ASS and PDI charges excluded from assessable value for excise duty calculation

CESTAT Chandigarh ruled in favor of appellant regarding exclusion of After Sales Service (ASS) and Pre-Delivery Inspection (PDI) charges from assessable value for excise duty purposes. The tribunal relied on its previous decision in appellant's case and established judicial precedents holding that ASS costs should not be included in assessable value. The issue was considered settled (res integra) by various judicial forums. The impugned order was deemed unsustainable and appeal was allowed.

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Issues Involved:

1. Inclusion of After Sales Service (ASS) charges in the assessable value.
2. Inclusion of Pre-Delivery Inspection (PDI) charges in the assessable value.
3. Legality of the demand of duty, interest, and penalty.

Summary:

1. Inclusion of After Sales Service (ASS) charges in the assessable value:

The Tribunal found that the issue of inclusion of ASS charges in the assessable value stands settled in the appellant's favor by the Tribunal's previous judgment in the appellant's own case (Suzuki Motorcycle India Private Limited vs. Commissioner of Central Excise, Delhi-III 2023 (11) TMI 370 - CESTAT Chandigarh). It was consistently held by various judicial forums that the cost of ASS shall not be includible in the assessable value of the goods. The Tribunal reiterated that expenses incurred by dealers after the sale of goods to them cannot be added to the sale price charged by the manufacturer for computing the assessable value. The Tribunal cited several case laws supporting this view, including General Motors India Private Limited vs. Commissioner of Central Excise, Pune-I - 2022 (4) TMI 1539 CESTAT MUMBAI and Skoda Auto Volkswagen India Private Limited vs. Commissioner of Central Excise, Aurangabad - 2021 (12) TMI 239 CESTAT MUMBAI.

2. Inclusion of Pre-Delivery Inspection (PDI) charges in the assessable value:

The Tribunal noted that the show cause notice did not quantify the demand on PDI charges, and the entire demand was quantified only on the reimbursement towards free ASS. The Tribunal found that the PDI is carried out by the dealer at his own expense before the delivery of the vehicle to the ultimate customer, and the appellant has no connection or control over the actual performance of the PDI by the dealers. Therefore, the inclusion of PDI charges in the assessable value is not sustainable in law.

3. Legality of the demand of duty, interest, and penalty:

The Tribunal concluded that since the demand of duty itself is not sustainable, the demand of interest and penalty is also not sustainable. The Tribunal set aside the impugned order by allowing the appeal with consequential relief, if any, as per law.

Conclusion:

The Tribunal allowed the appeal, setting aside the impugned order and providing consequential relief to the appellant, as the issues of inclusion of ASS and PDI charges in the assessable value were settled in favor of the appellant. The demand of duty, interest, and penalty was found to be unsustainable.

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