1997 (5) TMI 174 - AT - Central Excise

Summary

Issues:
Whether notional interest on deposit is to be included in the assessable value of goods manufactured and cleared by the assessees.

Analysis:
The judgment delivered by the Appellate Tribunal CEGAT, New Delhi, revolves around the issue of whether notional interest on deposit should be considered in the assessable value of goods manufactured and cleared by the assessees. The Tribunal referred to previous decisions, such as Metal Box India Ltd. and Ponds India Limited, where it was established that interest on deposit should be included in determining the assessable value of goods. The Tribunal also cited a Supreme Court judgment emphasizing that the burden lies on the department to prove any influence on the value of excisable goods due to advance deposits from customers. The Tribunal highlighted that the burden of proof is crucial in establishing a link between interest on deposit and the value of excisable goods.

In the present case, the learned Advocate for the appellant drew attention to the Assistant Collector's finding, which stated that there was no evidence to prove that the assessable value of excisable goods was influenced by the collection of advance deposits. The Advocate relied on the Supreme Court's ruling in Metal Box India Ltd. to argue that the burden lies on the department to establish a connection between notional interest on advance deposits and the value of excisable goods. The Tribunal, after considering the arguments from both sides and examining the records, concurred with the Supreme Court's decision and concluded that interest on advances should not be included in the assessable value of goods.

Moreover, the Tribunal referenced a specific case, Flex Industries Ltd. v. Commissioner of Central Excise, Meerut, where it was highlighted that the price of goods should not be loaded with notional interest if there is no concrete evidence to show that the price was affected by advance deposits. The Tribunal emphasized that the absence of evidence indicating a link between advance deposits and pricing should lead to the exclusion of notional interest from the assessable value. By aligning with the decisions of the Supreme Court and the Tribunal, the Tribunal accepted the contentions of the appellant and allowed the appeal with consequential relief.

In conclusion, the judgment underscores the importance of substantiating any claim regarding the inclusion of notional interest on deposits in the assessable value of goods with concrete evidence. The burden of proof lies on the department to establish a direct influence on the value of excisable goods, and in the absence of such evidence, notional interest should not be factored into the assessable value.