2026 (3) TMI 408 - AT - Central Excise

Valuation for excise: discounts on demo vehicles must be included under valuation rules and binding precedents, sustaining Revenue's determination.

Discounts on demo vehicles sold to dealers are includible in the excise assessable value; valuation must adopt the comparable price of normal cars because ... Transaction value - price determination for demo goods - discount offered by the appellant on demo vehicles sold to dealers​​​​​​​ - inclusion of discount in assessable value. Valuation of demo vehicles - inclusion of discount in assessable value - HELD THAT:- The Tribunal considered whether special discounts allowed on demo cars sold to dealers could be excluded from assessable value. Reliance was placed on earlier Division Bench decisions of this Tribunal in Ford India Pvt. Ltd. [2011 (7) TMI 1044 - CESTAT CHENNAI] and Hyundai Motor India Ltd. [2015 (12) TMI 940 - CESTAT CHENNAI], which held that at the time of clearance from the factory gate there is no difference between normal cars and demo cars and that transaction value for demo cars cannot be accepted where comparable normal car prices are available. The Tribunal noted that the Supreme Court had dismissed the civil appeal against those decisions, and held that the ratio is squarely applicable. Following those precedents, the Tribunal accepted the view that discounts given as special concessions for demo cars do not constitute deductible additional consideration and therefore the discounts must be included in the assessable value; transaction value was accordingly rejected insofar as it sought to exclude such discounts. [Paras 5, 6, 7] Appeals dismissed; discounts on demo vehicles to be included in assessable value and earlier precedent followed. Final Conclusion: The Tribunal dismissed the appeals, holding that the discounts granted on demo vehicles are not deductible and must be included in the assessable value, following the Division Bench precedents and the Supreme Court's dismissal of appeals against those decisions. Issues: (i) Whether the discount offered by the appellant on demo vehicles sold to dealers is includible in the assessable value under Section 4 of the Central Excise Act, 1944 and the valuation rules.Analysis: The issue concerns valuation for excise purposes where demo vehicles are offered to dealers at a discounted price. The legal framework includes Section 4 of the Central Excise Act, 1944, Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 and the Board circular F. No. 6/40/2002-CX.1 dated 01.04.2003 which clarify that at the time of removal there is no distinction between demo and normal vehicles for valuation. Prior decisions of the Tribunal in Ford India Pvt. Ltd. and Hyundai Motor India Ltd., affirmed by later orders, held that discounts for demo cars are not permissible deductions from transaction value where demo cars are not shown to be a separate class for valuation purposes and comparable price of normal cars must be adopted. The appellate bench applied those precedents and found them squarely applicable to the present facts, noting that the Revenue had relied on established authority and the Supreme Court had disposed of related civil appeals, leaving the issue settled.Conclusion: The discount on demo vehicles is includible in the assessable value; the appeals are dismissed and the valuation determinations in favour of Revenue are upheld.