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TMI BlogAssessable value – Section 4 of CEA, 1944 – interest – adding value of additional consideration on account of interest free depositsX X X X Extracts X X X X X X X X Extracts X X X X ..... he duty. In view of the CEGAT decision in case of Collector of Central Excise, Hyderabad Vs. M/s V.S.T Industries Ltd. Ors (1991 (52) EL T 59 (T), the appeal against which has been dismissed on merits by the Supreme Court, a doubt has arisen whether money value of the additional consideration has to be added to the cum- duty price or the Assessable value. OPINION Subject: - Determination of value under Sec. 4 of the Central Excise Act, 1944 for adding the money value of the additional consideration on account of interest free deposits. I have perused the Statement of Case and the Opinions of two former Attorneys General dated 6.5.1989c1nd 19.4.1991. The facts are not repeated for brevity. It has now settled by series of decisions that if the price is not the sole consideration flowing directly or indirectly from the buyer to the assessee-manufacturer, either in cash or in other form, the additional consideration quantified in terms of money value is to be added to the price declared by the assessee for determining the normal price of the goods. This conclusion has been arrived' at by the Court on the reasoning that the assessee would otherwise have been required to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and, in such a case the notional or actual interest could be added (emphasis added). The Court referred to its previous judgement in Metal Box case and distinguished it on the ground that "In Metal Box case large amount of money had been advanced. Secondly, and what is more important, in Metal Box case the assessee had given fifty per cent discount to Ponds India Ltd on its gross sale price and thereby charged lesser price than what was charged from the other buyers. In the present case the cigarettes are sold at the factory gate to the wholesale dealers at a uniform price irrespective of the fact whether the purchaser it buying the cigarettes on credit or against payment of money in cash ". It is obvious that the principle laid down in the Metal Box case had not been in any manner affected or diluted in the subsequent judgement in the VST Industries case. The Department's Civil Appeals No.2861-2863 of 1996 against the second determination were dismissed by a non-speaking order dated 29.3.1996. Although the Tribunal has decided the issue against the revenue, the dismissal of the appeal of the Government of India by a non- speaking order cannot be said to have approved the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... My predecessor Shri. K. Parasaran has opined as follows: " ......The assessable value of the goods is the cum-duty price minus the duty plus the additional consideration......... " He has further opined that: " .......when the manufacturer declared only part of the price and did not declare the other part of the price which represents the money value of additional consideration, the cum-duty price as originally determined represents only the assessable value as declared by the manufacturer plus the duty thereon and not the value of the goods representing the additional consideration and the duty thereon. When the additional consideration is taken into consideration, the duty element thereon has also to enter the cum-duty price ............ " The Supreme Court had occasion to consider the cum-duty price situation in the following 3 cases:- (1) Asstt. Collector of Central Excise Vs. MRF Ltd. -(Supp) SCC 751 para 22 to 25. (2) Govt.. of India Vs. Madras Rubber Factory Ltd. 1995 (4) SSC 349 para 60 (The view in -the case of MRF is accepted as the correct view). (3) Collector of Central Excise Vs. Bata India Ltd. -1996 (4) SCC 563. In the first MRF case, the contention of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted profits are included in the price of the goods, inclusion of the anticipated amount of the excise duty in the wholesale price is the last part of the pricing mechanism. The manufacturer has to calculate the value on which duty would be payable, estimate the amount of duty payable and add that amount to the value of the goods to arrive at the wholesale price. It is on the value of the goods and not the cum-duty price that the duty is paid to the excise authority before the clearance of the goods. If, as in this case, before adding any amount by way of excise duty, the manufacturer found that the value of the footwear was As. 60.00 per pair or less, no question of payment of excise duty could arise ........ " Para"14. Unless it is shown by the manufacturer that the price of the goods includes an amount of excise duty payable by him, no question of exclusion of the duty element from the price for determination of value under Sec. 4(4)(d) (ii) will arise...." at para 570. The fact situation set out in the illustrations in the Statements of Case based on which the opinion of Shri Parasaran has been given, highlights the fact that the cum-duty price had been determined by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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