2006 (8) TMI 495 - AT - Central Excise

Summary

Issues:
1. Inclusion of notional interest on advances in the assessable value of goods sold.

Analysis:
The appeal concerned the inclusion of notional interest on advances in the assessable value of goods sold. The appellate Commissioners had held that such notional interest should not be added to the assessable value based on the Apex Court's ruling and other precedents. The Department contested this, arguing that for tailor-made goods, establishing a nexus between the advance and price was challenging. The Department relied on a Tribunal decision stating that the burden to prove no nexus was on the assessee. However, the respondents argued that even for tailor-made goods, it was the Department's responsibility to establish the correct assessable value. They cited previous Tribunal decisions supporting this view.

The Tribunal analyzed the submissions and past decisions, concluding that valuation is primarily the Department's function, and the burden to establish a nexus between price and advance rests on them, even for tailor-made goods. The Tribunal emphasized that the burden cannot be shifted to the assessee solely based on the goods being tailor-made. Therefore, the Tribunal decided that notional interest on advances should not be included in the assessable value without the Department proving the nexus. The Tribunal criticized the opposing view for not considering previous Tribunal decisions and a relevant Board circular.

In conclusion, the Tribunal upheld the impugned orders, dismissing the appeals. The decision highlighted the Department's responsibility to demonstrate the basis for including notional interest in the assessable value, especially for tailor-made goods. The judgment underscored the importance of establishing a nexus between price and advance to justify such inclusions, emphasizing the Department's burden in this regard.