Per G.N. Srinivasan : This is an appeal filed against the decision of the Commissioner of Central Excise and Customs (Appeals), Pune made in Order - in - Appeal No. P/331/98 dated 30.12.1998 whereunder the Commissioner had dismissed the case of the appellants and confirmed the Order - in - Original passed by the Assistant Commissioner of Central Excise, Pune - III Divn. holding that the assessable value of the product declared by the assessee did not appear to be the sale consideration under Section 4 (1) (a) of the Central Excise Act; that the price was not reflecting the true value and that the normal price was required to be determined in terms of Rule 5 of the Valuation Rules in terms of Section 4 (1) (b) of the Act.

2. The appellants are manufacturers of wide range of commercial motor vehicles/chassis and cars known as motor vehicles. Such motor vehicles are manufactured in the appellants factory at Jamshedpur in the State of Bihar, at Lucknow in the State of U.P. and at Pimpri in the State of Maharashtra. The dispute in the present appeal relates to valuation of the motor vehicles manufactured and cleared upon payment of the Central Excise duty from the appellants, Pimpri Works. The appellants sell their motor vehicles to customers through country - wide network of dealers. They sell the motor vehicles to such dealers who resell the same to the ultimate customers. The dealership agreement provides for the scope of the territory under which the agreement would apply. Duty of the dealer service to be provided by the dealers to the customers. Stock to be maintained, terms of delivery payment of price, advertising and other motors. The agreement, it is claimed, provides that the relationship between the assessee and the dealers was at arms length and on principal to principal basis. The department in May, 1990 raised certain queries by its letter dated 23.5.1990 about the expenses incurred by the dealers or after sale service and advertising for the vehicles manufactured and sold by the appellants to such dealers. The appellants clarified position by its letter dated 13.6.1990. It was inter alia mentioned by the appellants as well as the dealers that the cost of services is shared by the appellants and the dealers. It was further clarified that the cost of labour in rendering such free services was borne by the dealer out of their retailing profit. In July 1996 by letter dated 31.7.1996 again the range Superintendent raised certain queries. It was answered by the assessee's letter dated 4.8.1996. Finally a show cause notice was issued on 1st February, 1997 proposing to revise the value adding the labour charges reversed to the servicing dealer by the manufacturer who took action to recover the amount from the concerned selling dealer. The detailed reply was filed by the company by its letter dated 14.5.1997. The Assistant Commissioner passed an order dated 27.2.1998 rejecting the contentions raised by the assessees. He also referred to judgment of the Supreme Court in the case of Philips India Ltd. Vs. CCE, Pune 1997 (19) RLT 471 (SC).=1997 (91) ELT 540 as also judgment of the Madras High Court in the case of Standard Appliances Vs. Supdt. of CE 1986 (23) ELT 302. After distinguishing these two cases he confirmed the demand and directed the assessees to pay Rs. 4,28,96,830/ - and Rs. 3,58,237.51 towards automobile cess and imposed a penalty of Rs. 1,00,000/ - . Against the said order passed by the Assistant Commissioner an appeal was filed before the Commissioner (Appeals). After considering the said order after referring to 'owners manual and service book' and also the difference in clause 19 of the agreement and clause 7 at his own expense' were absent. In clause 19 on his own expense' are absent. Therefore there is a financial flow - back. He distinguished the other cases. He confirmed the order passed by the lower authority. Hence the present appeal.

3. The learned counsel Shri V. Sridharan appeared for the appellant