2005 (7) TMI 562 - AT - Central Excise

Summary

Issues:
- Deduction of interest receivable from the assessable value in Central Excise Rule 173C price list approval.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Mumbai arose from the order of the Commissioner of Central Excise (Appeals), Pune. The appellant, a manufacturer of W.R. sets/Radio sub-assemblies, claimed deduction of interest receivable from buyers from the assessable value while filing a price list for approval under Central Excise Rule 173C. The Assistant Commissioner denied this deduction, which was upheld by the Commissioner (Appeals), leading to the appeal. The appellant relied on the Supreme Court decision in GOI v. MRF, where it was held that interest on receivables is deductible from the assessable value for assessment purposes.

The Commissioner (Appeals) distinguished the MRF decision, noting that the exceptional cases in MRF were different from the standard commercial practice in the present case, where extending 15 days credit was normal. The Commissioner rejected the appellant's claim, stating that the interest cost was a normal marketing expense and should be included in the assessable value unless proven otherwise. The appellant argued that the interest on debtors was incurred due to delayed payments beyond the credit period, emphasizing that post-clearance charges like interest should be deductible regardless of being built into the price.

The Tribunal, in its decision, referenced the Reliance Industries Ltd. case, which supported the deduction of interest on receivables even when not separately shown in invoices. The Tribunal upheld the appellant's contention, stating that interest on receivables is a permissible deduction from the assessable value, in line with the Supreme Court's ruling in MRF. The Tribunal rejected the Commissioner (Appeals)'s attempt to distinguish the Supreme Court's decision, emphasizing that interest on receivables is indeed deductible. Consequently, the appeal was successful, with any consequential relief to be granted in accordance with the law.