G.R. Sharma, Member (T)

1. There are two appeals. The issue involved in both the appeals is same and, therefore, both the appeals have been heard together and are being disposed of by this common order.

2. In these two appeals, the issue for determination is whether the amount reimbursed to the wholesale dealers out of the margin allowed to them in respect of sales to wholesale dealers and out of a mark up in respect of sales to DGS D, CSD and other departments for free after-sales services, pre-delivery inspection etc. at different rates from time to time should be included in the assessable value under Rule 5 of the Central Excise (Valuation) Rules, 1975. Other issues are allied to it.

3. Shri S. Madhavan, the Ld. Chartered Accountant appearing for the appellants submits that the appellants M/s. Enfield India Ltd. manufacture motor cycles. For the purpose of sales they have appointed dealers, some sales are effected directly to Govt. Departments, DGS D and Canteen Stores Department (CSD). The appellants reimburse different amounts at different time to wholesale dealers for undertaking free after sales service and pre- delivery inspection.

4. Tracing the history of the case the Ld. Chartered Accountant submits that the appellant submitted his price list in 1974 and 1975 for approval by the Assistant Collector, stating inter alia that Rs. 150/- reimbursed to wholesale dealers for undertaking the after sales service and pre-delivery inspection may be permitted to be deducted from the price of motor cycles. The Assistant Collector while approving the price list under his order dated 21-2-1976 did not allow deduction of this amount from the assessable value on the ground that dealers were related persons and price to DGS D and CSD is contract price. That this order of the Assistant Collector was upheld by the Collector (Appeals) in appeal and the Govt. of India in revision. The appellant filed a writ in the Hon'ble High Court at Madras who remanded the case to Asstt. Collector with the direction that he should find out and decide whether the main dealers and the appellant was related persons and also the propriety of inclusion of Rs. 150/- which the appellant was required to pay to the main dealers. The Asstt. Collector adjudicated the case holding that the wholesale dealers were not related persons and that Rs. 150/- reimbursed to wholesale dealers for pre- delivery inspection and after sales service will be included in the assessable value. The Collector in appeal also upheld the decision of the Asstt. Collector and hence one of the appeals.

5. Regarding the 2nd appeal, the Ld. Chartered Accountant submits that the appellant submitted another price list No. 8/91 dated 5-2-1991 for approval to the Asstt. Collector. The Asstt. Collector following the same logic held that the amount reimbursable to wholesale dealers for undertaking the after sales service and pre-delivery inspection would be includible in assessable value. The Collector (Appeals) upheld the view and hence the second appeal.

6. The Ld. Chartered Accountant argued that the Assistant Collector ought to have confined his decision strictly in accordance with the directions of the Hon'ble Madras High Court and should have limited his order to find out whether the wholesale dealers were 'related persons' and nothing else.

7. The Ld. Chartered Accountant argued that the fact of appellants dealers bearing the cost of pre-delivery inspection and after sales service charges out of their margin cannot be construed as additional consideration flowing directly or indirectly from the dealers to the appellants. The Ld. Chartered Accountant cited the following case law in support of his contentions.

1. Moped India v. A.C. C.E. - MANU/SC/0190/1985 : 1986 (23) E.L.T. 8 (S.C.)

2. Standard Electric Appliances v. Superintendent of Central Excise - 1986 (23) B.L.T. 302

3. Mahindra Mahindra Ltd. v. Superintendent of Central Excise - MANU/MH/0154/1983 : 1984 (16) E.L.T. 76 (Bom.)

4. As