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of <h1>Court rules excise duty payable on replaced parts during warranty period, rejecting double taxation claim</h1> <h3>BHARAT HEAVY ELECTRICALS LTD. Versus COMMISSIONER OF CUS. & C. EX., INDORE</h3> The Court upheld the decision that excise duty is payable on parts replaced during the warranty period. The appellants' argument that the sale price ... Valuation (Central Excise) - 'Complaint reserve' Issues involved: The issue involves whether excise duty is payable on parts replaced during the warranty period.Summary: The appellants, manufacturers of heavy electrical equipment, charge a 'complaint reserve' at the time of sale, which is not returned to the customer if parts are not replaced during the warranty period. The Collector and the Tribunal held that excise duty was payable on replaced parts, leading to the appeals.It was argued that since the part is replaced free of cost during the warranty period, and the sale price includes the price of the part, there should not be a double levy of excise duty. However, the Court found no substance in this argument, stating that the total amount paid by the customer, including the 'complaint reserve,' is considered the price for the machinery.Another submission was that the value of replaced parts should be considered zero, hence no excise duty should be payable. The Court rejected this argument, explaining that offering warranties or incentives does not exempt excisable goods from duty, as manufacturers bear the cost of such replacements.Ultimately, the Court upheld the Tribunal's judgment, finding no infirmity, and dismissed the appeals without costs.
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