Assessable value excludes dealer-incurred post-clearance service costs where the manufacturer has no service obligation.

Dealer-incurred expenditure on predelivery inspection and the first three after-sales services for vehicles resold to customers is not includible in the manufacturer's assessable value when the manufacturer has no obligation to provide those services and the wholesale sale is on a principal-to-principal basis. The services form part of the dealer's separate retail arrangement with buyers and do not add to the factory-gate value of the goods cleared by the manufacturer. On that basis, the demand and penalty founded on inclusion of these costs were unsustainable, and the matter was decided in favour of the assessee.

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Issues: Whether the cost of predelivery inspection and the three initial after-sales services incurred by the dealer on his own account for vehicles resold to customers is includible in the assessable value of the motor vehicles cleared by the manufacturer to dealers in wholesale trade.

Analysis: The dispute was treated as already settled by the Tribunal's earlier decision on the same question, which had received approval of the Supreme Court. The dealer's expenditure on predelivery inspection and running-in services was found to be part of the dealer's retail arrangement with customers and not an addition to the manufacturer's factory-gate value. Since the manufacturer had no obligation to render those services and the transaction with dealers was on a principal-to-principal basis, the cost of such services was not attributable to the assessable value of the goods cleared from the factory.

Conclusion: The cost of predelivery inspection and the three initial after-sales services is not includible in the assessable value, and the issue is decided in favour of the assessee.

Final Conclusion: The demand and penalty founded on inclusion of these dealer-incurred service costs could not be sustained, and the appeal was allowed on merits.

Ratio Decidendi: Dealer-incurred post-clearance service expenses that do not form part of the manufacturer's sale price or factory-gate value are not includible in assessable value.

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