2000 (9) TMI 139 - AT - Central Excise

Summary

Issues:
- Entitlement to claim deduction towards interest on receivables for determination of assessable value of products.

Analysis:
The issue in the present appeal revolved around the entitlement of the appellants to claim a deduction towards interest on receivables for determining the assessable value of their products. The appellants contended that they sold goods to customers on credit terms without charging separate interest, as the interest element was included in the price. They supported their claim with certificates from independent chartered accountants. However, the Asstt. Commissioner denied the deduction, stating that the interest element was inherent in the price and resembled a general credit period for buyers. He relied on a Board's Order and rejected the claim. Upon appeal, the Commissioner (Appeals) held that deduction was not permissible unless interest was actually charged and received from customers, remanding the matter for further examination.

The appellant's advocate referred to a Supreme Court order dismissing the Revenue's appeal against a Tribunal's decision, where the Revenue contended that interest on receivables cannot be deducted if not charged over and above the sale price. The Supreme Court's dismissal of the appeal indicated acceptance of the deduction. Additional support for the appellant's case was drawn from various precedents, including decisions involving Shriram Fertilizers & Chemicals, VST Industries Ltd., G. Claridge & Co. Ltd., and Jay Chemical Industries.

During the hearing, the JDR supported the lower authorities' orders. The Tribunal, after considering the facts and legal precedents, noted that the issue had been previously addressed in a Larger Bench decision involving Gomti Carbondioxide & Ors. v. CCE, Jaipur. The Larger Bench decision established that interest on receivables in credit sales should be allowed as a deduction from the sale price to determine the correct assessable value. It was emphasized that the interest deduction could be claimed for the credit period specified in invoices or other duty-paying documents. In the instant case, the Revenue did not dispute the credit period but disallowed the deduction based on the assumption that the interest was included in the wholesale cash price. Consequently, the Tribunal ruled in favor of the appellants, allowing the deduction for 'interest on receivables.'

In conclusion, the Tribunal set aside the impugned order and allowed the appeal, affirming the appellants' entitlement to claim a deduction for 'interest on receivables' in determining the assessable value of their products.