The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the pre-delivery and after sale service charges cannot be included in the assessable value of motor vehicles.
The department, earlier initiated the proceedings against the appellant-Company stating that the cost of Pre-delivery Inspection (PDI) and After Sale Service (ASS) charges required to be included in the assessable value of the motor vehicles sold by them to the dealers, when these charges/expenditure are incurred by the dealers from their profit margin.
While considering the appeal filed by the Company, Technical Member Mr. C J Mathew and Judicial Member Mr. Ramesh Nair found that the issue is no longer res integra as in the appellant’s own case this Tribunal vide Order No. A/87563- 87565/2018 dated 24.09.2018 decided the issue that the said charges cannot be included in the assessable value of the motor vehicles.
In the above order, the Tribunal held that PDI charges and free ASS charges would not be included in the assessable value under Section 4 of the Act for the purposes of paying excise duty.
“In view of the above ratio, the Pre Delivery Inspection (PDI) and After Sales Service (ASS) charges cannot be included in the assessable value of the motor vehicles. In the result, the assessee’s appeals are allowed and Revenue’s appeal is dismissed. From the above order of this Tribunal the issue stand settled in favour of the appellant. Accordingly, the impugned order is set aside and the appeal is allowed,” the Tribunal said.
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