2017 (2) TMI 372 - AT - Central Excise

Valuation - inclusion of notional interest on advances in the assessable value - Held that - We find that no evidence of any influence on the assessable value on account of such advances should have been produced by the Revenue - reliance placed in the case of ISPL Industries Ltd. 2003 (4) TMI 99 - SUPREME COURT OF INDIA to assert that in absence of any evidence of influence on the assessable value on account of such advances, the notional interest cannot be added to the assessable value - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Inclusion of notional interest on advances in assessable value.
2. Requirement of evidence of influence on assessable value.
3. Applicability of ISPL Industries Ltd. case.
4. Interpretation of Metal Box India Ltd. case.

Analysis:
1. The appeal involved the issue of whether notional interest on advances should be included in the assessable value. The appellant, M/s Asea Brown Boveri Ltd., had taken advances under existing orders/contracts with Government departments and Public Sector Undertakings. A notice was issued to include notional interest on these advances in the assessable value, leading to a confirmed demand by lower authorities.

2. The learned Counsel for the appellant argued that the Revenue failed to produce evidence of any influence of the advances on the assessable value. Citing the ISPL Industries Ltd. case, it was contended that without such evidence, notional interest cannot be added to the assessable value. On the other hand, the learned AR relied on the impugned order and the Metal Box India Ltd. case to support the Revenue's position.

3. The Tribunal examined the rival submissions and referred to the ISPL Industries Ltd. case. The Hon'ble Apex Court in ISPL Industries Ltd. emphasized the necessity for the Revenue to demonstrate that the advance influenced the lowering of the price, and notional interest cannot be added solely based on interest-free advances. The Court highlighted the need for proof and evidence to establish the influence of such transactions on price fixation.

4. Considering the decision in ISPL Industries Ltd. and the absence of evidence showing any influence of the advances on the assessable value, the Tribunal set aside the impugned order. The appeal was allowed based on the principle that notional interest cannot be added without concrete evidence of its impact on price fixation. The judgment emphasized the importance of providing proof rather than relying on presumptions in such cases.

In conclusion, the Tribunal's decision in this case underscores the significance of evidence in determining the influence of advances on assessable value, as established in relevant legal precedents such as ISPL Industries Ltd. The judgment clarifies the standard of proof required to include notional interest in assessable value, highlighting the need for concrete evidence rather than presumptions.