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2019 (10) TMI 531 - AT - Central ExciseValuation - charges recovered from the customer for the delayed payment by issuance of debit note - inclusion in the assessable value - it is alleged that Appellant had allowed cash discounts from the price, but later recovered a part of this discount so passed on - nature of additional consideration or not - HELD THAT:- If the customers delay in making payment beyond specified period, interest is charged, which is the financial cost to the Company for late receipt of payment and accordingly debit notes were issued to the Appellant for recovery of said financial charges separately. This issue of inclusion of financial charges in the value has been considered by this Tribunal in the case of ARHAM SPINNING MILLS VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR [2005 (9) TMI 463 - CESTAT, NEW DELHI] where it was held that there is no justification for including ‘financial cost’ in the assessable value. The objection of the Revenue is that the Appellant had collected extra amount by not passing the cash discount and in the guise of financial charges, hence, being an additional consideration, hence to be included in the value of the goods. Rebutting the said argument, the Appellant had referred to their price policy, disclosing there under the slab-wise cash discount admissible on the sale price slab-wise; also in the said policy, they disclosed interest for delayed payment depending upon the number of days delay, for which rate of interest also varies. There are merit in the contention of the learned Advocate for the Appellant. It could be a coincidence that in certain cases the financial charges recovered from the customers may be equal to the cash discount, but reading their credit policy structure as a whole annexed to the appeal memo, it is clear that no recovery is made in excess of cash discount passed on as alleged by the Revenue other than recovery of the financial charges, for delay payment than the prescribed period. Appeal allowed - decided in favor of appellant.
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