2007 (6) TMI 45 - AT - Central Excise

Valuation (Central Excise) - Assessee claim for deduction towards interest on receivable from the sale price of the goods - Held that there is no evidence to support that such interest having been separately recovered by the assessee and accordingly non deduction allowed

Summary

Issues:
1. Valuation issue regarding deduction towards 'interest on receivables' for the purpose of payment of duty.
2. Whether the interest on receivables was inbuilt in the sale price of the goods sold on credit basis.
3. Entitlement of the assessee to claim deduction of interest on receivables from the sale price for determining the assessable value of the goods.

Analysis:

1. The appellant, engaged in the manufacture of lubricating oils/preparations, deducted Rs. 1.696 per unit quantity from the sale price to determine the assessable value for duty payment. The deduction included Rs. 0.563 per unit quantity towards 'interest on receivables,' which was disapproved by lower authorities, leading to a demand for differential duty. The assessments were provisional, and the claim for deduction was rejected on the grounds of lack of customer interest charges and impermissibility of abatement on interest not separately charged.

2. The Supreme Court judgments in A. Infrastructure Ltd. and Novapan Industries Ltd. emphasized that the burden is on the assessee to demonstrate that interest on receivables was inbuilt in the sale price to claim deduction for arriving at the assessable value. The appellant's argument of presumed interest in credit sale prices was dismissed since no evidence of interest element being separately recovered from customers was found. The court held that the appellant failed to establish the inclusion of interest on receivables in the sale price, making them liable to pay duty on the differential value of the goods.

3. In a related appeal, the appellant sought waiver of pre-deposit and stay of recovery for duty demanded for another period based on interest on receivables, similar to the first appeal. The court, having dismissed the first appeal due to the appellant's failure to prove inbuilt interest, also rejected this appeal and the stay application. The decision was finalized, emphasizing consistency with the previous judgment. The court pronounced the operative part of the order on 26-6-2007, concluding the matter.