Deccan Mechanical and Chemical Vs. Commissioner of Central Excise and - Court Judgment

Excerpt:

1. the question for consideration in this appeal is whether the national interest(not actually paid or claimed) on the advances given by the purchasers of the goods manufactured by the appellant is to be included in the assessable value of these goods. the commissioner has advanced as a reason for ordering such inclusion in the fact that, but for these advances, the manufacturer would have been compelled to resort to commercial borrowing on payment of interest.2. it is now settled by the supreme court (vst industries vs. cce 1998(97) elt 395, etc.)that, unless a nexus is established between the fact of the advances and a reduction in the prices of the excisable commodity, the notional interest on such advances cannot form part of such assessable value. the reason advanced by the commissioner by no means establishes such nexus.

Judgment:

1. The question for consideration in this appeal is whether the national interest(not actually paid or claimed) on the advances given by the purchasers of the goods manufactured by the appellant is to be included in the assessable value of these goods. The Commissioner has advanced as a reason for ordering such inclusion in the fact that, but for these advances, the manufacturer would have been compelled to resort to commercial borrowing on payment of interest.

2. It is now settled by the Supreme Court (VST Industries Vs. CCE 1998(97) ELT 395, etc.)that, unless a nexus is established between the fact of the advances and a reduction in the prices of the excisable commodity, the notional interest on such advances cannot form part of such assessable value. The reason advanced by the Commissioner by no means establishes such nexus.