TaxTMI 
TaxTMI 
1996 (7) TMI 497
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....ate bills one said to be for the price of the goods and the other for the comprehensive maintenance service (CMS) charges. The total amount of both the bills was collected from the WD's for all the supplies from the factory to the WD's. The bill for the CMS charges was shown, as having been issued subsequent to the date of removal of the TV sets but in fact both the bills - one said to be for the price and the other for the CMS charges were issued simultaneously and the total amount collected. The amounts collected in the name of CMS charges were not included in the declared assessable values and no Central Excise Duty (CED) was paid on such amounts. The T.V. sets were sold by the WD's to the customers and there was no agreement between S.T.C. and such ultimate customers. The bills were raised on the WD's. The goods were covered by the manufacturers' guarantee and for such guarantee, it was declared that no separate charges were payable. In fact, however, the CMS charges were to be borne compulsorily by the WD's and through WD's by the ultimate customers in respect of all the T.V. sets cleared from the factory of STC. On investigation, it was found that there was no agreement betwe....
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.... the S.T.C. were recovering CMS charges by raising separate invoices from their WD's. These charges were compulsorily paid by WD's with regard to all the supplies received by them from S.T.C. In turn, WD's were recovering these charges from their customers by raising consolidated bills representing both the declared prices and the CMS charges + their margin, etc. These separate invoices under which CMS charges were recovered from the WD's were not taken into account by STC for arriving at their assessable values. It is seen that all the T.V. sets were covered by the manufacturers' guarantee, and after-sale service during the guarantee period was already provided by such manufacturers' guarantee. When guarantee was there against defective components as well as sub-standard workmanship then these collections in the name of after-sale service were nothing but additional consideration with regard to the sale of the T.V. sets. As per letter dated 8-7-82 of STC all the T.V. sets were covered against defective components and sub-standard workmanship under manufacturers' guarantees. The T.V. Guarantee-Card provided for a guarantee of 12 months for manufacturing defects. It formed a part of....
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....e the sale in the course of wholesale trade is effected by the assessee through its sales organisation at a place or places outside the factory gate, the expenses incurred by the assessee upto the date of delivery under the aforesaid heads cannot, on the same grounds, be deducted. But the assessee will be entitled to a deduction on account of the cost of transportation of the excisable article from the factory gate to the place or places where it is sold. The cost of transportation will include the cost of insurance on the freight for transportation of the goods from the factory gate to the place or places of delivery" 8. In the case of Collector of Central Excise v. Kelvinator of India Ltd. - 1988 (36) E.L.T. 517 (S.C.), there was an optional service contract for maintenance of refrigerators after expiry of free warranty period. 91% buyers had opted for service contract on payments through dealers. Services were to be provided by the manufacturers and the entire payment was passed on to them by dealer. The contract was optional which was entered into later on. There was no evidence in that case to conclude that the service contract was a facade to split the true value of ref....
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....extended period of limitation, information had been gathered from them and they had submitted their replies to the queries made. It is seen from the show cause notice that various records and documents from the customers were resumed in the month of July, 1984. There are various allegations of mal-practices in the show cause notices. The S.T.C. had been mis-stating the dates of preparation vis-a-vis delivery of the CMS bills in their records. They had suppressed the fact that invoice-cum-delivery Challans and CMS bills were raised and delivered simultaneously to their dealers. The realisation of after-sale service charges was not declared to the Deptt. These facts clearly establish that the appellants have not disclosed all the relevant information for determining the correct assessable values and had suppressed vital facts. 14. We find that there are specific allegations of wilful mis-statement and suppression of facts. In the show cause notice dated 31-8-1984, it had been clearly stated that the appellants had contravened the various provisions of the Act and the Rules "with the intent to evade payment of Central Excise duty by wilful mis-statement and suppression of facts ....
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....iso to Section 11A of the Act will depend on the specific circumstances of each case. In the case of Jai Shri Engg. Co. Pvt. Ltd. v. C.C.E. - 1989 (40) E.L.T. 214 (S.C.) the Hon'ble Supreme Court had observed that whether there was any fraud, collusion, wilful mis-statement or suppression of facts for the Deptt. to justify to claim duty beyond period of six months, was a question of fact. The Hon'ble Supreme Court had further observed that the fact that the Deptt. visited the factory of the appellants and they should have been aware of the production of the goods in question, were no reason for the appellants not to truly and properly to describe those goods. It was further added that having come to the conclusion that there was deliberate suppression or wrong statement it follows automatically that the Tribunal was justified in up holding the imposition of penalty. The quantum of penalty however, was a matter which the Tribunal was free to fix as they thought fit, as the justice of the case demanded. 17. The CED is required to be paid in the manner prescribed by the Rules and at the rates set-forth in the Tariff. Where the CED is chargeable with reference to value, such valu....