention of appellant is accepted regarding the deduction of warranty charges then likewise there are many more heads of charges which can also be claimed for deduction. To avoid any such sort of interpretation, the legislature had enacted section 4A whereunder the valuation of consumer goods was made simplified, according to which, at whatever price the goods are sold to the consumer that price minus abatement as specified under the notification shall be the assessable value therefore there is no scope for any deduction other than abatement for the purpose of valuation under Section 4A. In the present case the price which affixed on the package of CTVs is undisputedly maximum retail sale price and no deduction can be allowed from the said retail sale price other than the abatement as statutorily provided under the notification. In the instant case, the fact is that the RSP was declared by the appellant including the warranty charges and the same was affixed on the package. Thus as per the appellant's declaration itself the retail sale price includes the warranty charges. It that is so the abatement rangi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the charges which are includible as per Section 4 in the transaction value all such charges plus the element such as dealer margin, retail margin, sales tax freight, etc are also included in the retail sale price and thereafter the only deduction which is permissible is the abatement as notified by the government from time to time therefore there seems to be no reason why a particular element out of many charges i.e. warranty charges should be allowed to be deducted. The appellant submitted that on the warranty charges they have discharged the service tax for this reason also the warranty charges should be allowed to be deducted from retail sale price of CTVs. We do not agree with this submission of the appellant for the reason that the statutory provision under Section 4A cannot be altered or influenced merely because the appellant has chosen to discharge service tax on portion of the retail sale price. Therefore merely because the service tax was paid, deduction of the said value cannot be allowed as no such option has been provided either under the Central Excise Act, or under the Finance Act, 1994. In the present case the issue involved is whether the deduction on accou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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