Custom, Excise & Service Tax Tribunal
Otis Elevator Co. (I) Ltd vs Commissioner Of Central Excise, ... on 3 March, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No. E/1474/09-Mum (Arising out of Order-in-Appeal No. SB(69)/MV/2009 dated 30.9.2009 passed by Commissioner of Central Excise (Appeals), Mumbai-I) For approval and signature: Honble Mr. P.K. Jain, Member (Technical) and Honble Mr. Ramesh Nair, Member (Judicial) ======================================================
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 :
CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== Otis Elevator Co. (I) Ltd. Appellant Vs. Commissioner of Central Excise, Mumbai-V Respondent Appearance: Shri Sushant Murthy, Advocate, for appellant Shri N.N. Prabhudesai, Superintendent (AR), for respondent CORAM: Honble Mr. P.K. Jain, Member (Technical) Honble Mr. Ramesh Nair, Member (Judicial) Date of Hearing: 3.3.2015 Date of Decision: 3.3.2015 ORDER NO Per: P.K. Jain
Brief facts of the case are that the appellants are engaged in the manufacture, erection and commissioning of lifts. The case of the Revenue is relating to valuation. The appellants have paid the duty as per the contract value. The case of the department is that the appellants have been taking advances from various customers and the quantum of advance varies from customer to customer and the advances taken have affected the value for the purpose of assessment. According to the Revenue, in the cases where higher advance is taken, the contract value is on the lower side. Thus the value is reduced due to the notional interest on the advances held by the appellant.
2. Learned counsel for the appellant took us through the show cause notice and the order-in-original to prove that the value of goods is not affected due to the advance taken. He submitted that lift is a customized produce and, therefore, whenever they enter into a contract, they normally insist on advance. The quantum of advance depends upon the customer. For example, in case of a government contract, they do not take any advance. In case of reputed companies, a quantum of advance of only 10% of the contract value, while in other cases 25 to 30%. However, the quantum of advance is nothing to do with the contract value. He further submitted that in the show cause notice itself, it can be seen that for the same model of lift they have taken more advance where the contract value is more. This itself disproves the point being advanced by the Revenue. From the table, there is no conclusion that in cases where they have taken more advance, the contract value is on the lower side and in view of this fact, the contract value on which they have paid the duty has to be taken as the transaction value and they are not required to pay duty on the assumed notional interest on the advances.
3. Learned AR reiterates the findings in the impugned order and further submitted that as alleged in the show cause notice, the value has been depressed or reduced in case of the customer who has given the higher amount of advance. He further stated that after the new Section 4, the value is to be taken as the transaction value and the interest on the advances will be an additional consideration and, therefore, the impugned order is correct and the demand may be upheld.
4. We have considered the submissions of both the sides. We have also gone through the original order as also the order passed by the Commissioner (Appeals). We have not been able to find anything in the show cause notice or the order-in-original to support the Revenues claim that the contract value has been reduced due to advance taken and in case of higher advances, the value is lower. In the list given in the show cause notice, it is seen that in large number of cases, the advance amount is 10% of the contract value and in few cases the advances are in the range of 20 to 25%. However, the show cause notice does not give the value of the lifts where the advances in the higher range have been taken and in the absence of such details, it cannot be said that the contract value is suppressed or reduced due to higher advance taken.
5. The issue relating to adding of the notional interest on advances has been settled in various judgments of this Tribunal and other higher courts and it is a settled principle that until and unless the Revenue is able to prove that the value is suppressed due to the advances taken, the notional interest cannot be added.
6. In view of the settled law on the subject, the appeal is allowed.
(Operative part pronounced in Court) (Ramesh Nair) Member (Judicial) (P.K. Jain) Member (Technical) tvu 1 4