Customs, Excise and Gold Tribunal - Delhi
Porritts And Spencer (Asia) Ltd. vs Cce on 15 February, 1999
Equivalent citations: 1999(84)ECR688(TRI.-DELHI)
ORDER G.A. Brahma Deva, Member (J)
1. The short point arises for our consideration in this appeal is whether interest on a notional basis on the advance deposit received by the appellant from various buyers would form part of assessable value or not?
2. When the matter was called, Shri A.K. Suri, Manager (Commercial) of the appellants concern appeared and requested for an adjournment. On going through the issue involved in this case, we find that the matter can be proceeded with. Accordingly, we proceed to pass this order after hearing Shri K. Shiv Kumar, learned JDR.
3. It was brought to our notice the issue involved in this case has been covered by the decision of the Supreme Court in the case of VST Industries Ltd. v. CCE. Hyderabad reported in 1998 (97) ELT 395 Para 12 : 1998 (74) ECR 486 (SC) para 11 of the said decision is relevant and same is reproduced as under:
Coming to the facts of the present case it is not in dispute that the appellants are charging a uniform price from their wholesale dealers. The price at which the cigarettes are sold at the factory gate was the same, irrespective of the fact whether the dealers were buying the cigarettes on credit or against payment of money. As is indicated in the circular, and there is no dispute to what has been stated therein, one of the commercial considerations for introducing interest free deposit scheme was to cover the risk of credit sales extended to bulk customers. There is nothing on the record to show that the receipt of the deposit from some of the dealers could possibly influence the fixation of the sale price even with regard to those sales which were made at the factory gate against cash and not on credit. Had there been a difference in the selling price where, for example, special discount was given to the dealers who had given a deposit then it may gave been possible to say that there were two different markets and two different prices and that lesser price was being charged for an extraneous consideration and, in such a case the notional or actual interest could be added. But that is not the case here. Metal Box case (supra) was the one where two different prices were being charged. In Metal Box case the assessee was manufacturing goods which were offered for sale to M/s Ponds India Ltd. a wholesale buyer, who required bulk of the containers manufactured by the assessee for marketing its cosmetic products. In order to ensure a steady and regular supply Ponds India Ltd. gave large advances and an agreement had been entered into between the parties as a result whereof discounts were given by the assessee to Ponds India Ltd. which were to be deducted from the gross price. This deduction was not allowed by the excise authorities and the Tribunal. It was contended on behalf of the assessee in this Court that the Tribunal erred in restoring the loading of purchase price by the ad hoc interest on advances made by Ponds India Ltd. to the assessee. While rejecting this contention this Court took notice of the fact that Ponds India Ltd. was a wholesale buyer who was lifting ninety per cent of the total production of the appellant. The assessee was giving to Ponds India Ltd. fifty percent discount from normal price and Ponds India Ltd. had given large amounts of money free of interest to the assessee. In these circumstances it was held that the price charged by the appellant from Ponds India Ltd. could not be said to be the normal price of containers and, therefore, the action of the department in taking into account the notional interest on the advances given was upheld.
4. In the memorandum of appeal, it was also submitted by the party subsequent to the decision of the Apex Court the CBEC has issued a Circular (bearing No. 404/37/98-CX dated 22.6.1998) clarifying the above issue. The relevant portion of the circular is as under:
If there is no difference in the selling price for both the categories of the wholesale buyers and there is also no proof than on account of advance deposits taken from some buyers, the price charged from all the buyers has been reduced, then the element of notional interest on advance deposits cannot be added.
5. Shri K. Shiv Kumar, learned JDR fairly conceded the position.
6. In the facts and circumstances and in view of the decision of the Supreme Court in the case referred to above and the Circular followed by the Board and in view of the consistent view of the Tribunal, we accept the contention of the assessee. In the result, appeal is allowed with consequential relief.
(Dictated and pronounced in the open court).