2018 (2) TMI 554 - AT - Central Excise

Valuation - includibility - notional interest - The department is of the view that the notional interest will have to be added to the assessable value of the goods - Held that - similar issue decided in the case of COMMISSIONER OF CENTRAL EXCISE MUMBAI-III Versus ISPL. INDUSTRIES LTD. 2003 (4) TMI 99 - SUPREME COURT OF INDIA where it was held that if there is no deference in the selling price for both categories of the wholesale buyers and there is also no proof that on account of advance deposits taken from some buyers the price charged from all buyers has been reduced then element of notional interest on advance deposits cannot be added - interest to be included in present case. The appeal is not time-barred and extended period is rightly invoked in the appellants case. Appeal dismissed - decided against appellant.

Summary

Issues:
Appeal against order-in-original regarding addition of notional interest to assessable value of goods received as advances with discounts.

Analysis:
The appeal was filed against an order-in-original dated 28/11/2003, where the appellant, engaged in manufacturing pet bottles and jars for cold drink manufacturers, received advances with discounts. The department sought to add notional interest to the assessable value of the goods. The Tribunal noted that the appeal was not time-barred, and the extended period was rightly invoked. The Tribunal upheld the findings of the lower authority regarding this issue.

On the merits, the Tribunal referred to a Supreme Court judgment in Commissioner of Central Excise v. ISPL Industries Ltd [2003 (154) ELT 3 (SC)], which emphasized that merely receiving interest-free advances does not automatically justify reloading the assessable value with notional interest. The revenue must demonstrate that such advances influenced the pricing and did not reflect the normal price of the goods. The Tribunal agreed with this principle and found no reason to interfere with the impugned order. The Tribunal dismissed the appeal based on the Supreme Court's ruling and upheld the findings recorded in the order-in-original.

The Tribunal's decision was based on the legal principle established by the Supreme Court, emphasizing the need for concrete evidence showing that interest-free advances impacted pricing. The judgment highlighted that the revenue must prove that the fixation of price was influenced by such transactions, rather than relying on presumptions. The Tribunal's decision aligned with the legal standards set by the Supreme Court and emphasized the importance of providing evidence to support claims of pricing influence by interest-free advances.