1988 (10) TMI 136 - AT - Central Excise

Summary

Issues Involved:
1. Whether the rebates and discounts claimed by M/s. Metal Box India Ltd. are admissible while arriving at the assessable value.
2. Whether the interest on advances given by M/s. Ponds (I) Ltd. should be included in the assessable value.
3. Whether the demand for differential duty was time-barred.

Summary of Judgment:

1. Admissibility of Rebates and Discounts:
M/s. Metal Box India Ltd. claimed deductions for quantity rebate, special body maker rebate, and cash discount from the gross sale price to arrive at the assessable value. The department argued that these rebates and discounts were not uniformly given to all buyers and were specifically favorable to M/s. Ponds (I) Ltd., thus not in accordance with the normal practice of wholesale trade. The Assistant Collector and the Collector (Appeals) both disallowed these deductions, stating that the discounts were not admissible under the Central Excises and Salt Act as they were not uniformly available to all buyers. The Tribunal upheld this view, emphasizing that the price must be the sole consideration for the sale of goods u/s 4(1)(a) and any additional consideration must be added to the price declared by the assessee.

2. Inclusion of Interest on Advances:
The Assistant Collector included the interest accruing on the advances made by M/s. Ponds (I) Ltd. to M/s. Metal Box India Ltd. in the assessable value, reasoning that these advances were used as capital for purchasing raw materials, thus reducing the sale price. The Collector (Appeals) disagreed, stating that notional interest could not be added to the price in the absence of actual interest payment. However, the Tribunal sided with the Assistant Collector, holding that the interest-free advances provided by M/s. Ponds (I) Ltd. constituted an additional consideration, which should be included in the assessable value as per the principles laid down in the Union of India v. Bombay Tyre International Ltd. case.

3. Time-Barred Demand:
M/s. Metal Box India Ltd. contended that the demand for differential duty was time-barred beyond six months as per Section 11A of the Central Excises and Salt Act, 1944. The department argued that the extended period of five years was applicable due to the suppression of facts regarding the financing agreements with M/s. Ponds (I) Ltd. The Tribunal agreed with the department, noting that M/s. Metal Box India Ltd. had failed to disclose the true sale price and the existence of the agreements, thus justifying the invocation of the extended period for raising the demand.

Conclusion:
The Tribunal dismissed the appeal by M/s. Metal Box India Ltd., upheld the department's appeal, and restored the Assistant Collector's order, including the interest on advances in the assessable value and confirming that the demand was not time-barred.