Custom, Excise & Service Tax Tribunal
Hindustan Motor Finance Corporation ... vs Cce Chennai-I on 9 March, 2026
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT No. III
(1) Excise Appeal No. 40786 of 2017
[Arising out of Order-in-Appeal Nos.298 to 300/2016 (CXA-I) dated
30.12.2016 passed by Commissioner of Central Excise (Appeals-I),
Central Excise Building, 26/1, Mahatma Gandhi Marg, Nungambakkam,
Chennai 600 034/
M/s.Hindustan Motor Finance
Corporation Ltd. .... Appellant
Adhigathur,
Kadambathur,
Thiruvallur District 631 203.
VERSUS
The Commissioner of GST &
Central Excise ... Respondent
Chennai Outer Commissionerate, Newry Towers, No.2054, I Block, II Avenue, 12th Main Road, Anna Nagar, Chennai 600 040.
WITH (2) Excise Appeal No.40787 of 2017 (Hindustan Motor Finance Corporation Ltd. Vs CGST & Central Excise,, Chennai Outer) (3) Excise Appeal No.40788 of 2017 (Hindustan Motor Finance Corporation Ltd. Vs CGST & Central Excise, Chennai Outer) [Arising out of Order-in-Appeal Nos.298 to 300/2016 (CXA-I) dated 30.12.2016 passed by Commissioner of Central Excise (Appeals-I), Central Excise Building, 26/1, Mahatma Gandhi Marg, Nungambakkam, Chennai 600 034] (4) Excise Appeal No.40752 of 2018 (Hindustan Motor Finance Corporation Ltd. Vs CGST & Central Excise, Chennai Outer) 2 (5) Excise Appeal No.40753 of 2018 (Hindustan Motor Finance Corporation Ltd. Vs CGST & Central Excise, Chennai Outer) [Arising out of Order-in-Appeal Nos.01 & 02/2017-2018 (Audit-I) dated 03.01.2018 passed by Commissioner of Central Tax (Appeals-II), CGST & Central Excise, Newry Towers, 3rd Floor, Plot No.2054, I Block, II Avenue, Anna Nagar, Chennai 600 040] (6) Excise Appeal No.41468 of 2018 (Hindustan Motor Finance Corporation Ltd. Vs CGST & Central Excise, Chennai Outer) [Arising out of Order-in-Appeal No.96/2018 (CTA-II) dated 28.02.2018 passed by Commissioner of Central Tax (Appeals-II), GST & Central Excise, Newry Towers, 2nd Floor, Plot No.2054, I Block, II Avenue, Anna Nagar, Chennai 600 040] (7) Excise Appeal No.40272 of 2023 (Hindustan Motor Finance Corporation Ltd. Vs CGST & Central Excise, Chennai Outer) [Arising out of Order-in-Appeal No.110/2023 dated 10.03.2023 passed by Commissioner of GST & Central Excise (Appeals-II), Newry Towers, 2nd Floor, No.2054, I Block, II Avenue, Anna Nagar, Chennai 600 040] APPEARANCE :
Shri S. Jaikumar, Advocate for the Appellant Shri M. Selvakumar, Authorized Representative for the Respondent CORAM :
HON'BLE MR. P. DINESHA, MEMBER (JUDICIAL) HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) FINAL ORDER Nos.40327-40333/2026 DATE OF HEARING : 07.01.2026 DATE OF DECISION :09.03.2026 3 Per: Shri P. Dinesha These Appeals arise out of different impugned Orders- in-Appeals passed by the Commissioner of GST & Central Excise (Appeals), Chennai and the only issue in all these Appeals is the valuation of demo vehicles sold to the dealers.
2. Shri S. Jaikumar, Ld. Advocate appearing for the Appellant, would submit that the Revenue has raised the demand alleging that the discount offered by the Appellant on the demo vehicles to its dealers are not deductible under Section 4 of the Central Excise Act, 1944, which is to be included in the assessable value. The lower authorities also relied on the orders of Chennai Bench in the cases of Ford India Pvt. Ltd. Vs Commissioner of Central Excise, Chennai [2011 (7) TMI 1044-CESTAT Chennai = 2014 (302) ELT 257 (Tri-Chennai)] and Hyundai Motor India Ltd. Vs CCE & ST, LTU Chennai and Vice-Versa [2015 (12) TMI 940-CESTAT Chennai = 2017 (346) ELT 431 (Tri.-
Chennai)].
43. Ld. Advocate would submit that there is no difference between a demo vehicle and a normal vehicle cleared by the Appellant, though Rule 6 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 is invoked but however, the Revenue has neither identified any additional consideration nor quantified the same; When the discount was given to offset the loss incurred by a dealer in the sale of such demo vehicles which was used for demo purposes and hence, the discount so given by the Appellant would not constitute 'additional consideration'. In any case, it was contended that even accepting the Revenue's case for argument's sake, but the fact remains that the Appellant would not derive any benefit. Shri Jaikumar also laid emphasis on the fact that the demo vehicles though similar to the normal vehicles but they belong to a separate class, which is very clear from the demo vehicle policy which requires separate documentation of the engine number and chassis number of such demo vehicles, which has to be accepted by the dealer in the form prescribed under the demo vehicle policy. He would finally conclude that the application of Valuation Rules as well as the essence of transaction value having not been considered in the case of Ford India Pvt. Ltd. supra and Hyundai Motor India Ltd.
5supra, the ratio in the said cases are not applicable. He would thus pray for allowing the Appeals.
4. Per contra, Shri M. Selvakukmar, defended the impugned orders. He would contend that each and every aspect has to be considered in the orders of Ford India Pvt. Ltd. and Hyundai Motor India Ltd. supra and further the said orders have been upheld by the Hon'ble Apex Court. He would thus pray that the Appeals be dismissed by upholding the impugned orders.
