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TMI Blog2023 (9) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee even when the interest is inbuilt in the price in invoice. It is also found that the department cannot demand duty arising due to accounting treatment adopted by the appellant as held in the case of FIRM FOUNDATIONS HOUSING PVT. LTD. VERSUS PRINCIPAL COMMISSIONER, OFFICE OF THE PRINCIPAL COMMISSIONER OF SERVICE TAX [ 2018 (4) TMI 613 - MADRAS HIGH COURT] wherein the Hon ble High Court set-aside the demand of service tax computed on the basis of profit loss account and held that it is irrelevant for the purposes of determination of service tax payable. When the demand of tax itself is not sustainable, the demand for interest and penalty is not justified. The impugned order is not sustainable - Appeal allowed. - MR. S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TAX Rs. 8,88,645/- Rs. 8,18,461/- Penalty Rs. 8,88,645/- under Section 11AC of Central Excise Act, 1944 Rs. 8,18,461/- under Section 11AC of Central Excise Act, 1944 2. Briefly the facts of the case are that the appellant is engaged in the manufacture of engines falling under Chapter 84 of First Schedule of Central Excise Tariff Act, 1985 and cleared their final product on payment of appropriate excise duty. The Appellant receives orders for the finished goods in terms of purchase orders ( POS ) placed on the appellant and as per the purchase orders, the credit period of 30 days was offered by the Appellant to the purchasers i.e the time wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edent decisions on the same issue. She further submitted that the deduction of interest on receivable is claimed on the basis of purchase orders and the invoices which clearly mention that the unit price agreed on includes a specified and agreed amount towards interest for credit period. She further submitted that the interest for credit period is inbuilt in the price and therefore, the interest so charged on the invoices are liable be deducted from the receivables. She also submitted that the definition of transaction value given in Section 4 of Central Excise Act, 1944 is exhaustive; however there is no such mention of interest on receivable which shows that the intention of the legislature is clear regarding the interest charged on recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed any appeal against the said order and therefore, she submitted that the department cannot take different stand for different tax period for the same assessee when there is no change in the position of law. 7. It is her further submission that the Ld. Commissioner (Appeals) in the impugned order has wrongly upheld the demand on the basis that the Appellant has adopted an accounting treatment where interest on receivables are not reported separately in the financial record. She further submitted that the department cannot question the commercial decisions and accounting methods adopted by them, in order to determine the duty and in this regard, she placed reliance on the decision of Firm Foundation Housing Pvt. Ltd. vs. Principal Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is on account of credit period and interest for the credit period is inbuilt in the price. 12. Further, we find that the department Circular dated 01.07.2002 also clarified this point. The said clarification is stated herein below:- Will delayed payment charges be excluded from the transaction value? Yes, since transaction value relates to the price paid or payable for the goods. In this case the delayed payment charge is nothing but the interest on the price of the goods which is not paid during the normal credit period. However, to be admissible as deduction it should be separately shown or indicated in the invoice and should be charged over and above the sale price of the goods. Attention in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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