Customs, Excise and Gold Tribunal - Bangalore
M/S. Gec Alsthom India Distribution ... vs The Commissioner Of Central Excise, ... on 21 June, 2001
Equivalent citations: 2001(77)ECC379
ORDER Shri G.A. Brahma Deva, Member (J)
1. These are 30 appeals filed by the assessee. Since the issue involved here is common, all the appeals are taken up together and are being disposed of by this common order.
2. Arguing for the appellant, Sh. N. Venkataraman, submits that the issue relates to notional interest on advance Whether notional interest on advances is to be included or not is an issue to be considered. He submitted that the very issue has already been considered by various decisions following the decision of the Supreme Court in the case of VST Industries reported in 1998 (97) ELT 395 (SC). In this context he drew our attention to the page 31, para 9 of the paper book which reads as under:
"I have gone through the records of the case and various submissions made by the party, carefully. The main contention of the party is that the advances taken had no influence over the price of the product, that the price fixed was not based on the quantum of advance received, because the price was fixed first and then only the question of advance was taken up. It was also argued that the price fixation was based on the standard price list, was unfounded and the price list prepared was only for the guidance of the persons concerned to quote the price at which a transformer could be offered to the customer. A perusal of the documents concerned will show that the company was taking advances which were mainly used for purchase of raw materials, components etc., and the money was deposited in the current account of the company. The advances taken were subsequently deducted from the selling price at the time of sales. It is also seen that as per the price list of the company 35% of value of net selling price was to be paid in advance along with the order. It is also found that the price to be increased at the rate of 1% for every 10% reduction in advance and the minimum advance acceptable shall be 15% for which the price increase would be 2%. The company also offers a price reduction at the rate of 1% for every 10% advance payment of more than 35%. If that is so, there is a clear nexus between the amount collected and the price of the transformer at which it was sold. Therefore, it is seen that this is not a case of normal interest earning on the deposits and inclusion thereof in the assessable value. This is a case of outright depression of value, depending upon the amount of deposits given by the customer. The evidence as above suggest that the advance so collected has conferred a direct / pecuniary advantage on the assessee as M/s Metal Box India Ltd (Metal Box India Ltd. Vs. CCE Madras 1995 (75) ELT 449 (SC). Bombay High Court in the case of Britania Industries Ltd, Vs. Union Of India (1989 (44) ELT 630) held that the interest payments on the deposits received by the assessee are not to be deducted in assessing the wholesale price. The financial benefit as a result of receipt of advances should be considered for determining the assessable value and the additional consideration of variation of selling price as per receipt of advance is found to exist in the instant case. In another judgement, CEGAT, Special Bench 'A', New Delhi (1995 (77) ELT 721 (Tribunal) in t he case of Resistance Alloys (India) Ltd Vs. Collector of C. Ex., Allahabad, has held that deposit / advances enhances the working capital and, therefore, affects the assessable value and is in the nature of additional value flowing indirectly from the buyer to the assessee and therefore, the interest on deposits / advances is includable in the assessable value. Therefore, I find that the duty on interest on advances has to be paid by the assessee, because it is seen that there is a financial benefit earned by receipt of advances, which is not deductable from the assessable.
3. He submitted sufficient evidence has been placed by the party to show there was no nexus between the interest and fixation of price. This factual position has not been examined properly. He submits that the authority proceeded to pass the order assuming there was nexus between the interest and price. In fact he started with the wording "If that is so, there is a clear nexus....." Further the clause contained in the price circular is only for a limited period starting from 1.4.89, to 1.4.91., and was never given effect to. Whereas the department has determined adding the interest for entire period without supported by any evidence.
4. On careful considerations and submissions, and taking into consideration, the discrepancies with reference to the factual position as can be seen from the impugned order, we are of the view that matter will have to go back for reconsideration. In view we have taken, we are remanding the matter back to adjudicating authority to examine all the issues and to pass an appropriate order on providing an opportunity to the party. The party may make use of this opportunity and substantiate his claim and to refer the case law on the point at issue during the readjudication proceedings. Thus all these appeals are allowed by way of remand to the original authority.
(Pronounced and dictated in the open court)