MARUTI UDYOG LTD. Vs. CCE

JUDGEMENT

(1.) THE appellant has been engaged in the manufacture and sale of automobiles for more than 3 decades now. First sale of car is to dealers, who in turn sell cars to customers. The sale of car is covered by a manufacturer's warranty for 2 years. The charges, if any, towards that warranty remain included in the sale price.

(2.) IN March, 2002 the appellant introduced and extended optional warranty for 3rd and 4th years. Under this scheme the owner of the car could purchase a warranty for 3rd and 4th year on payment of certain amount. This warranty was later on made available to cars which had been already sold also. The warranty scheme was administered through dealers, who obtain a commission for each sale of the extended warranty.

(3.) UNDER the impugned order the Central Excise authorities have held that the cost of extended warranty should also be the part of the assessable value of cars. Based on such a finding, duty demand amounting to over Rs. 18 crores have been made for the period April, 2002 to March, 2005. Penalties have also been imposed.