Customs, Excise and Gold Tribunal - Mumbai
Ravangaon Sugar Farm Ltd. vs Cce on 12 February, 1998
Equivalent citations: 1998(76)ECR469(TRI.-MUMBAI)
ORDER
U.L. Bhat, J. (President)
1. Shri S.S. Prashar, representative of the appellant is present. He prays for an adjournment. Having perused the orders and after hearing Shri M. Ali, JDR we think it unnecessary to adjourn the case.
2. The dispute in these appeals relates to the question whether notional interest on advances received by the appellant from contracting buyers of sugar manufacturing machinery is to be added to the assessable value. Appellant was receiving advance by way of security from all buyers; generally the advance varied from 10 to 30%, in a few cases 50% and in one cash 100%, depending on the nature of the machinery items and the standing of the buyer. The Assistant Collector approved the prices in part II by adding, notional interest on the advances at 18% per annum to the declared price. On this basis seven demands of differential duty were confirmed by the Collector (Appeals) the assessee has filed the present appeals.
3. The goods in question were made out of the goods on the basis of the contracts entered into with the buyers. The items were not of general or ordinary use by the agency of customers. They were made to the specific requirement of individual buyers. The consistent plea of the appellant is that these amounts were being received by way of trade contracts, in the nature of security deposit to ensure commitment of the buyers to the orders placed. The fact that appellant was using these amounts for purchasing raw materials or the like cannot by itself be a ground of justifying addition of notional interest in the assessable value. Notional interest can be added only if there is nexus between the advances and the price. Advances were being collected from all buyers, the percentage varying depending on the several relevant factors. Department has no specific case that these prices do not compare with prices of similar goods manufactured by other persons and supplied without receiving advances. Thus, there is no touch stone with the use of which it can be said that the advances did influence the prices. In these circumstances, we hold that the lower authorities are not justified in adding notional interest on advances to the assessable value. Accordingly, we set aside the impugned orders and allow the appeals.
Dictated and pronounced in the open Court.