ORDER
Gowri Shankar, Member (Technical)
1. After hearing both parties on the stay application, we are of the view that the appeals can be disposed of and heard both sides and proceed to dictate this order.
2. General Motors India Ltd., the appellant, manufactures motorcars in its factory at Holol. There is some dispute as to the pattern of sales of these cars. It is however not in doubt that prior to 1.4.1997 the cars were sold directly by the manufacturer to the retail customers. The retail customers paid the manufacturer the price of the car. They subsequently paid to the dealer, from whom they took delivery of the car, charges due on account of octroi, sales tax, registration and insurance. General Motors gave the dealer an amount of Rs. 16000/- out of the purchase price of the car as its margin. The dealer incurred on servicing and pre-delivery inspection of car an amount which is again in dispute. The Additional Collector in his order impugned in the appeal E/3540/00 finds to be Rs. 477 per car and the Commissioner in her order impugned in the other appeal E/3539/00 finds it to be Rs. 1000/-.
3. In each of the orders impugned in these appeals it has been held that the charge incurred by eh dealer towards servicing and redelivery inspection must form part of the assessable value of the goods. The order of the Addl. Collector impugned din appeal E/3540/00 was passed on 28.2.00 and demanded duty for clearance made between 1.7.97 and 31.8.98. The other order of the Commissioner was passed on 229.00 and demanded duty for the period April 1996 to January 1999. To the extent that this latter order deals with the period already adjudicated by the Commissioner (Appeals), it cannot be maintained. The operations of second order must be confined to the period from 1.4.96 to June 1997.
4. The manufacturer had relied upon the decision of the Tribunal in Mahindra and Mahindra vs. CCE 1998 (103) ELT 606 in support of its contention that these charges were not includable in the value. In this decision, the Tribunal, relying upon the earlier decision of the Tribunal in Escorts Tractors Ltd. vs. CCE 1998 (98) ELT 206, held that although the redelivery inspection was conducted by the dealer at the instance of the manufacturer, charges for it were not includable in the assessable value. Such inspection was an activity subsequent to the clearance at the factory gate. The dealers were carrying out the inspection not as an agent of the manufacturer.
5. This reasoning will squarely apply in those cases where the goods are sold by General Motors to the dealer and the dealer in turn sells them to the individual customer. This appears to be the position that has been prevailing form 1.4.86 onwards. The counsel for the appellant brings to our notice an order dated 19.1.92 passed by the Commissioner of Central Excise, Baroda. In this order the Commissioner was concerned with the eligibility to deduction of the margin given by the manufacturer to the dealer out of the retail price collected by him form the customer. The Commissioner’s order finds in paragraph 17 and 18 that after 1.4.97 General Motors pattern of sale changed. After this date, the sale were in wholesale to the dealer who in turn sold the cars to the customer. He notes that the dealer margin was for Rs. 16000 per car. Although the Commissioner in her order impugned in the appeal concludes that the sales were directly by the manufacturer to retail customers we are not able to find the basis for this conclusion. The show cause notice seems to proceed on the basis that the sales were to dealers. It cites a number of statements of dealers, as saying that they purchased the car, and they received the discount from the manufacturer. Paragraph 6 of the notice with which she was concerned speaks of “the dealer margin which can be charged by the dealer on sale of Opel Astra car the them to the customer”. She relies upon a letter dated 6.6.96 of the manufacturer to Sheeraz Motors, dealer at Mumbai. Paragraph 2 of the letter reads as follows. “Matturity allotment letters would be issued by GMI to retail customers who have booked Opel Astra. Customers will be requested to visit the Opel Dealer and to organize financing for the Vehicle. Payment to be made by Demand Draft from the customer to GM India for the complete ex-factory price of the car including delivery. The dealer will separately collect charges for Octroi, Sales, Tax Registration and Insurance at actual form the customer. The amount remitted to GMI, will include Rs. 16000 dealer margin per car which will be paid to the dealer by GMI. A separate account will be maintained by GMI to which the dealer margin for each sale will be credited. The balance accumulated in this account will be paid to the dealer periodically during out regular payment run made throughout each month. Payments will be made by means of cheque encashable in the Dealer’s city or by Demand Draft”.
6. This letter no doubt indicate that the sale was directly to the individual customer. However this is for the period prior to April 1997. No material has been shown to us that order of the Commissioner, Vdadodara is wrong with regard to the sale patterns. It has not been shown that it has been appealed by the department. We find no reason not to accept the finding that from April 1997 onwards the sale were in wholesale.
7. The Commissioner has declined to accept the decision in Mahindra and Mahindra and other similar decisions cited before us. She has said that those decisions were related to sale to dealers and also found that the civil appeals filed to the Supreme Court against these orders were dismissed in limine. Thus the ratio set forth in these decisions has not been confirmed by the Supreme Court. Whether the ratio has been confirmed by the Supreme Court or not, the Commissioner was bound by the Tribunal’s order till such time as they were set aside by the competent authority. This is therefore no ground for not following them. Therefore, for the period April 1997 onwards, the expenses incurred by the dealers for the servicing and redelivery expenditure were not includable in the assessable value. We must note that these expenses were incurred out of the margin of Rs. 16000 given by the manufacturer to the dealer. The price fixed by the manufacturer which is paid by the customer to the dealer includes the dealer’s margin. There is therefore no question of this amount constituting additional consideration for the sale.
8. For the period prior to 1997 we are concerned with the retail sales by General Motors to customers. The assessable value cannot be determined under Section 4(1)(a) of the Act there being no wholesale price. Rule 6(1) of the Valuation Rules provides that where goods are sold in retail the assessable value shall be deduced from the retail price by deducting from it an amount necessary and reasonable to arrive at the wholesale price. In his order, the Commissioner Baroda has held that the dealers margin of Rs. 16000 per car is a reasonable deduction. This order has been accepted by the department. Therefore the assessable value will be the retail price less Rs. 16000. That is the value on which duty has been paid as confirmed by the Commissioner, Baroda.
9. In the result, no duty was payable by the appellant. Appeals are allowed. Impugned order set aside.