9911796707
TMI Blog1991 (7) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturing costs and expenses. In view of the decisions recorded by this Court and the Supreme Court, the Company filed new price lists on May 15, 1980 and sought exclusion in respect of post-manufacturing expenses. By show cause notice dated September 1, 1980, the Assistant Collector of Central Excise called upon the Company to explain why the assessable value of the articles should not be determined on the basis of manufacturing costs plus manufacturing profits and selling costs plus selling profits and why the exclusion claimed on account of post-manufacturing expenses should not be disallowed. The Company gave reply to the show cause notice and filed fresh price lists with effect from October 7, 1980 and December 2, 1980 in which the assessable value of the goods excluding the post-manufacturing expenses was set out. The Assistant Collector gave a personal hearing in pursuance of the show cause notice and then approved the price lists without allowing any deduction on account of post-manufacturing expenses. The Assistant Collector passed the order approving the price lists on February 3, 1981. The petitioners preferred Writ Petition No. 189 of 1981 to challenge the legality ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g therein that the amount of excise duty provisionally paid was paid under protest and the duty liability payable in terms of revised price lists were filed. The Company claimed refund amounting to Rs. 33,69,859.02 paid in excess in respect of period between May 19, 1980 and February 17, 1981 and sum of Rs. 1,00,08,511.10 in respect of period commencing from February 18, 1981 to December 29, 1983. The figures were subsequently revised to Rs. 33,98,605.30 and Rs. 1,01,22,016.21. The revision was due to calculation error. In these revised price lists, the Company sought deduction under three heads: (a) additional tax on sales tax, (2) maintenance charges, and (c) site service charges. The Assistant Collector called upon the Company by letter dated January 23, 1984 to furnish certain clarifications in respect of deduction claim under three items and the clarification was furnished by letter dated February 6, 1982. 5. The Assistant Collector by order dated March 16, 1984 held that the Company is entitled to claim deduction in respect of amount covered under heading 'additional tax on sales tax' but the deduction sought under the heads of 'maintenance charges' and 'site service charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel appearing on behalf of the Department, very fairly stated that the observation of the Assistant Collector that the 'claim cannot be granted because the deductions on this count were not sought initially, cannot be supported. It is obvious that though initially the Company had not sought deduction on this count in pursuance of the interim order passed by this Court on December 9, 1983, the Company was permitted to file revised price lists in accordance with the decision of the Supreme Court in Bombay Tyres International Limited and consequently, the revised price lists were filed by the Company on January 7, 1984 claiming deduction in respect of maintenance charges and site service charges. The Assistant Collector could not have turned down the claim on the ground that the Company did not initially seek deduction under these headings. Shri Andhyarujina, learned counsel appearing on behalf of the petitioners, submitted that in respect of room air-conditioners and water coolers sold by the Company, one year's warranty is given to the customers and an offer is made for entering into a contract for annual maintenance service. The contract of maintenance service is optional. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished to every customer and the maintenance service contract is optional one, still the amount recovered towards maintenance service should be included in the value of the article because the services rendered to them under the warranty and agreement of maintenance of service are not different. It is not possible to accede to the submission of the learned counsel. As mentioned hereinabove, there is clear line of distinction between the obligations under the warranty and the obligations under the maintenance service. The brochure produced by the Company before the Assistant Collector unmistakably establishes that the liability to replace or to repair any defective part is upon the Company provided such defect is due to faulty material or workmanship. The warranty furnished by the Company does not demand that the Company should replace or repair the parts which have become defective due to normal wear and tear and the parts which fail to operate due to mis-handling of the machine. The Company is bound to furnish warranty to every customer in respect of goods sold but the customer is not bound to enter) into contract in respect of maintenance service. The customer may very well o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is given to the customer to enter into contract, if so desired. The customer is not bound to seek maintenance service from the Company but can very well enter into contract with any other Company or a person. The after sales service which the Supreme Court had in con temptation while making the aforesaid observations clearly refer to these services which the customer is bound to accept and pay for. It is also possible that in certain cases after sales service may be in respect of delivery of article from one place to another and in such cases the charges for delivery can be included. It is not possible to accede to the submission of Shri Desai that maintenance service offered by the Company promote the marketability of the article and, therefore, should enter into its value. It was also not possible to appreciate the observation made by the Assistant Collector that the maintenance service charges are not deductible because the Supreme Court has expressly laid down that no other expenses except trade discount, excise duty and average freight will be deductible for the purpose of determining the value of the excisable goods. On the other hand in paragraph 57 of the judgment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce enough documents to support the claim of deduction of maintenance service charges is incorrect. The Company filed revised price list and the price lists demonstrated the amount charged towards maintenance service contract from the customer. In addition to the price lists, the Company filed certificate in respect of maintenance service dated February 6, 1984 issued by the Chartered Accountant in support of the claim. The Assistant Collector not only did not reject the certificate but accepted the same in respect of deduction sought by the Company on account of additional tax on sales tax. Shri Desai made a faint attempt to urge that the production of certificate by Chartered Accountant is not sufficient documentary evidence to substantiate the claim. The submission is not correct. After the decision of the Supreme Court in Bombay Tyres International Limited delivered on October 7, 1983, the Government of India, Ministry of Finance issued circular dated December 3, 1983 to all the Collectors of Central Excise. The circular, inter alia , recites that the Assistant Collectors and the Collectors would be required to take up large number of cases for settling the claims arising out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allation of the Units and also helps the dealer in solving special problems encountered after installation. The site service also includes attending to customers' complaints received directly by Voltas in respect of Units serviced by the dealer. The Company sells the air-conditioners/water coolers to recognised dealers on a principle to principle basis and the dealer fulfils the warranty obligations to its customers. The site services rendered by the Company are independent of the warranty obligations and maintenance service. The Assistant Collector did not furnish any reasons apart from those which were mentioned hereinabove for rejecting the claim for deduction in respect of maintenance charges to turn down this claim also. Shri Desai submitted that site service charges also should be included in the assessable value for the identical reasons which were urged in respect of maintenance service charges. In other words, the submission was that site service charges is nothing different from the services rendered under the warranty obligations. We are unable to find any merit in the submission. The warranty obligation does not require the Company to provide design assistance to the de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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