S.V. Maruthi, Judicial Member

1. The case of the appellant is that they are engaged in the manufacture of Light Commercial Vehicles (LCVs) covered under Chapter 87 of the Schedule to the Central Excise Tariff, 1985. During the relevant period, they were selling the goods i.e. Light Commercial Vehicles in retail and filed Price Lists in Part V. In the said Price Lists they claimed deduction from retail price on account of:

(i) Dealers margin described as trade discount amounting to Rs. 5100/- per vehicle; and non-inclusion of

(ii) "Material Service Performance Security Deposit" (MSPSD) amounting to Rs. 2000/- per vehicle accepted from customers opting for the appellants' "MSPSD" Scheme.

2. The appellants have appointed authorised representatives all over the country to facilitate sale of its vehicles to the customers and enter into agreements under which the primary responsibility of the authorised representatives are as follows :

(a) Booking orders from individual customers;

(b) Receiving payments for the ordered vehicles;

(c) Transmit the customers order and payments to the appellant's Marketing Division;

(d) To receive the vehicle from the appellants' factory/Branch, together with all clearance, documents made out in the name of the customer;

(e) Carry out Pre-delivery Inspection of the Vehicles;

(f) Assist the customer in respect of registration and insurance;

(g) Render Seven services of the vehicle without any additional charge and any other assistance which the customer may be in need of;

(h) Maintain a show-room and repair workshop together with technically qualified staff.

3. The basis on which the deduction of Rs. 5100/- is claimed is that had they appointed the wholesale dealers on principle to principle basis instead of authorised representatives, they would have been given the said margin amount. The remuneration, thus, payable to the authorised representative, would be equal to the margin which would have been payable to the wholesale dealer and thus, be equal to the deduction contemplated under Rule 6(a) of the Valuation Rules. In other words, the price to the wholesale dealer would have been the current retail price less the margin of Rs. 5100/-per vehicle allowed to the wholesale dealer. As regards the claim of the appellants for deduction of "Material Service Performance Security Deposit" in the sum of Rs. 2000/-, it is their case that it is given as an advance payment towards the cost of materials namely Engine Oil, Transmission oil; Differential oil; Brake fluid; Beaming grease ; Air cleaner oil; Oil filter element; Fuel filter element; Oil seals etc. These materials are supplied by the authorised representatives to the customers directly at the time of 'servicing' of the vehicle the price of which is paid by the customer directly to the authorised representatives as per the trade practice. However, in order to ensure that the authorised representative performs the function of servicing, the appellant collect an amount of Rs. 2000/- from the customers at the time of sale of the vehicle through the same invoice and hold as deposit to be paid over to the authorised representative upon his completion of services. The servicing i.e. the labour is provided free to the customer by the dealer at his own cost and therefore, not covered by the aforesaid MSPSD. The appellants also issued a Circular laying down the guidelines for MSPSD. In acknowledgement of the deposit of Rs. 2000/-, the customer is given a Book-let containing 8 "Free Service Coupons" alongwith the vehicle. After recommended 8 intervals, the customer gets the vehicle serviced in exchange of the coupons free of any further charge and the customer surrenders the coupons evidencing the service of the vehicle. The authorised representative, thereafter, forwards to the company the said service coupons obtained from the customer on receipt of which the company reimburses the cost of the service material proportionately in relation to each service from the amount of