The Chandigarh bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) granted relief to Suzuki Motors by quashing the excise duty demand on after-sale services charges on the grounds of PDI exemption.
Suzuki Motorcycle India Private Limited, the appellant assessee engaged in the manufacture and sale of two-wheelers and parts thereof through their dealers who are appointed under a Dealership Agreement; the assessee sells their final products at ex-factory prices to their dealers who further sell to the ultimate customers after including dealers margin.
The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the demand of Rs.1,31,15,550/- along with interest and equal penalty.
Krati Singh, the counsel for the assessee contended that the Commissioner had traveled beyond the show-cause notice and given a finding that post-delivery inspection charges (PDI) and after-sale service charges are includable in the assessable value and the extended period cannot be invoked.
Rajeev Gupta, the counsel for the department relied on the decisions made by the lower authorities and contended that the assessee was liable to pay the demand raised by the revenue.
The Bench observed that PDI and three free services are necessary on the part of a customer to remain eligible for any claim under warranty; it was obligatory on the part of the dealer to provide three free services as mentioned under the Warranty Clause and he had no free will to deny them.
The two-member bench comprising S S Garg (Judicial) and Anjani Kumar (Technical) quashed the excise duty demand while allowing the appeal filed by the assessee.
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