Assessable value of tractors excludes pre-delivery inspection, free after-sales service and warranty labour under central excise law.

Expenditure on pre-delivery inspection, free after-sales service and warranty-period labour for replacement of parts was treated as not forming part of the assessable value of tractors for central excise purposes. The reasoning followed earlier decisions in the assessee's own case and later rulings holding that dealer-incurred costs for pre-delivery inspection, free service and training were outside assessable value. A Board circular withdrawing contrary instructions and clarifying that pre-delivery inspection and free after-sales service during the warranty period would not be included supported that view. The disputed amounts were therefore excluded from assessable value, and the appeal was allowed.

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Issues: Whether the costs of pre-delivery inspection, free service and warranty-related labour were includible in the assessable value of the tractors for central excise purposes.

Analysis: The issue had already been decided in the assessee's own case and in later decisions holding that the dealer's expenditure towards pre-delivery inspection, free service and training was not includible in the assessable value of tractors. The same approach was applied to labour cost incurred during the warranty period for replacement of parts, which was held not to form part of the assessable value. The Board's circular withdrawing earlier contrary circulars and clarifying that pre-delivery inspection and free after-sales service during the warranty period would not be included in assessable value supported that view.

Conclusion: The disputed amounts were not includible in the assessable value, and the appeal was allowed.

Ratio Decidendi: Expenditure on pre-delivery inspection, free after-sales service and warranty-period labour for replacement of parts is not includible in the assessable value of tractors for central excise purposes.

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