2000 (4) TMI 574 - AT - Central Excise

Summary

Issues:
1. Approval of price lists - Notional profit vs. claimed profit margin
2. Deduction for interest on receivables from wholesale cash price

Analysis:

1. Approval of Price Lists:
The main issue in this case pertains to the approval of price lists submitted by the respondents. The Assistant Commissioner had added a 20% notional profit to the price lists, alleging that the respondents had reduced their profit margin to lower duty payments. However, the Commissioner (Appeals) overturned this decision, noting that the addition of 20% profit was baseless and arbitrary. The Revenue argued that notional profit based on the previous year's gross profit should be added, citing a relevant case. The Tribunal upheld the Commissioner's decision, emphasizing that the profit margin must be notional and related to actual profit earnings. Therefore, the addition of 20% profit margin was deemed unjustified, and the Revenue's appeal on this point was rejected.

2. Deduction for Interest on Receivables:
The second issue revolved around whether the respondents could claim a deduction for interest on receivables from their wholesale cash price to determine the assessable value. The Commissioner (Appeals) allowed this deduction, following a precedent set in a previous case. However, the Revenue contested this decision, arguing that the interest on receivables was not separately identified and was already factored into the goods' prices. The Tribunal agreed with the Revenue, stating that since the interest was not explicitly charged separately on delayed payments, it should not be excluded from the assessable value. Consequently, the Tribunal upheld the Revenue's appeal on the deduction for interest on receivables.

In conclusion, the Tribunal rejected the Revenue's appeal regarding the addition of profit margin to the price lists but allowed the appeal concerning the deduction for interest on receivables from the wholesale cash price.