5. We have considered the rival contentions and perused the documents placed on record; we have also gone through the judicial precedents relied upon during the course of arguments. After hearing both sides, we find that the only issue is, 'whether the discount offered by the Appellant is includible in the assessable value of the demo vehicles ?'.
We have also gone through the orders of this Bench in Ford India Pvt. Ltd. and Hyundai Motor India Ltd. supra and we also note that the Hon'ble Apex Court has dismissed the Civil Appeals vide separate orders and hence, we are of the view that the issue raised in these Appeals has already been laid to rest in the above orders.
66. In the case of Hyundai Motor India Ltd. supra this Bench held as under :
"27. Issue on Demo Cars :
On this issue, both assessee and Revenue are on appeals before this Tribunal for different periods. Initially, the LAA in his OIA No. 41/2004, dated 28-7-2004 had upheld DC's order dated 12-12-2003 on rejection of transaction value and redetermination of value on demo cars which led to assessee's appeal. But the LAA in his subsequent OIAs for the period 2003-04, 2004-05, 2005-06, 2006-
07 and 2007-08 had set aside the DC's order on identical issue of demo cars for which Revenue is before this Tribunal. There is no dispute on the fact that assessee sell cars through their dealer network and adopt two different price viz. for normal cars and for demo cars by way of giving special discounts. Adjudicating authority discussed the issue in detail in his findings and disallowed the discount given on the Demo cars and relied the Board's circular issued in F. No. 6/40/2002-CX.1, dated 1-4-2003 and re-determined the price payable on demo cars as per the price of normal cars cleared to the dealers. In this regard, we find that the issue of valuation on Demo cars stands settled by this very Tribunal Bench orders in the case of Ford India Ltd. v. CCE, Chennai - reported in 2010-TIOL-329-CESTAT-MAD and 2014 (302) E.L.T. 257 (Tri.- Chen.) and also in the case of Royal Enfield v. CCE, Chennai - 2012 (280) E.L.T. 92 (Tri.-Chennai) wherein the Division Bench of this Tribunal had consistently upheld the demand of differential duty on Demo Cars and rejected the assessee's appeals except waiving the penalties. The relevant Paragraphs 3 & 4 of the latest decision of this Tribunal's order in the case of Ford India Pvt. Ltd. v. CCE, Chennai - 2014 (302) E.L.T. 257 (Tri.-Chennai) are reproduced as under :-
"3. The assessees have not been able to demonstrate a difference between the 'demo cars/'normal cars' sold through dealers. The 'demo cars' are put to test and usage as desired by prospective buyers and the assessees also permit such usage to enhance the marketability of their cars. In these circumstances, the transaction value cannot be accepted and comparable price adopted for other cars (other than 'demo cars') has correctly been adopted and differential duty charged thereon. We, therefore, uphold the duty demands together with interest but set aside the penalties imposed on the grounds that penalty is not warranted as the assessees received and paid the duty 7 on the transaction value and the demands are also within the normal period of limitation.
4. The appeals are partly allowed by setting aside penalties."
Further, we also find that the Hon'ble Supreme Court has dismissed the civil appeal filed by M/s. Ford India Pvt. Ltd. against the above Tribunal's order on account of delay as reported in Ford India Pvt. Ltd. v. Commissioner - 2015 (318) E.L.T. A39 (S.C.). The ratio of the above Tribunal's decisions are squarely applicable to the present case as the issues are identical in nature. We find that the lower authority while setting aside the demand came to the conclusion that demo cars are sold at higher price based on few sales whereas the Revenue contended that comparison of price was improper. Since the demo cars are meant for display and publicity, a special discount was given for demo cars which is not the case in the case of normal car. Since the demo car is not at normal sale, but with a condition that it should be used for demonstration purpose/test drive, the price charged for the sale of demo cars is not a normal transaction at the time of place of removal. There was no evidence placed by assessee that the entire sale of Demo cars was sold at higher price whereas we find that the lower authority has gone by few examples of the price of the demo car which is higher than the normal car and the same cannot be taken for entire transaction. As rightly clarified by the Board in their Circular No. 6/40/2002-CX, dated 1-4-2003, at the time of clearance from the factory gate, there is no difference between the normal car and demo car. The same car is sold to the dealer as Demo car for carrying out test drive by the customers which was subsequently sold to ultimate customer on 'as is where is basis'. Therefore, the adjudicating authority has rightly disallowed the discount on the sale of demo car and redetermined the price as per normal car and demanded the differential duty. By respectfully following this Tribunal's decision in the case of Royal Enfield (supra), Ford India Pvt. Ltd. (supra), we hold that the price of demo cars shall be determined as per normal car cleared to the dealers.
28. Accordingly, we uphold the impugned Order-in-Appeal No. 41/2004, dated 28-7-2004 in respect of value of demo cars and reject the assessee's appeal to that extent. Consequently, we set aside that portion of the orders of LAA in respect of OIA Nos. 59/2008, dated 30-3-2009; OIA No. 64/2008, dated 30-3-2009, OIA No. 59/2009, dated 3-11-2009 and OIA No. 60/2009, dated 3-11- 2009 relating to Demo cars and uphold the respective adjudication orders on the issue of valuation of demo cars and allow the Revenue appeals on this count."
87. In view of the above, we do not find any merit in the Appeals and therefore same are dismissed.
(Order pronounced in open court on 09.03.2026) sd/- sd/-
(VASA SESHAGIRI RAO) (P. DINESHA) Member (Technical) Member (Judicial) gs