TMI Blog2000 (6) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... n receivables for finding out the assessable value of the goods. One of the heads of deduction claimed by the manufacturers relates to interest on receivables. What is meant by interest on receivables? This is nothing but interest realized from purchasers who get benefit of credit sale. If the sale is on credit for a fixed price and the same is payable within a fixed period mentioned in the invoice, the sale will be a credit sale. The interest on the price for the period of credit is inbuilt in the said price. The price showed in the invoice may not include the interest separately from the price of the goods covered by the same invoice. So, the price mentioned in the invoice is inclusive of the interest on account of the delayed payment. That price mentioned in the invoice is payable by the purchaser within the period mentioned therein. It means that the price is inclusive of the interest on the sale consideration for the period during which the payment is postponed. Putting it in other words, the invoice makes mention of price realisable by a future date. Excise duty is to be assessed on the value at the time and place of removal. So, the price payable at a future date has to be w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the interest charged from the date of delivery of the goods till the date of realisation of the price should be deducted from the value of the goods for finding out the assessable value. The interest so deductible is only the interest for the period mentioned in the invoice, otherwise it will lead to unintended consequences. In cases where payment to the manufacturer is indefinitely delayed or where the dealer refuses to pay the price, the sale price will stand wiped off, because the interest may exceed price. In such a case, are not the goods liable to excise duty? The answer can only be emphatic 'no'. Excise duty is on the manufacture of the goods. It is not depending on the issue as to whether the manufacturer gets the price of the goods from the dealer or not. So, the interest charged from the date of delivery till the realisation of the price should be understood with reference to the period fixed in the invoice. If the invoice provides a specific period up to thirty days for effecting payment, interest from the date of delivery till the expiry of that period of thirty days alone is deductible from the price mentioned in the invoice. 5.After the second decision in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vation is not having support of the Supreme Court decision. 7.Now, we take up the appeals on merits. In appeal No. E/1698/99-A and connected matters, learned counsel representing the appellant, manufacturer, pressed the following points for our consideration: - (1) Adjudicating authority was clearly in error in not deducting the quantum of interest on receivables fixed in the invoice for finding out the assessable value. (2) The assessing authority erred in not excluding the cylinder maintenance charges, etc., in finding out the assessable value. (3) After having found that the price at which M/s. Chemicon Pvt. Ltd. sold the Carbon Dioxide Gas to dealers should be taken as the price at which manufacturer sold the goods. Excise duty payable on that price was not deducted to find out the assessable value. And in computing the differential duty arithmetical mistake crept in. That mistake has to be eliminated. 8.First count of attack against the order of the Commissioner is that the Commissioner did not deduct interest on receivables. This was so done by the Commissioner on the basis of the circular issued by the Board. Earlier in this order we found th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it is not an activity of manufacture. Their Lordships confirmed the calculation. 12.The question whether any amount representing the phased cost of the cylinder over its total life span is excludible from the sale price of the gas manufactured was considered by this Tribunal in the decision in the case of Collector of Central Excise v. Hindustan Gas Industries Ltd. reported in 1989 (41) E.L.T. 663. On the same principle stated in that decision the manufacturer herein is trying to recover the total cost of the cylinder in instalment spread over the life span of the cylinder. We make it clear that the claim made by the manufacturer is only a single recovery and not a double recovery over and above the initial purchase price of the cylinder. In such a situation, on the basis of that decision, we are clear that the manufacturer, appellant before us, is entitled to have the total cost of the cylinder Gomti Carbondioxide and Others v. CCE, Jaipur and (Vice-versa) spread over during its life span and recover in the phased manner at the time of the sale of the gas on each occasion. The above principle stated by the Tribunal in 1989 (41) E.L.T. 663 has been affirmed by the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 5,82,96,856 79,42,103 39,43,786 2,89,48,293 2,94,99,516 1995-96 6,15,30,935 80,94,858 39,17,321 2,97,76,485 3,07,23,376 1996-97 (till Feb.) 7,08,65,623 81,28,000 33,13,781 2,88,91,874 2,91,86,059 The value given by the Commissioner is stated to be erroneous. We are not in a position to decide this issue, because the Commissioner has not given the data for arriving at the figures adopted by him. Therefore, the matter has to be re-examined by the Commissioner for arriving at the correct value of the Carbon Dioxide sold by the manufacturer during the above period. 15.As per the impugned order, Commissioner confirmed the demand of Rs. 29,38,823.12. We find that the manufacturer is entitled to get deduction of interest on receivables, cost and maintenance charges of cylinders and duty recomputed on the basis of the principle stated in the case of Srichakra Tyres Ltd. reported in 1999 (108) E.L.T. 361. So, the demand must necessarily fall far below the amount confirmed by the impugned order. Therefore, the penalty of Rs. 5 lakhs imposed under Rule 173Q of the Central Excise Rules, 1944 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal, the Commissioner (Appeals) disallowed interest on receivables, but allowed collection charges as a permissible deduction. Assessee has preferred appeal E/1077/98-A questioning the correctness of the decision whereunder interest on receivables has been disallowed. 1414 Revenue challenges the order of the Commissioner (Appeals) wherein he allowed deduction on account of collection charges. For the subsequent period from 1-7-1997 to 31-12-1997 the assessee's claim of deduction of interest on receivables and collection charges has been rejected by the adjudicating authority as also by the appellate authority. Hence, appeal E/14/2000-A. Same was the position regarding the period from 1-3-1997 to 30-6-1997. Therefore, the manufacturer has preferred appeal E/15/2000-A. 20.In the earlier part of this order, we found that the manufacturer/assessee is entitled to get interest on receivables. That interest must be in relation to the period during which credit facility was allowed to the dealer. In many of the cases mentioned in the order of the adjudicating authority the terms of payment were ready cash or advance payment. In such cases, interest on receivables is not available to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of post-clearing expenses and, therefore, they are deductible while calculating the assessable value of the goods. In our opinion, the claim of the assessee on account of deduction in respect of interest and bank charges on drafts is a post-manufacturing expenditure and the matter will have to be remanded back for verification of the amount deductible in this behalf." In this decision, the High Court was not dealing with admissibility of interest on receivables. So, the question whether a manufacturer who is getting deduction of interest on receivables from the value can again claim interest and bank charges on draft was not before the High Court. Manufacturer can claim only one item among these two as a proper deduction. He cannot have both. In the case of credit sales, we have come to the conclusion that the manufacturer is entitled to interest on receivables. Over and above that, we do not think that this decision allows interest and bank charges on drafts as well. [Further, the decision rendered by the Bombay High Court has been challenged before the Supreme Court. While allowing SLP (Civil) 11634/92, that appeal is directed to be taken up along with Civil Appeal 4791/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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