2002 (2) TMI 1267 - AT - Central Excise

Summary

Issues:
Whether notional interest on advances should form part of the assessable value for excise duty calculation.

Analysis:
The case involved 20 appeals filed by the Revenue regarding the inclusion of notional interest on advances in the assessable value of capital goods manufactured by the assessee. The Revenue argued that interest accrued on deposits influences the price of tailor-made goods and should be included in the assessable value. They relied on previous judgments, including a CEGAT Special Bench decision and a Supreme Court ruling, to support their stance.

The Revenue contended that interest-free deposits enhance working capital and indirectly affect the assessable value. They emphasized that the burden is on the assessee to prove that the extra consideration from buyers has not influenced the price. The Revenue also highlighted the Supreme Court's observation that interest on advances should be included in the assessable value.

On the other hand, the respondent assessees argued that the advances were security deposits, not additional consideration affecting the price. They cited previous tribunal decisions and a Supreme Court ruling that supported their position. The respondents emphasized that there was no nexus between the advances and the selling price, and the notional interest should not be included in the assessable value.

The Tribunal analyzed the arguments and referenced various judicial pronouncements, including the Supreme Court decision in VST Industries Ltd. v. CCE, Hyderabad. The Tribunal found that if the uniform price is charged from buyers regardless of credit or cash sales, and if interest-free deposits are introduced for commercial reasons without reducing the selling price, then notional interest should not be added to the assessable value. Based on this legal precedent, the Tribunal rejected the Revenue's appeals and upheld the orders of the Commissioner (Appeals) in favor of the respondents.

In conclusion, the Tribunal held that notional interest on advances should not be included in the assessable value for excise duty calculation, following the legal principles established in previous judgments and the Supreme Court ruling in VST Industries Ltd. v. CCE, Hyderabad. The appeals filed by the Revenue were rejected, and the orders of the Commissioner (Appeals) were upheld.