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TMI Blog2009 (4) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... sh Sangoi , C.A. , for the Respondent. [Order per : A.K. Srivastava, Member (T)]. - This is an appeal filed by the Revenue. 2. Heard both the sides and perused the records. 3. The issue involved in the instant case is whether the notional interest accruable on the advances taken from the customers is to be added to the assessable value of the goods. 4. The respondents are engaged in manufacture of tailor made goods falling under Chapter 84 of the Schedule to the Central Excise Tariff Act, 1985. 5. As is the practice in the industry manufacturing tailor made goods, the respondents obtain advance payments from some of their customers as a security against their orders based on their risk perception in the transaction. 6. The notices involved in the present case, were adjudicated against the respondents by the Dy. Commissioner, Central Excise, vide Order-in-Original dated 19-9-2002. On appeal, the Order-in-Original has been set aside by the Commissioner (Appeals) vide Order-in-Appeal dated 28-2-2003. The Commissioner (Appeals) has held that it is not established that advances taken as security deposit have depressed the sale price. He further held that nexus, if any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... includible in transaction value, only if they satisfy the following conditions, viz. (a) It is an amount that the buyer is liable to pay to the assessee; or (b) It is an amount that the buyer is liable to pay (to someone) on behalf of the assessee; and (c) The payment is by reasons of sale or in connection with the sale. 8.5 The 'notional interest' is not such an amount. It is not an amount paid by the buyer to the respondents. Neither is it an amount paid by the buyer to someone on behalf of the respondents. What is paid by the buyer in connection with the sale is the 'amount of advance' and not the interest thereon. 8.6 The interest is not a payment received by reasons of sale or in connection with the sale. 9. Initially, when Section 4 was proposed in the Finance Bill, 2000, the definition of 'Transaction Value' included - - the amounts charged for, or to make provision for 'Financing'. These words were subsequently deleted. This is an unambiguous indication that the legislature did not intend to include 'Financing Charges' in the assessable value. 9.1 Thus, where the buyer paid financing charges to or on behalf of the assessee, such charges were earlier contem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortionate cost of pattern has to be included in the assessable value of the castings...." (CBEC circular 170/4/96-CX., dated 23-1-1996) 12.3 It is notable that the pattern would remain with the manufacturer for a long period and if the same were to be manufactured or purchased by the casting manufacturer, he would have to spend money. Thus (similar to the case of receipt of advances), supply of the patterns too would obviate need for borrowal. But the Revenue did not require addition of the notional interest. 12.4 The Revenue has continued to hold the same view ever after 1-7-2000 as is evident from the CBEC Cir. 619/10/2002, dated 19-2-2002, Para 6 of the circular states that in case the music company (customer) has also supplied to the job worker, free of cost, inlay cards, jackets, jewel box or any other material/input, their cost should also be added to job charges. There is no mention of the interest on value of these items. 12.5 Similar is the case for other components of the cost. Even where 'cost construction method' was adopted [Rule 6(b)(ii) of Central Excise Values, Rules, 1975], it was only the landed cost of various items, and not the interest thereon, which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we may refer to the Board's circular of 1998 quoted earlier, clause (iii) of which clearly provides that if there is no difference in the selling price for both categories of the wholesale buyers and there is also "no proof" that on account of advance deposits taken from some buyers, the price charged from all buyers has been reduced, then element of notional interest on advance deposits, cannot be added. Obviously, where there are two prices, one for those who have made the advance and the other who have not, it would require no further proof of the lower price having been influenced by the interest free advance made by the buyer. But otherwise, it would require proof and the proof for the purposes of holding that interest free advance has influenced the price would obviously be provided by the revenue. There is no scope for any such presumption as canvassed on behalf of the appellant. We find the same position to be continued in the later amendment in the Rules of 2003 referred to above. As in illustration 2, it talks of evidence to show that interest free advance has resulted in lowering of the prices. The departmental circulars and the amendments in the Rules at the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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