Customs, Excise and Gold Tribunal - Mumbai
Charms Cosmetics Pvt. Ltd. And 5 Ors. vs Commissioner Of Central Excise And ... on 10 March, 2000
Equivalent citations: 2000(69)ECC542
ORDER Gowri Shankar, Member (T)
1. These six appeals involve consideration of common issue and are therefore disposed of by this order.
2. The appeals E/1085, 1189 and 1221/95 are against the orders of the Commissioner of Central Excise (Appeals), Pune and the others against the order of Commissioner of Central Excise, Surat and Nagpur.
3. The question for consideration in each of these appeals is whether the department was entitled to include in the assessable value of the goods manufactured by the appellant, a manufacturer of excisable goods, the interest, not paid or collected, on the advance taken from the customers.
4. We have heard the Counsel for the appellants except in the case of India Hume Pipe Company Ltd., and Sunrise Industries Pvt. Ltd., the appellants in E/1221-V/95 and E/4561-V/95. These appellants are absent and unrepresented despite notice. We have read their submissions in the appeal memorandum.
5. The common thread running through in each of the impugned orders is that, if he had not taken advance, the manufacturer would have had to resort to commercial borrowing to finance its manufacturing activity on payment of interest. Therefore notional interest payable on these advances has to be included in the assessable value. The order passed by the Commissioner (Appeals), relies upon the judgment of the Supreme Court in Metal Box India Ltd. v. CCE in support of this view. It also cites the decision of the Tribunal in Resistance Alloys (India) Ltd. v. Collector to say that whether the advance recovered from every buyer, it is on the assessee to prove that it has not used in the manufacture of excisable goods.
6. It is now settled law that for such interest on advance taken by the manufacturer from its customers, to form part of the assessable value it has to be shown that the fact of such advance has the effect of depressing the assessable value. That is to say, it must be shown that where it had not taken the advance the price charged to the buyer and therefore the assessable value must be higher. Where, for example, in the case of E/1189/95, the advance was taken not from every buyer, this fact would be demonstrated by the price for identical goods being higher when supplied to a person from whom advance is not taken compared to the price charged to a buyer from whom advance is taken. No such case is made out. Even in a situation where advance is taken from every buyer the burden is still upon the department to prove its influence on the price. That the Tribunal in its decision in Grasim Industries v. CCE while explaining this Court did not accept the contrary view expressed in the decision of the Tribunal in Resistance Alloys (India) Ltd. v. Collector to the effect that the burden of proving that the advance has no intricacies on the price charged where advance has taken from every buyer is upon the assessee.
7. The decision in Metal Box India ltd. v. CCE which the Commissioner (Appeals) has relied upon was against the background that M/s. Metal Box India Ltd. taken large amounts of advance from a particular buyer and in view of this fact they had given 50% discount. The other judgment of the Supreme Court that we have referred to above and the decision of the Tribunal were in different situation of fact.
8. Accordingly it has to be held that in each of the appeals, there is insufficient material to hold that the advance has resulted in lowering of the assessable value. The notional interest was therefore not included in the assessable value. All appeals allowed. Impugned orders set aside. Consequential relief, if any, accordance to law.