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TMI Blog2006 (5) TMI 343X X X X Extracts X X X X X X X X Extracts X X X X ..... od covered by the notice was 1985-86 to 1990-91. 3. The ground for alleging short-levy was that the appellant was taking a deposit of Rs. 500 per motorcycle at the time customers booked motorcycles and this deposit was an additional (to the sale price) consideration and that suitable addition was required to be made to the sale price to arrive at the assessable value. The case was adjudicated in June, 1997 and Commissioner of Central Excise confirmed a duty demand of over Rs. 2 crores. Penalty of Rs. 50 lakhs was also imposed on the appellant manufacturer. That decision was appealed against to the Tribunal as well as the Hon ble Supreme Court. The matter is now before us upon remand by the Hon ble Supreme Court vide its order of April, 2005. 4. The direction in the remand order is that the Tribunal will consider in detail after looking into the accounts of the assessee, whether or not advances or part thereof have been used in the working capital and whether or not the advances received or the interest earned thereon had been used in the working capital and whether it had the affect of reducing the price of motorcycle. Since the matter involved detailed scrutiny of the accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the sale price for the purpose of arriving at the assessable value. 9. Learned SDR has submitted that the Hon ble Supreme Court had directed that no further evidence is required to be allowed in the case and therefore, the evidence relating to sale of motorcycles to parties other than the ones making deposit is not be allowed, since this factual position was not relied upon by the assessee in the adjudication proceeding. The learned SDR has also taken us through the evidence and adjudication to show that the deposits had conferred advantage on the appellant and that the advances and earnings from them were taken into account in all management decisions. 10. The conclusion of the Cost Accountant is that surplus money from advances appears to have been used in the working of the company but not necessarily entirely in the working capital of the company . His observation about use of the funds and the earning therefrom are as under : In the present case the additional source is the deposits for booking of vehicles against which there are also statutory investments. Well recognised principles of Accounting exist to reflect the inflow and outflow of funds by which fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) AS PER BALANCE SHEET Sales value of m/c 10119.07 11009.40 11874.74 12798.80 14424.58 16304.74 18762.46 21843.14 22779.13 23568.90 Diff. W.R.T. Pr. Year 890.33 865.34 924.06 1625.78 1880.16 2457.73 3080.68 935.99 789.77 %Diff. W.R.T. Pr. Year 8.80 7.86 7.78 12.70 13.03 15.07 16.42 4.29 3.47 COST OF SALES A Material Cost 7480.78 9001.75 9363.88 10296.27 10875.93 11581.09 13923.21 ,16358.40 17132.85 17770.01 Diff. W.R.T Pr. Year 1520.97 362.13 932.39 579.65 705.17 2342.12 2435.19 774.45 637.17 %Diff. W.R.T Pr. Year 20.33 4.02 9.96 5.63 6.48 20.22 17.49 4.73 3.72 B Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and sale price attributable to the income from Rs. 500 deposit. It is his contention that sale prices of the motorcycles were market determined normal prices and in terms of Section 4 of the Central Excise Act, such normal sale prices merited acceptance for the purpose of valuation of motorcycles. Learned Senior Counsel has, therefore, submitted that there was no short-levy in the present case and duty amounts already paid were the correct amounts of duty and the subsequent short-levy demand has no basis in fact or in law. 13. The finding of the Commissioner is that the huge amounts of customers booking advances were used to meet their working capital requirements as well as were partly invested in deposits/securities . It is his finding that the interest, dividends and capital gains from such investment enabled them to meet the working capital requirements which resulted in lowering their capital borrowings. It has been held that as a result of this, the financial charges which form an integral part of the cost of production of goods also got lowered and this includes profitability and savings in interest costs. It is also his finding that utilisation of customers booking ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould have been included in the assessable value of motorcycles in question from the period June, 1986 to January, 1991. 14. It is to be noted that the overall effect of the deposit on the financial position of the company or its profitability is not of direct relevance to the dispute. What is relevant for excise valuation is whether the deposits had the effect of lowering the sale prices of the motorcycles or whether the sale prices were normal sale prices unaffected by the deposits. 15. From the materials on record and the analysis provided by the costing expert, we are clear in our mind that deposits were not a relevant factor in the pricing of the motorcycles. The average sales realisation and average cost at Annexure II of the report show that there is considerable gap between sales realisation and manufacturing cost of the motorcycles. This gap also varies vastly from year to year. From the highest per motorcycle loss of Rs. 771.21 in 1988-89 the highest profit of Rs. 1122.00 in 1990-91. This is despite the rise of the sale price of a motorcycle from about Rs. 10,000 to about Rs. 19,000 during the relevant period. The year-to-year position is also not any different. The p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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