Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of Central Excise, ... vs M/S Integrated Engg. & Exports (P) Ltd., ... on 8 August, 2001
JUDGMENT
1. This appeals filed by Revenue are against the Order-in-Appeal No. 63/97 dated 21.2.97 passed by the Commissioner of Central Excise & Customs (Appeals) Trichy. All these appeals pertained to an issue which is no more res integra and has already been decided by this Tribunal in a number of cases. Hence, they are taken up together for disposal as per law.
2. The common ground taken is that respondents/assessees have not included the notional interest accrued on the advances received from their customers and that the differential duty on this count was payable.
3. The short issue that arises for consideration in this appeal is whether the notional interest on advances would form part of the assessable value or not. The Commissioner (Appeals) in similar matters have disposed of similar appeals against the Revenue. he has set aside the impugned order of the AC in the absence of any evidence brought out on record to show that advances taken by assessees had in fact depressed the price or that the assessees had derived benefit by receipt of said advance particularly in the absence of quantification thereof.
4. Heard Ld. DR Shri A. Jayachandran, who appeared for the Revenue and Shri V.S. Jayakumar, Ld. Advocate appearing for M/s. Wendt India Ltd and Easun Reyrolle Relays and Devices Ltd. and Shri S. Renganathan, Advocate, appearing for M/s. Indian Hume Pipe Co. Ltd. and Shri Muthuvenkataraman, Advocate appearing for M/s. Ion Exchange India Ltd. None appeared for rest of the respondents.
5. Ld. DR reiterated the grounds of appeal and prayed that the appeal be allowed r remanded back to the original authority to decide whether advance taken by assessees had in face depressed the price or that assessees had derived benefit by receipt of said advance.
6. The Ld. Commissioner (Appeals) has recorded his findings in para 3-5 which is reproduced as follows:-
3. So far as the subject Departmental appeals are concerned it has been argued in the grounds of appeal which are all similarly worded except one that the respondents derived additional consideration directly or indirectly from the advance collected and without inclusion of the interest element in the assessable value, the price charged to such customers will not represent the normal price in terms of Section 4 of the Central Excises act 1944. in Appeal No. 88/96CBE(D), it has been mentioned that money doe snot come free in the market and in no business money is kept idle either . Therefore when the fact of interest free deposit is proved, the consideration accruing to the persons receiving the deposit is proved ipso facto. According to the Department, at this stage itself, the burden shifts to the assessee to prove that the extra consideration accruing tot he buyer of the goods has not influenced the price. As per the Department, the interest accruing is real and there is nothing notional about it. The department has also placed reliance in the case of Metal Box Limited (1995(75) ELT 449(T) and in the case of M/s. Resistance Alloys (1995(77) ELT 721(T).
4. From the impugned orders I find that the AC has recorded that from a sample of invoices (SIC) by him, it was found that the price charged is the same for customers who paid advance and those who had not paid advance and that the price charged was not deflated because of advance and that no nexus can be established between the advances received and the price charged and that the advance was taken as per contract to ensure that the customer took delivery of the goods ordered. In arriving at the above conclusion the AC also referred to Indian Oxygen case-1988(36)ELT730(SC). In the case of Appeal No. 88/96CBE the AC has recorded that the respondent offered no discount and there was no evidence that the contracted price was depressed.
5. I find great force in the above observations of the AC as per the impugned orders. His views are the same as held by me in the earlier orders in appeal referred to above. As per para 7 extracted above, the Board has also instructed that the interest on advance has to be added only as per the directions of the Courts as discussed above. Here the AC has undertaken the necessary exercise after which he has come to the conclusion that there was no evidence in this regard. In the absence of any such evidence leading to quantification of the benefit derived by the respondents, the AC's orders are correct and maintainable and so I uphold the same. There is no merit in the Department appeals which have to be rejected.
7. We perused the records and the impugned order. We notice that similar matters have already been disposed of by final order No. 737 to 761/2001 dated 24.5.01 in the case of CCE Coimbatore Vs UNIVERSAL HEAT EXCHANGERS LTD & OTHERS; final order No. 806 to 840/01 dated 1.6.2001 in the case of CCE Coimbatore Vs GEC Alsthom & Others; final order No. 849 to 859/2001 dated 4.6.2001 in the case of CCE Coimbatore Vs K.S.B. Pumps and final order No. 878 to 893/2001 dated 6.6.01 in the case of CCE Vs Servall Engg. Works (P) Ltd. The findings recorded in the Tribunal decision in the case of CCE Coimbatore Vs Servall Engg. Works (P) Ltd., is reproduced as follows:-
"3. Ld. Counsel at the outset submits that the issue is covered in assessee's favour and the Commissioner has given a detailed finding holding that there is no evidence on record to show that the deposits which they have received from various persons have influence the price. it is contended by him that deposits are independent of the price in all the matters and they are all concerned with the appeals which can be disposed of.
