Customs, Excise and Gold Tribunal - Mumbai
Jaya Hind Industries Ltd. vs Cce on 8 September, 1999
Equivalent citations: 2000(90)ECR85(TRI.-MUMBAI)
ORDER J.H. Joglekar, Member (T)
1. These four appeals have the same facts and points of law involved. The appellants are the same. These are therefore being disposed of vide this common order.
2. We have heard Shri C.S. Lodha, advocate for the appellants and Shri Deepak Kumar for the Revenue.
3. The appellants made aluminium castings. In the making of these castings specialized dies were required which dies were manufactured by the appellants themselves. In some cases advances were taken by the appellants for development of such dies from the customers of their castings. In identically worded show cause notices the allegation was made that the assessees had not declared the fact of their having received advances from their customers. It was claimed that the notional interest accrued on these advances should have been added to the valuation of the dies and the added value should have been apportioned over the castings manufactured using such dies. It was alleged that this receipt was additional consideration flowing from the buyers of these castings to the present appellants. In ten show cause notices a total demand on this count amounted to Rs. 14,58,648.40 was made. The Assistant Collectors/Assistant Commissioners confirmed the demands raised and in the four impugned orders the Collectors/Commissioners of Central Excise (Appeals) upheld the confirmation of the demands. These appeals arise out of these orders-in-appeal.
4. In their judgment in the case of Metal Box India Ltd. v. UOI the Supreme Court observed that where in accordance with an agreement, substantial amounts were advanced by the buyers to the sellers which advance resulted in depression of the prices and thereby of the assessable value, the notional interest on such deposits was includible when calculating the assessable value. This judgment and two other judgments of the Supreme Court in the case of Collector v. Indian Oxygen Ltd. and GOI v. MRF Ltd. were examined by the Supreme Court in their judgment in the case of VST Industries Ltd. v. CCE 1998 (97) ELT 395 : 1998 (74) ECR 486 (SC). The Supreme Court in this case observed that the manufacturers were charging uniform price from all the dealers irrespective of the fact that some of them had given certain deposits. The court observed that there was nothing on record to show that the receipt of the deposits from some dealers had influence on determination of the price. In other words a clear nexus was required to be shown between the fact of acceptance of the deposit and the calculation of the price.
5. In the latter judgment the Tribunal followed the requirement of the nexus principle in their judgment in the case of Grasim Industries Ltd. v. CCE 1999 (80) ECR 191. The Tribunal held that in the absence of a nexus being established between receipt of advances and prices charged, the notional interest on advances was not includible in the assessable value. A similar view was held by the Tribunal in their judgment in the case of Goodlass Nerolac Paints Ltd. v. CCE and in the case of CCE v. Netel Chromatographs .
6. Against the law so set out we have examined the show cause notices leading to the impugned orders. Apart from the bare allegation that the interest on advances amounted to additional consideration flowing from the customers to the assessees, nothing is shown in the way of nexus. On the other hand we find that the assessees before the Commissioners had claimed that the castings were sold at the same price irrespective of the fact whether the dies were manufactured by the appellants or whether they were given by the buyers of castings for use to them.
7. Thus, in the proceedings before us, we find that the department had failed to establish a nexus between the receipt of the advances and the prices charged. Therefore the confirmation of the duty allegedly short levied was not sustainable. These appeals are allowed with consequential relief.
(Dictated in Court).