Judgment:
2. Notice issued to the appellant proposed inclusion in the assessable value of the pipes and tubes that it manufactured of the notional interest (i.e. interest notionally calculated and not actually paid) on the deposits towards the price of these goods that it took from this buyers. Adjudicating on the notice, the Dy. Commissioner noted the existence of an order of the Tribunal in the assessee's own case holding that, in the absence of evidence that the fact of advances had depressed the price, it is not permissible to include the notional interest in the assessable value of the goods.
3. The department appealed this order to the Commissioner (Appeals).
That authority allowed the department's appeal, set aside the order of the Dy. Commissioner and confirmed the liability of the manufacturer to pay duty. Hence the appeal by the manufacturer.
4. The appellant is absent and unrepresented. It requests for decision on merits and relies upon the earlier order of the Tribunal.
5. When confronted with the earlier order in the appeal, the Commissioner (Appeals) has relied upon the Supreme Court's judgment in CC Madras and Ors. v. D. Bhoormull 1983 (13) ELT 1546 and says. "The position that is now well established is that the Department can discharge the burden of proof on the basis of circumstantial evidence with the help of preponderance of probability and not necessarily positive proof of mathematical precision. When the facts of the case have been accepted by the appellants, the evidential and legal burden shifts to the appellants who would have particular knowledge of the things to be proved." He concludes on this basis that "the deposits definitely go towards reduction in value components. Even otherwise, it is reasonable to say that in any price negotiation, the element of deposit will always be a consideration towards depressing the price." 6. The Commissioner has clearly misdirected himself as to the scope of the Supreme Court's judgment in CC v. D. Bhoormull . The Supreme Court in that judgment did not lay down any principle that the department is not required to discharge the burden of proof that laid upon it. It emphasised in the judgment that while the burden of proving that the goods are smuggled is upon the department, it is not required to "prove its case with mathematical provision to a demonstrable degree.... All that it requires is the establishment of such a degree of probability that a prudent man may, on the basis, believe in the existence of the fact in issue. Thus legal proof is not necessarily perfect proof often it is nothing more than a prudent man's estimate as to the probabilities of the case." The Commissioner (Appeals) appears to have interpreted this to mean that the department need not prove the case at all and that the burden of proving that the notional interest is not includable in the value is upon the assessee because of special facts in the assessee's knowledge.
7. It is now well settled by way of many judgments - we need only to cite the Supreme Court's judgment in VST Industries v. CCE 1998 (97) ELT 395 - that notional interest on deposits taken by manufacturer from the purchaser is not includable in the assessable value unless it is shown that the facts of the deposit had depressed the price. Doubtless it is more difficult to establish this in the case where the assessee manufactures and supplies goods to the specific particulars of the buyer than in cases where they are of a standard nature and supplied across the board to all buyers. But this does not mean that it i snot required to establish the nexus. This is precisely what the Tribunal said in Grasim Industries v. CCE 1998 (80) ECR 191. Dealing with a case of inclusion in the assessable value of notional interest of deposits given to the manufacturer by purchasers of tailor-made goods, it said "The fact that it would be more difficult in the case of tailor-made goods to establish a nexus, will not relieve the department of the responsibility of establishing nexus by some credible means or other".
The Commissioner (Appeals)'s order is nothing more than an attempt to say that he is not required to establish the facts when he finds that it is possible for him to establish it.
8. We must also deplore the Commissioner's attitude disregarding the order of the Tribunal in the applicant's own case particularly in the light of the fact that the department has accepted the correctness of the order and not filed an appel against it. The Commissioner (Appeals)'s should do well keep in mind the principle, as well settled as the principle which he refers to in D. Bhoormall's case that orders of authorities superior in the judicial hierarchy are binding on those lower down. We would like to draw the Commissioner's attention the Supreme Court's judgment in Kamalakshi Financial Company Ltd. v. CCE 1991 (55) ELT 433.