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2016 (1) TMI 820 - SUPREME COURT

2016 (1) TMI 820 - SUPREME COURT - 2016 (332) E.L.T. 193 (SC) - Valuation - inclusion of notional interest in advances - Depression of assessable value of the goods - short payment of duty - respondent-assessee had obtained certain advance sums from some companies/users to supply the bottles and on that count it had granted 3-4 per cent discount - Held that:- In the present case, there has to be application of mind by the tribunal regard being had to the amount of money paid by purchasers, namel .....

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t when the entire activities were within the knowledge of the excise authorities, penalty is not leviable. Needless to emphasize, the tribunal shall advert to the said submission, if required, in the ultimate eventuate, in proper perspective.

In the result, the appeal is allowed, the order passed by the tribunal is set aside and the matter is remitted to the tribunal for fresh disposal keeping in view the observations made herein-above. We may hasten to clarify that we have not expres .....

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dding the additional consideration received from the customers in the form of advance and, therefore, the notional interest accrued thereon is to be added to the sale price, for such non-addition had resulted in depression of the assessable value of the goods, namely, the bottles manufactured by the respondent-assessee. 2. In the show cause notice, it was mentioned that the assessee had short paid the duty on its products, that is, printed glass bottles, by under-valuing the same at the time of .....

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to the show cause was received, the adjudicating authority passed an order on 28th November, 2003, making a demand of ₹ 33,91,934,00/- under Section 11A(1) of the Central Excise Act, 1944 (for short the Act ) being the duty payable on the additional consideration received by the assessee from the customers in the form of notional interest accrued on advance payments and also imposed penalty for the same amount under Section 11AC of the Act. Apart from that, the adjudicating authority confi .....

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that the advances obtained from a buyer had really been instrumental in depression of the price. Learned Member further opined that there was no nexus of interest with the price and hence, the demand was not acceptable and consequently, no penalty could be levied. 5. The Member (Judicial) adverted to the order passed by the Commissioner wherein the statement of the Manager (Sales) had been adumbrated in detail, referred to the other documents that had been put-forth by the revenue before the ad .....

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use of the advances, income generated from the said advances, their contribution of the pricing structure and their reflection in the Balance-sheet or the Annual Reports of the appellants, and the deployment of the funds so received by them, as I agree with the learned brother Shri Sekhon that onus to prove so is on the Revenue. However, the appellants would be at liberty to produce relevant evidences before the adjudicating authority in support of their contention that the interest accrued on s .....

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Metal Box India Ltd. vs. Collector of Central Excise, Madras (1995) 2 SCC 90 are not applicable to the case at hand and accordingly concurred with the opinion expressed by the Member (Technical). Hence, the revenue is before this Court in appeal. 7. We have heard Mr. Yashank Adhyaru, learned senior counsel for the appellant-revenue and Mr. Aarohi Bhalla, learned counsel for the respondent-assessee. 8. On a scrutiny of the factual score, it is noticeable that the respondent-assessee had obtained .....

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a whole-sale buyer of the appellant's goods, had accepted the view of the tribunal and expressed thus: On the facts on record, therefore, it must be held that the Tribunal was perfectly justified in taking the view that charging a separate price for the metal containers supplied to M/s Ponds (I) Limited could not stand justified under Section 4(1)(a) proviso and, therefore, to that separate price charged from the Ponds (I) Limited, the extent of benefit obtained by the assessee on interest-f .....

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sessable value or wholesale price will depend upon the facts of each case. The three-Judge Bench adverted to the facts of the case, the agreement existing between the parties and the lower price at which the respondent-assessee therein had sold the motor-cycles and after analysing the factual matrix opined as follows: For the above reasons, we hold that the tribunal has disposed of the appeal before it in a most perfunctory manner without going into any figures at all but by merely on the statem .....

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nt and/or the interest earned thereon have been used in the working capital and/or whether it has the effect of reducing the price of the motorcycle. The tribunal to so decide on the material which was placed before the Commissioner and not to allow any additional documents/materials to be filed before it. None of our observations made herein shall bind the tribunal to which this case is remitted. 11. In the case at hand, the Member (Judicial) has remitted the matter to the competent authority t .....

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nt-revenue would submit that the documents were produced before the adjudicating authority as well as the tribunal to show the nature of advance and the manner of transaction from which it is demonstrable that there has been depression of the assessable value. 14. On a perusal of the order passed by the Commissioner, it is seen that observations have been made on certain aspects and inferences have been drawn. It cannot be said that no material was produced by the revenue. The concerned Commissi .....

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a case where a separate price was charged. In the case of Hero Honda Motors Ltd. (supra), the facts, as we perceive, were not clear and, therefore, there was a remit. Be it noted, sale price agreed between two competing parties may get depressed, when substantial and huge advances are periodically extended and given with the objective and purpose that the sale price paid or charged would be lowered, to set off the consideration paid by grant of advances. There should be a connect and link betwe .....

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