Custom, Excise & Service Tax Tribunal
Cce, Chennai I vs M/S. Royal Enfield Motors Ltd on 2 May, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
E/538/2004
(Arising out of Order-in-Appeal No. 186 & 187/2003 (M-I) dated 30.12.2003 passed by the Commissioner of Central Excise (Appeals), Chennai)
For approval and signature:
Honble Shri P.K. Das, Judicial Member
Honble Shri Mathew John, Technical Member
1. Whether Press Reporters may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether the Members wish to see the fair copy of the Order?
4. Whether order is to be circulated to the Departmental authorities?
CCE, Chennai I Appellant
Vs.
M/s. Royal Enfield Motors Ltd. Respondent
Appearance Ms. Indira Sisupal, Asst. Commr. (AR) for the Appellant Shri K.S. Venkatagiri, Advocate for the Respondent CORAM Honble Shri P.K. Das, Judicial Member Honble Shri Mathew John, Technical Member Date of Hearing: 02.05.2013 Date of Decision: 02.05.2013 Final Order No. ____________ Per P.K. Das The relevant facts of the case in brief are that the respondents/ assesses are engaged in the manufacture of motor cycle classifiable under Chapter 87 of Central Excise Tariff Act, 1985. They cleared the motor cycles for sale through appointed dealers and also effected clearances directly to Government Departments, DGS&D and Canteen Stores Department. After delivery of the vehicles, the respondent offered four free services to the customers through the Dealer which is known as After Sales Services (ASS) and the dealers also undertake the Pre-delivery Inspection (PDI) of the vehicles. These were services were provided by the dealer on behalf of the respondent and the respondent was paying Rs.440/- per vehicle to the dealers. Two show-cause notices were issued for the period 1.7.2011 to 30.6.2003. It has been alleged that the respondents derived additional consideration on account of ASS and PDI performed by the dealer which should be included in the assessable value in terms of Rule 6 of Valuation Rules, 2000. The original authority by two adjudication orders, confirmed the demand of duty along with interest. The Commissioner (Appeals) set aside the adjudication orders and allowed the appeals of the respondents. Hence Revenue has filed this appeal.
2. The learned AR reiterates the grounds of appeal. She submits that the respondent had not paid the duty on the PDI and ASS borne by the dealer and it actually effected the discount at the hands of the dealer indirectly. In this context, she particularly drew the attention of the Bench of grounds of appeal insofar as on comparison of clearances effected during 2002-03 and the corresponding charges towards ASS, PDI & VIF @ Rs.440/- per vehicle with the trial balance of 2002-03, it shows that the actual reimbursement should have been Rs.1,16,85,080/- whereas the assessee have reimbursed and accounted for only Rs.90,84,145.10. It, therefore, appears that a portion of the expenditure towards the said charges is borne by the dealer on behalf of the manufacturer. Thus an amount of Rs.26,00,935/- has escaped assessment towards value for the period 2002-03 on which the duly liability works out to Rs.4,24,620/- (BED Rs.4,16,150/- and CESs Rs.8,470/-). She relied upon the decision of the Larger Bench of the Tribunal in the case of Maruti Suzuki India Ltd. Vs. Commissioner of Central Excise 2010 (257) ELT 226 (Tri. LB) which was upheld by the Honble Supreme Court.
3. The learned counsel on behalf of the respondent reiterates the findings of the Commissioner (Appeals). He submits that there is no dispute that PDI and ASS should be included in the assessable value. He further submits that in this case the PDI and ASS have already been included in the assessable value as evident from adjudication order. He further submits that in this case the assessee paid the amount to the dealer for PDI and ASS Rs.440/- per vehicle which was included in the assessable value. He submits that the reimbursement to the dealer is on the basis of free coupons of the customers submitted by the dealer to the applicant. The differential amount as mentioned in the Revenue appeal is that the dealer had not submitted free coupons to applicants and therefore the said amount was not reimbursed to the dealer. There is no additional consideration flowing from the buyer to the assessee and therefore Rule 6 of the Valuation Rules would not apply.
4. After hearing both sides and on perusal of the records, we find that there is a specific averment of the respondent before the original authority that the value declared for payment of duty have already included the expenses towards PDI and ASS. This fact was not disputed by the original authority. Rule 6 of Valuation Rules provides where the excisable goods are sold in the circumstances specified in Section 4(1)(a) of the Act except the circumstances where the price is not sole consideration for sale, the value of such goods shall be deemed to be the aggregate of such transaction value and the amount of money value of any additional consideration flowing directly or indirectly from the buyer to the assessee. In the instant case, there is no allegation that the respondent had collected any additional consideration from the buyer. We find, on this issue, the Commissioner (Appeals) had given a detailed finding as under:-
I have gone through the facts of the case and the submissions made. I find that there is a fundamental factual error in appreciating the facts by the adjudicating authority. The assumption of the adjudicating authority is that the dealers had incurred expenditure towards pre delivery inspection and after sales service and this should be construed as additional consideration flowing from the dealer to the company and therefore it is to be added to the transaction value. He also relied upon the Boards instructions dated 1.7.2002 in support. The notice and the order clearly render a finding that there is no such consideration flowing from the dealer to the appellants. The impugned order can survive if and only if the appellants had not paid Rs.440/- to the dealer. There is no such finding at all. On the contrary, the facts on record as noted in the show cause notice and in the impugned order is that it is clear that the appellants paid Rs.440/- to the dealer. The recovery of additional consideration to be dealt with under Rule 6 of the Valuation Rules Act arises only if the said amount has been received by the appellant from the dealer and not when they paid the said sum to the dealer. There cannot be any allegation of additional consideration when the payment is made by the appellant to the dealer and there is no amount received by the appellant from the dealer. These facts remain undisputed in the impugned order. Reliance on the Boards instructions appears to be incorrect. In this case the cost is incurred by the appellants and no deduction for the same has been claimed by the appellants. Hence this amount already stands included for payment of duty. The same cannot be added once again.
5. In the present appeal, according to the Revenue, the actual reimbursement should have been Rs.1.16 crores and the respondent had reimbursed or paid to the dealer only Rs.90.84 lakhs and duty was demanded on the differential amount. Hence it appears that the amount of Rs.90.84 lakhs was included in assessable value. Thus, there is no basis that the balance amount was not included in the assessable value. In the case of Maruti Suzuki (supra), as relied upon by the learned AR, the issue had arisen for consideration as to whether the charges towards PDI and ASS are to be included in the assessable value. In the present case, the respondent had already included the charges towards PDI and ASS in the assessable value and therefore the said case law would not help the appellant. In addition to that the words the amount of money value of any additional consideration flowing directly or indirectly from the buyer to the assessee in Rule 6 of Valuation Rules, 2000, make it clear that the amount should be received by the assessee. We agree with the findings of the Commissioner (Appeals) that in the present case there is no material available that the respondents had collected any additional consideration. In view of that, we uphold the order of the Commissioner (Appeals) and reject the appeal filed by the Revenue.
(Operative portion of the order was
pronounced in open court)
(Mathew John) (P.K. Das)
Technical Member Judicial Member
Rex
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