2003 (5) TMI 477 - Commission - Central Excise

Summary

Issues Involved:
1. Validity of the deduction claimed for "Interest on Receivables" (I.O.R) by the applicant.
2. Eligibility for deduction of I.O.R in respect of sales made through the indenting agent, M/s. Vijaya Associates.
3. Calculation of Central Excise duty payable by the applicant.
4. Immunity from interest, penalty, and prosecution under the Central Excise Act.

Detailed Analysis:

1. Validity of the Deduction Claimed for "Interest on Receivables" (I.O.R):
The applicant, M/s. Kodak India Ltd., claimed a deduction of 1.9% as I.O.R for sales of "Cinematographic Positive Films-Motion Picture films." The Department denied this deduction, asserting that the sales were through their indenting agent, M/s. Vijaya Associates, and the credit facility was not provided to customers but only to the agent. The applicant admitted an additional duty liability of Rs. 3,04,899/- and paid this amount.

2. Eligibility for Deduction of I.O.R in Respect of Sales Made Through M/s. Vijaya Associates:
The applicant contended that sales through M/s. Vijaya Associates averaged 26% of total sales, while direct sales to customers averaged 74%. The applicant revised the I.O.R factor for sales through M/s. Vijaya Associates to 1.26%, 0.85%, 0.71%, and 1.40% for the years 1995-96 to 1998-99, respectively. The Department argued that the deduction was incorrect because the customers were unaware of any credit facility, and payments were received from M/s. Vijaya Associates, not directly from customers. The Commission observed that the customers did not enjoy any credit facility and were unaware of the I.O.R factor, thus denying the deduction for sales through M/s. Vijaya Associates.

3. Calculation of Central Excise Duty Payable:
The Central Excise duty payable was recalculated after denying the I.O.R deduction for sales through M/s. Vijaya Associates. The duty payable was determined to be Rs. 6,17,670/-, with the applicant having already paid Rs. 3,04,899/-. The balance duty payable was Rs. 3,12,771/-. The Commission allowed the deduction of I.O.R for direct sales to customers, following the ratio of cited judgments.

4. Immunity from Interest, Penalty, and Prosecution:
The Commission granted immunity to the applicant from interest and penalty under the Central Excise Act/Rules, 1944, and from prosecution under the Central Excise Act. This decision was based on the applicant's cooperation throughout the proceedings and the interpretational difference regarding duty liability.

Conclusion:
The case was settled with the applicant required to pay an additional Central Excise duty of Rs. 3,12,771/-. The Commission granted immunity from interest, penalty, and prosecution, provided the settlement was not obtained by fraud or misrepresentation of facts.