Assessable value excludes dealer-reimbursed service charges; central excise demand, interest and penalty were held unsustainable.

After-sales service and pre-delivery inspection charges reimbursed to dealers were treated as not forming part of the assessable value for central excise, because the vehicles were sold at the transaction price and the dealer, not the manufacturer, performed those services. The Tribunal relied on its earlier decision in the assessee's own case and held that reimbursement of such expenses did not amount to additional consideration flowing to the manufacturer. It also noted that the Department had not established any fresh basis beyond the show-cause notice. On that settled footing, the duty demand failed, and the consequential interest and penalty also could not be sustained.

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Issues: Whether the value of after-sales service and pre-delivery inspection charges reimbursed to dealers was includible in the assessable value for central excise duty, and whether the duty demand with interest and penalty could be sustained.

Analysis: The dispute was covered by the Tribunal's earlier decision in the assessee's own case for the previous period, following which the issue had already been settled against inclusion of after-sales service and pre-delivery inspection charges in the assessable value. The reasoning accepted that the manufacturer sold vehicles to dealers at the transaction price, that the dealer performed the services, and that reimbursement of such expenses did not amount to additional consideration flowing to the manufacturer. It was also noticed that the case of the Department had not been properly established beyond the show-cause notice, and that no fresh basis could be introduced to justify inclusion of these amounts in assessable value. In view of the settled position, the demand itself could not survive, and the consequential interest and penalty also failed.

Conclusion: The value of after-sales service and pre-delivery inspection charges was not includible in the assessable value, and the duty demand with interest and penalty was unsustainable.

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