4. Ld. SDR Shri G.S. Menon, appeared for the Revenue in these batch of appeals and submitted that all these may be remanded back for examining whether the value has depressed because of accepting the deposits on which there would have been notional interest.
5. Ld. Counsel invited our attention to paras-3 & 4 of the Order-in-Appeal which are extracted herein below:-
"3. In the grounds of appeals filed by the appellants which are ore or less similar, it has been claimed that the raw materials required for the manufacturing activities are being purchased generally and stored before purchase orders are received except for a few items of specific nature and that it is from this bulk stock that the appellants draw the materials for the manufacturing activity and that the purchases have not been made exclusively out of the advances received from the customers. Most of the appellants have categorically stated that they do not receive advance deposits from all the customers and that the quantum of advance is very low compared to the turn over of the company and that the price is uniform and does not vary for a particular item whether the customer pays advance or not and that once the prices are agreed to as per the contract the appellants are obliged to supply the goods at the same price even if the costs of raw materials vary. It has also been argued that the earnest deposit received was purely to ensure the contractual binding as per the Trade practice since the goods are tailor made and are not of the type which are mass-produced and delivered off the shelf and the amount of advance received is not taken into account while arriving at the contract price; therefore the question of the interest free advance influencing the price did not arise; Further such a concept had not been in their minds or the customers.
4. In the light of the above, I have no reason to change my views taken in the earlier orders in appeal referred supra. I therefore hold that the Assistant Commissioner's orders here cannot be sustained in law in the absence of any evidence brought on record to show that the advances taken by the appellants had in fact depressed the price or that the appellants had derived benefit by receipt of such advance, particularly, in the absence of quantification thereof. The impugned orders do not survive in law in the light of judicial pronouncements as above and the demands confirmed have to be set aside."
7. Ld. Counsel has also relied on this Tribunal judgment in the matter of FORT WILLIAM INDUSTRIES LTD. Vs. CCE Calcutta-IV as reported in 2000 (122) ELT 174 (T); CCE New Delhi Vs. SCHENCK AVERY LTD. reported in 2000 (119) ELT 582 (T); ACC MACHINERY COMPANY LTD. Vs. CCE, Mumbai VI as reported in 2000 (117) ELT 231 (T) and CCE Coimbatore Vs FESTO ELGI PVT. LTD. reported in 1998 (100) ELT 175 (T) and this Tribunal final order No. 737 to 762/2001 dated 24.5.01 arising from the same impugned order which was considered by the Tribunal and the Revenue appeals were rejection therein.
7. Ld. Counsel has stated that whether they have taken advance or not, they have charged the same price from each customer and the advance has not depressed the price to any extent and therefore same is not includible in the assessable value in terms of Section (4) of the Central Excise Act, 1944.
8. We have carefully considered the submissions made by Ld. SDR & DRs who appeared for the Revenue and the Ld. Counsel Shri J. Narayanswamy who appeared for the respondent, namely M/s. Sree Andal & Co. The learned Commissioner (Appeals) has thoroughly examined this matter and has given his detailed findings in paras-3 & 4 of his order which have been extracted supra and therefore respectfully following the various Tribunal's judgments, cited by the learned Counsel for the respondents, we do not find any merit in the appeals filed by the Revenue and therefore the order of the Commissioner (Appeals) is confirmed and appeals filed by the department are dismissed. We also note that by Final Order No. 737 to 761/01 dated 24.5.01 in the case of CCE Vs UNIVERSAL HEAT EXCHANGES LTD & OTHERS vide final order No. 806 to 840/01 dated 1/6/01, the impugned order has already been set aside by following the ratio of the above cases, thus, the Revenue appeals are accordingly dismissed."
7. We also observe that the issue is no longer res integra and the Tribunal has taken a similar decision on the basis of law laid down by the Supreme Court in the case of VST Industries Vs. CCE Hyderabad 1998 (97) ELT 395 (SC) holding that notional interest on advances/security deposit taken from customer is not addable to the assessable value.
8. In these circumstances, respectfully following the ratio of the earlier orders, and in view of law laid down by the Supreme Court in the case of CCE Vs VST Industries (supra), there is no merit in these appeals. we also feel that no useful purpose would be served by sending these appeals back to the original authority as requested by Ld. DR since neither before the Commissioner (Appeals) nor before this Bench of the Tribunal any evidence, that there is depression in the value because of these advances/security deposit, has been led.
9. In view of the above position of law, respectfully following the ratio already laid down in cited judgment, the revenue appeals are therefore dismissed. Ordered accordingly.
(Dictated and Pronounced lin open court)