VESPA CAR CO. Vs. C.C.E.

JUDGEMENT

(1.) THIS appeal has been filed by M/s Vespa Car Co. Ltd. against the Order dated 31.5.96 passed by the Commissioner (Appeals), Allahabad.

(2.) BRIEFLY stated the facts are that the appellants manufacture scooters. They are selling their scooters in Uttar Pradesh through dealers and outside U.P. through authorised representatives. The Asstt. Collector under order dated 30.11.1994, disallowed Rs. 325 and Rs. 225 claimed as deduction in the price lists, ordered that duty be charged on the amount collected in excess of the actual freight and insurance incurred by them, holding that these amounts were remuneration paid to dealers and authorised representatives for discharging their responsibility in terms of agreement including post delivery services to the customers; that dealers and authorised representatives were promoters of the business of the appellants as they were required to maintain a proper show room and service station, undertake advertisement/publicity and collect amount from customers. The Asstt. Collector relied upon the judgment in Bombay Tyre International case . He also mentioned that the appellants intimated under letter dated 5.5.93 that the initial price list effective from 25.8.86 in which the dealer's discount of Rs. 325 was shown in column 8 had been withdrawn; that they filed another price list wherein no amount in the name of deduction had been mentioned. He also ordered that Rs. 25 per scooter charged as handling charges is also to be included in the assessable value. On appeal, the Commissioner (Appeals), under the impugned order dated 31.5.96, rejected the appeal holding that in view of the Supreme Court's decision in Bombay Tyre International and MRF case 1995 (77) ELT 443 (SC), after sales services marketing and selling organisation expenses including advertisement expenses cannot be deducted from the assessable value as they promote the marketability; that perusal of agreement dated 25.5.86 with the authorised representative reveals that he is mainly selling and promoting agent who works for and under full direction and control of the appellants and has no freedom to sell the scooter and is liable for penal action in case of default; that GPI and other documents are released in the name of the customers who had booked the scooter, that even the Chasis No. and Engine number of scooter are allotted by the appellants and the wholesale dealer and authorised representative only coordinate the delivery and collect the pending amount and deposit the same in the account of the appellants, that they are to maintain service, Centre for providing free after sale service during the warranty period and advertise the scooter within their territory; that for all these services they are getting a fixed amount of Rs. 325 and Rs. 225 scooter which is actually remuneration and cannot be termed as dealer's discount.

(3.) SHRI R. Santhanam, learned Advocate, submitted that the appellants have filed price lists in Part -1 for sale of scooters in wholesale to the dealers within the State of U.P.; that the sales within U.P. commenced right from the beginning of production in 1986; that in 1987 they started selling outside U.P. through authorised representative (ARs) to the buyers in terms of booking already made; that they had also filed price lists for sale in retail outside U.P. which later on were withdrawn as there was no need for separate price list to be filed for retail sale when the wholesale price at the factory gate was known. He further submitted that the distinction between a wholesale dealer and ARs is evident from the terms and condition of the agreement entered into with dealers and ARs; that dealer purchases the scooter from the appellants on principal to principal basis and sells the same to retail customers on his own account; he can sell any scooter to any customer in the priority list provided by the appellants and if customer refuses to take delivery, dealer can offer the same to the next person on the waiting list; dealer can sell the scooter at a price lower than the recommended retail price whereas the AR does not purchase the scooters whose ownership remains with the appellants; AR receives the payment in the name of appellant; he has to deliver scooter to the specific customer and in case of refusal, AR has to send back to the scooter and he has no right to sell the scooter at a lower price. The learned Advocate also mentioned that as dealer invests his own capital in stocks he is permitted a margin of Rs. 325 whereas AR does not invest any capital in stocks and he is paid a commission of Rs. 225.