9911796707
TMI Blog2018 (9) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... sale or at any other time, etc., will form part of the transaction value. Only then will the transaction value become the assessable value for levy of Central Excise Duty. What comes to the fore is that the price of warranty services is not included in the price of the products and is payable separately by the bank as per agreed rates. Not only that, after expiry of warranty period of two years, the second line maintenance charges will also kick in. Discernibly, without agreement on payment of warranty charges for two years and second line maintenance charges after expiry of that period for another three years, the ATM machine is not sold. Evidently, the agreement to pay these warranty charges and their actual payment is nothing but a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the case are that appellants are manufacturers of Automatic Teller Machines (ATMs). The present dispute revolves around the contract entered into between the appellant and State Bank of India and their associates. As per the agreement entered into by the appellant with the banks, the latter were required to make payment for warranty services half-yearly in arrears, the price of which was not included in the price of the ATM and was required to be paid separately by the banks. 2.2 Further, after expiry of the warranty service period of two years, the banks were required to make payments to the appellant towards Second Line Maintenance (annual maintenance contract) for three years. The Department took the view that the said charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roadly summarized hereinbelow : (i) There is an obligatory warranty period of 30 days and further warranty period of two years and three years which are optional only and therefore, the price of the ATM is independent of warranty services of two years and three years. (ii) The appellant pays service tax for the rate of warranty charges accepted for two years and three years. It may also be seen that the warranty charges quoted are per annum and it does not depend on the price of the ATM. (iii) The price payable by the buyer on a product shall include only services which are in connection with the sale. It is submitted that the disputed warranty services cannot be considered as in connection with the sale for the following reasons : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department, the Ld. AR Shri. A. Cletus, supports the impugned Orders. He also made various submissions which can be broadly summarized as under : (i) The warranty charges are not optional charges as made out by the appellants; (ii) For each of the items supplied by appellant, the Master Solutions Agreement provides for separate charges for warranty/second line maintenance which shall be undertaken by the appellant for the period of five years cumulatively from the date of installation of the ATMs. Hence, the warranty/second line maintenance agreed to be provided by appellant is compulsorily connected with the supply of ATMs. (iii) Instead of paying Central Excise Duty at around 16%, the noticee has chosen to discharge much less ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether payable at the time of the sale or at any other time, etc., will form part of the transaction value. Only then will the transaction value become the assessable value for levy of Central Excise Duty. 9. Viewed in this light, we would then focus on the conditions of the sale. Para 5.2 of the Master Solutions Agreement which has been reproduced by the appellant in para 7 of the grounds of appeal is reproduced as under : 5.2 Warranty period The warranty services commence upon installation (irrespective of whether connectivity to SBI s ATM switch has been obtained or not) and shall be for a period of two years. However, the price of warranty services is not included in the price of the products and is payable separately by SBI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... econd line maintenance services is found in page 164 of the appeal papers onwards. The addendum describes the Second Line Maintenance (SLM) Services that appellant will provide to the bank and specifically indicates that they shall be provided as SLM/warranty services during the warranty period of two years and as SLM/maintenance service after expiry of the warranty period. 13. From the discussions hereinabove, it is clearly evident that it is mandatory for the buyers of the ATMs to also accept the warranty agreement referred to above and pay warranty charges for the first two years and second line maintenance charges for the next three. Although the amounts become payable only later, in our view, this would still come within the sc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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