Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, Mumbai ... vs M/S Otis Elevator Co. (I) Ltd on 21 June, 2011
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
Appeal No. E/3843/03
(Arising out Order-in-Appeal No. SDK (185)185/MV/03 dated 31.7.2003 passed by the Commissioner of Central Excise (Appeals), Mumbai)
For approval and signature:
Honble Mr. Ashok Jindal, Member (Judicial)
Honble Mr. P.R. Chandrasekharan, Member (Technical)
1. Whether Press Reporters may be allowed to see No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the Yes CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy Yes
of the Order?
. Whether Order is to be circulated to the Departmental Yes
authorities?
Commissioner of Central Excise, Mumbai V
Appellant
Vs.
M/s Otis Elevator Co. (I) Ltd.
Respondent
Appearance:
Shri S.S. Katiyar, SDR for the appellant None for the respondent CORAM:
Honble Mr. Ashok Jindal, Member (Judicial) Honble Mr. P.R. Chandrasekharan, Member (Technical) Date of hearing : 21.06.2011 Date of decision : 21.06.2011 O R D E R No:..
Per: Mr. Ashok Jindal, Member (Judicial) Revenue has filed this appeal against the impugned order wherein the adjudication order confirmed the demand of duty along with interest and penalty on account of undervaluation was set aside.
2. The facts of the case are that the respondents are engaged in the manufacturing of lift elevators and part thereof. The respondent were issued show-cause notice over different periods for non-inclusion of interest charges earned accrued on advances/deposits in the assessable value of the final product. It was alleged that the respondent have been receiving advances/deposits towards orders placed by them towards contract/agreement and by utilising such advances/deposit the respondent gained on account of interest accrued on the same which they otherwise would have incurred on equal fund procured from other sources, that the said saving in expenditure appeared to be an indirectly gain to the respondent which tantamount to indirect flow from the buyers, as the buyers have borne an additional interest expenditure beyond the price actually paid to the respondent, that the amount of interest on such advances/deposit at the appropriate rate, is additional consideration that flows from buyer to the respondent beyond the contractual/sale price declared by the respondent to the department. The show-cause notice was adjudicated demand for duty on interest accrued earned on advances/deposit was confirmed along with interest and equivalent amount of penalty which was appealed before the Commissioner (Appeals) who set aside the adjudication order. Therefore revenue is in appeal before us.
3. The ld. DR reiterates the adjudication order and the allegation alleged in the show-cause notice and submitted that the advances/deposit received by the respondent have affected the price of the final product, therefore the duty on the interest accrued/earned on the deposit/advance is payable by the respondent.
4. None appeared on behalf of the respondents despite notice nor any request for adjournment. Therefore the respondents are proceeded ex parte.
5. After hearing the ld. DR, we find that in the case of ISPL Inds. reported in 2003 (154) ELT 3 (SC), the apex court has held that when the price is not influenced by the fact of the interest free advances made by the buyer to the manufacturer, notional interest is not includable in the assessable value of the goods. It was also held that where it is proved that interest free advances has influenced the price, onus lies on the revenue and no presumption can be drawn by mere fact of interest free advances received from by the buyer by the manufacturer has affected the assessable value. In the light of the judgment of the apex court, we have examined the records and found that the respondents are having contract with their buyers for specific design/specification of lifts to be supplied to their buyers and the respondent have to manufacture the lift/elevator or part of different models of lifts in their unit and also its erection and commissioning at site as per the specifications/design. They took advances from the buyer as security advances as in case the buyer fails to take delivery of the specified product after manufacturing, the respondent should not suffer the losses. Therefore, they are taking the advances as security deposit. It is also on record that no such security deposit has been taken from the Government Institutions. It is also on record that in some cases where no advances has been received, the price are lower than from the customers to whom advances has been taken. Therefore in the light of above observation, we find that the advances/deposit received by the respondent does not affect the assessable value. Therefore the lower appellate authority has rightly set aside the adjudication order and we do not find any infirmity with the same. Accordingly, impugned order is upheld. Appeal filed by the revenue is dismissed.
(Operative part pronounced in Court) (P.R. Chandrasekharan) (Ashok Jindal) Member (Technical) Member (Judicial) SR 4