2000 (12) TMI 675 - AT - Central Excise

Issues: Duty demand and penalty imposition based on advance received affecting price assessment for metal containers manufactured and supplied to a specific buyer.

Duty Demand Issue Analysis:
The appeal contested duty demand of Rs. 1,33,000/- and penalty of Rs. 50,000/- imposed by Central Excise Authorities due to the advance received from the buyer impacting the assessed price of metal containers. The appellant argued that the comparison of prices with other buyers was unjustified as the contracts were not comparable in terms of time and the price difference could be justified by the high quantity of purchase alone. They contended that the advance should be treated as a deposit, citing various Tribunal decisions. On the other hand, the Departmental Representative (DR) argued that the advance constituted a consideration for the fixed price, referring to a letter from the buyer discussing financial assistance and adjustments required in pricing due to interest charges. The DR relied on the precedent set by the Supreme Court in Metal Box India Ltd. v. Collector of Central Excise, Madras, stating that the benefit of interest-free advance needed to be reflected in the final price.

Judgment on Duty Demand:
The Tribunal observed that the sale to the buyer was contract-based, and the advance received had indeed influenced the price, as indicated in the buyer's letter. Consequently, the contract price was reduced due to the interest-free advance, necessitating a re-adjustment of the assessable value to reflect the benefit obtained by the appellant. While acknowledging the need for re-fixing the assessable value by adding interest cost on the advances, the Tribunal found fault with the adoption of prices from other buyers for assessing goods sold under contract to the specific buyer. The Tribunal deemed this approach incorrect, emphasizing that only the impact of interest-free advances should have been considered in determining the duty demand. Therefore, the Tribunal set aside the impugned orders, directing the Deputy Commissioner to recalculate the duty demand by solely accounting for the effect of interest-free advances, allowing the appellants to present relevant data and arguments. The penalty amount was also instructed to be re-evaluated in light of the revised duty demand.

Conclusion:
In conclusion, the judgment addressed the duty demand and penalty imposition issues arising from the impact of advance received on the pricing of metal containers supplied to a particular buyer. It clarified the need to recompute the duty demand solely considering the effect of interest-free advances, emphasizing the inaccuracy of adopting prices from other buyers for assessment purposes in a contract-based sale scenario. The decision provided a clear directive for reassessment by the jurisdictional Deputy Commissioner, ensuring a fair evaluation based on the relevant factors presented by the appellants.

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