1995 (2) TMI 173 - AT - Central Excise

Summary

Issues:
1. Whether interest on deposits and trade advances collected by the appellants is to be included in the assessable value of goods manufactured by them.

Analysis:
The issue in this case revolves around determining whether interest on deposits and trade advances collected by the appellants should be considered in the assessable value of the goods they manufacture, specifically Electrical Resistance Wires. The appellants argued that the deposits were received as security against the supply of goods and did not influence the sale price. They relied on precedents such as Mahavir Aluminium Ltd. v. Collector of Central Excise, Jaipur, to support their stance that these deposits should not be considered as additional consideration for the purpose of valuation. On the other hand, the Department contended that there was a clear nexus between the deposits and the supply of goods, emphasizing that every buyer had to deposit before purchasing goods. They argued that the interest accrued on these deposits should be included in the assessable value, citing cases like Britannia Industries Ltd. v. Union of India to support their position.

The Tribunal considered both arguments and noted that the appellants had collected deposits and advances from customers without exception, enhancing their working capital. The Tribunal found merit in the Department's argument that there was a nexus between the goods supplied and the deposits received, as no other activities were carried out by the appellants apart from manufacturing. The burden was on the appellants to prove that the deposits were not used in manufacturing, which they failed to substantiate. Therefore, the Tribunal concluded that the deposits and advances were additional value indirectly flowing from buyers to the assessee, impacting the assessable value. Relying on the precedent set by Britannia Industries Ltd., the Tribunal upheld the inclusion of interest on deposits in the assessable value, dismissing the appeals filed by the party and disposing of the cross objection filed by the Department accordingly. The Tribunal distinguished the case law cited by the appellants, emphasizing the unique circumstances of the present case where deposits were collected from all buyers.

In conclusion, the Tribunal ruled in favor of including interest on deposits and trade advances in the assessable value of the goods manufactured by the appellants, based on the nexus between the deposits and the supply of goods, as well as the impact on working capital and indirect value flow from buyers. The decision aligned with established precedents and upheld the Department's position on the matter.