1998 (2) TMI 364 - AT - Central Excise

Summary

Issues:
1. Calculation of assessable value for goods supplied.
2. Inclusion of interest on advances in the assessable value.
3. Conflict between decisions of different High Courts.
4. Interpretation of the impact of advances on assessable value.
5. Application of previous court decisions on similar matters.

Analysis:

1. The case involved the calculation of the assessable value for plug valves manufactured by the respondent for supply to a specific buyer. The respondent did not include the interest on advances received from the buyer in the assessable value declared.

2. The Assistant Collector contended that even though no interest was paid on the advances, they should be considered as an addition to the funds of the respondent. Therefore, interest at 18% was proposed to be added to the assessable value of the goods. The Commissioner (Appeals) referred to a decision of the Madras High Court where it was held that interest on advances would not form part of the assessable value unless there was evidence of a reduction in price due to the advance.

3. The Departmental Representative argued that a decision of the Bombay High Court mandated the inclusion of interest on advances in the assessable value. However, the representative of the respondent relied on the later decision of the Madras High Court, which suggested that interest should not be included unless there was a clear reduction in price.

4. The Tribunal rejected the argument that decisions of High Courts with jurisdiction over the Tribunal, Commissioner, and Assistant Collector must be followed even if they conflict with decisions of other High Courts. The Tribunal emphasized the need for evidence showing a direct influence of advances on the reduction of price to justify their inclusion in the assessable value.

5. Referring to a Supreme Court decision in a similar matter, the Tribunal highlighted the importance of demonstrating a direct impact of advances on the price reduction for inclusion in the assessable value. In the absence of such evidence in the present case, the Tribunal dismissed the appeal, emphasizing the lack of proof of a reduction in price due to the advances taken by the respondent.

In conclusion, the Tribunal upheld the decision that interest on advances should not be included in the assessable value unless there is clear evidence of a reduction in price directly attributable to the advances. The Tribunal emphasized the need for concrete proof of the influence of advances on pricing decisions to justify their inclusion in the assessable value of goods.