Appeal against demand of excise duty and penalty. Tribunal exempted notional interest from assessable value as Revenue failed to prove advance influenced price.
Demand of excise duty, interest and penalty based on notional interest disallowed; appeal allowed.
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CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL West Zonal Bench AHMEDABAD
COURT NO. I
Appeal No. E/1445/2009 -DB
[Arising out of Order-in-Appeal No. OIA-251/2009-AHD-III-KCG/CE/COMMR-Adated 21.07.2009 passed by Commissioner (Appeal) of Central Excise & ST, Ahmedabad]
M/s. Pharmalab Engineering (India) Pvt. Limited : Appellant
vs.
Commissioner of Central Excise & ST, Ahmedabad : Respondent
Appearance:
Shri Vipul Khandar, Chartered Accountant, for the Appellant Shri S.K. Shukla, Superintendent (AR) for the Respondent
CORAM:
Hon’ble Mr. Ramesh Nair, Member (Judicial) Hon’ble Mr. Raju, Member (Technical)
Date of Hearing : 05.11.2018 Date of Decision : 13.11.2018
Final Order No. A/12578 / 2018
Per : Raju
This appeal has been filed by M/s. Pharmalab Engineering (India) Pvt.
Limited against the demand of Central Excise duty, interest and imposition of penalty.
2
Appeal No. E/1445/2009
buyer agreed to give 50% advance against the bank guarantee. The buyer agreed to pay another 40% after inspection of the machinery and balance 10% on receipt of the machinery against performance bank guarantee. In terms of the said agreement, the buyer gave an amount of Rs. 20,38,000/as advance against the bank guarantee given by the appellant. In terms of the agreement, a discount of Rs. 8 Lakh was offered to the buyer. Revenue sought to include the amount of notional interest of Rs. 1,93,019/- on the said advance in the assessable value to the goods. Ld. Counsel pointed out that notional interest can only be added when the Revenue is in a position to show that the said advance has influenced the price of the goods. Ld. Counsel pointed out that in the instant case, the Revenue has not given any evidence that the advance has influenced the price of the goods. In this circumstance, the ld. Counsel argued that the so called notional advance cannot be included in the assessable value.
has relied upon to explanation 2 of Rule 6 of Central Excise Valuation
3
Appeal No. E/1445/2009
(Determination of Price of Excisable Goods) Rules, 2000, the same is reproduced below:-
“ Where an assessee receives any advance payment from the buyer against delivery of any excisable goods, no notional interest on such advance shall be added to the value unless the Central Excise Officer has evidence to the effect that the advance received has influenced the fixation of the price of the goods by way of charging a lesser price from or by offering a special discount to the buyer who has made the advance deposit.”
They have argued that onus is on the Revenue to establish whether the price is influenced by the advance received by the appellant. He pointed out that on the contrary the Revenue in the show cause notice itself has produced the evidence that the appellant has been receiving similar advance from many parties and no discount was offered to those parties. He argued that the said evidence clearly establishes that discounts are not linked with the advance received and if that was so, then such discount would have been given to all customers similarly placed and who have given advance.
(Order pronounced in the open court 13.11.2018)
Raju Ramesh Nair Member (Technical) Member (Judicial)
KL
3 issues framed by the court
Whether notional interest on advance receipt can be added to assessable value when the revenue fails to prove the advance influenced the price.
Whether a discount offered for advance payment indicates a link between the advance and price determination under Rule 6.
Whether the Revenue discharged the onus to establish a nexus between advance receipts and discount offered.
1 provisions across 1 enactments
M/s. Pharmalab Engineering (India) Pvt. Limited
Commissioner of Central Excise & ST, Ahmedabad
Ramesh Nair
Raju
As recorded by the court registry
An appeal in a central excise matter before CESTAT.
2 orders share this CNR
Judgements on the same questions, provisions and authorities, from every court
