TaxTMI 
TaxTMI 
2006 (5) TMI 211
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....ered by a manufacturer's warranty for 2 years. The charges, if any, towards that warranty remain included in the sale price. 2. In March, 2002 the appellant introduced and extended optional warranty for 3rd and 4th years. Under this scheme the owner of the car could purchase a warranty for 3rd and 4th year on payment of certain amount. This warranty was later on made available to cars which had been already sold also. The warranty scheme was administered through dealers, who obtain a commission for each sale of the extended warranty. 3. Under the impugned order the Central Excise authorities have held that the cost of extended warranty should also be the part of the assessable value of cars. Based on such a finding, duty dem....
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..... It is being pointed out, that while dealers are the buyers transaction with the appellant and the extended warranty is that including buyers of the car and no payment towards the same made by the dealer. According to the learned Counsel, the condition relating to payment being made by the dealer is also not satisfied in the present case. 6. Learned Counsel has pointed out that an identical case in relation to preventive maintenance service for Volvo vehicles had come before the Tribunal and the Tribunal held that the preventive maintenance service in question was no in connection with the sale of the goods and the free service provided in terms of sale along was liable to be part of assessable value. It is the submission of the le....
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....vant price for the purpose of valuation of manufactured goods. In the present case, in the first sale price of the manufacturer, the cost of normal warranty for 2 years remains included and duty is being discharged based on that transaction value. The extended warranty is an agreement between the buyers of the cars and Maruti Udyog Ltd. The dealers figure in this only as commission agent for sale of the car. The purchase of such a warranty bear no condition for sale of the cars by the appellant manufacturer or the dealers. Thus the dealer who purchase the cars in wholesale or individual buyers of the cars are under no obligation to obtain the extended warranty. There is no direct or proximate connection between the sale of the car to the de....
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.... with the citation "that the CUSTOMER has sought and VOLVO has agreed to provide or procure the provisions of preventive maintenance/repairs for the vehicle (identified in the agreement hereto) upon the terms and conditions mentioned under this agreement and the schedule hereto". Thus, it is a service sought by the customer and provided by Volvo. It is not a part of or implicit in the sale and purchase of the vehicle. There is, of course, "servicing" which forms part of the sale consideration and that is the free service which is available to every purchaser "by reason of" the purchase of the vehicle on completion of 10,000 Kms. or four weeks of run. This service is part of the sale consideration and its value remains included in the sale p....
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....part of sale of the vehicle. It is an entirely different activity. Only the service provided by reason of the sale or in connection with the sale can alone be included in the sale transaction. In the present case that servicing is the free service provided upon 10,000 Km. Run and not the life-time service procured through a separate agreement. 9. In Philips India Limited v. CCE, Pune reported in 1997 (91) E.L.T. 540 (S.C.) = 1997 (6) SCC 31, dealing with the question of includability of advertisement expenditure by dealer in the assessable value of electronic goods, the Apex Court again cautioned as under :- "7. We think that in adjudicating matters such as this, the Excise authorities would do well to keep in mind legitimat....