2014 (3) TMI 709

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....2005 to Mar. 2006 Rs. 50,25,949/-   Rs. 50,25,949/-   2.   E/2566/2011   April 2006 to Dec. 2006 Rs.1,40,40,283/-   Rs.1,40,40,283/-   3.   E/2567/2011   Jan. 2007 to Sep. 2007 Rs.1,80,72,327/-   Rs.1,80,72,327/-   4.   E/2568/2011   Oct. 2007 to Mar. 2008 Rs.1,26,15,684/-   Rs.1,26,15,684/-   5.   E/2569/2011   April 2008 to Sep. 2008 Rs.1,32,81,703/-   Rs.1,32,81,703/-   6   E/2570/2011   Oct. 2008 to Mar. 2009 Rs. 63,16,970/-   Rs. 63,16,970/-   7.   E/2571/2011   April 2009 to Sep. 2009 Rs.1,18,27,255/-   Rs.1,18,27,255/-   8.   E/2572/2011   Oct. 2009 to Mar. 2010 Rs.1,82,52,887/-   Rs.1,82,52,887/-   9.   E/3150/2011   April 2010 to Sep. 2010 Rs.1,77,69,168/-   Rs.1,77,69,168/-   10.   E/25703/2013   Oct. 2010 to Mar. 2011 Rs.1,81,78,242/-   Rs.1,....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ee, the cost towards this is included in the dealers margin (or reimbursed to him).This is one of the considerations for sale of the goods (motor vehicles, consumer items, etc.) to the dealer and will therefore be governed by Rule 6 of the Valuation Rules on the same grounds as indicated in respect of advertisement and publicity charges. That is, in such cases the after sales service charges and PDI charges will be included in the assessable value.     After this circular was issued proceedings were initiated against several assessees and they are already several decisions on this very same issue. Some of them are as under: (a) Hyundai Motor (India) Ltd. vs. CCE: 2013 (289) E.L.T. 358 (Tri.-Chennai); (b) Toyota Kirloskar Motors Ltd. vs. CCE: 2007 (217) E.L.T. 104 (Tri.-Chennai); (c) Mahindra & Mahindra Ltd. vs. Collector: 1998 (103) E.L.T. 606 (Tri.-Del.) (d) Escorts Tractors Ltd. vs. Commissioner: 2000 (124) E.L.T. 496 (Tri.-Del.) maintained by Supreme Court in 1999 (114) E.L.T. A142 (SC); (e) Hindustan Motors Ltd. vs. Collector: 1998 (101) E.L.T. 198 (Tri.-Del.) (f) Skoda Auto India Pvt. Ltd. vs. CCE: 2012 (286) E.L.T. 356 (Bom.) (g) Honda....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....mer. These services are referred to as free after sales services. (For short said services). 6. According to the petitioners, the dealer has to employ necessary persons as also use necessary machinery to carry out PDI and said services. The expenses to conduct PDI and said services are to be incurred by the dealer without reference to the petitioners. It is also the case of the petitioners that the petitioners do not reimburse the expenses incurred by the dealer on PDI and said services. According to the petitioners they have been paying Excise duty on the amount charged by them to the dealer while selling the car to the dealer. The petitioners received 4 show cause notices calling upon the petitioners to pay duty on account of Clause 7 of Circular No. 643/34/2002 dated 1st July, 2002 (For short Circular dated 1st July, 2002) as according to the respondents the costs incurred by the dealer towards PDI and said services was includable in assessable value. The four show cause notices cover the period from December, 2008 to June, 2011. These show cause notices are dated 25th November, 2009, 31st March, 2010, 27th January, 2011 and 23rd September, 2011. The petitioners showed cause ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....en, the said expenses incurred by the dealer cannot form a part and parcel of the assessable value. To that extent, Clause 7 of the Circular dated 1st July, 2002 is illegal and void and is contrary to the provisions of Section 4(1)(a) r/w Section 4(3)(d) of the said Act. Similarly, the Circular dated 12th December, 2002 to the extent it confirms Clause 7 of Circular dated 1st July, 2002 is void and illegal. 49. For all the aforesaid reasons, we hold that as per Section 4(3)(d) of the Central Excise Act, 1944 the PDI and free after sales services charges can be included in the transaction value only when they are charged by the assessee to the buyer. The impugned circulars, inter alia, purport to hold that where the assessee sells the motor vehicles to a dealer (buyer) at a given price and the dealer in turn sells the said motor vehicles to a customer at a price with dealers margin which includes the PDI charges and after sales service charges, then, the assessable value for determining the Central Excise duty payable by the assessee has to be determined by including the PDI and after sales service charges even if they are not been charged by the assessee to the dealer, which in ....