Gec Alsthom India Ltd. Vs. Cce Tiruchirapalli - Court Judgment

Jyoti Balasundaram

The appellants, who are manufacturers of Air Circuit Breakers and Control Panels and availing MODVAT credit facility, claimed 8.16% as abatement from the value of goods sold through depots as post-manufacturing expenses (PME) under various heads out of which 4.58% was claimed as interest on receivables. They included the interest on receivables in the price and the price was the same whether paid on the date of delivery of goods or any other date within the general credit period of 60 days. According to the department, eligibility to abatement of interest on receivables, arises only when it is separately identified and collected from the buyers on the selling price of the goods i.e. in cases where payment is made after the general credit period has expired, such payment would not form part of the assessable value. Based on the above, a show-cause notice was issued proposing recovery of Rs.2,61,679/- for the period from April 98 to June 98 and proposing imposition of penalty. The Asst. Commissioner confirmed the demand but did not impose any penalty; his order was upheld by the Commissioner (Appeals); the assessee filed Appeal No.E/814/01 against such demand. In Appeal No.E/815/01, the amount of demand confirmed is Rs.5,18,518/- for the period from October, 1997 to March 1998.

2) We have heard both sides. The appellants cleared their goods to depots from where the goods are sold to their dealers or other buyers. As per agreements, dealers had to get trade discount at a fixed price and other discounts depending upon the manner of payment. The appellants claimed abatement of trade discount and other post-manufacturing expenses, including the elements like cash discount, prompt payment discount, additional discount etc. Assessees declared the price under proviso to Rule 173C wherein assessable value in terms of Section 4 was arrived at after deducting trade discounts and other PME. The above price is the price at which the goods are sold, irrespective of the fact of receipt of payment within the general credit period of 60 days or beyond the above period. Although the Commissioner has rejected the claim for abatement on the ground that the interest amount was not shown separately in the depot invoices, which is not sufficient for rejection, we find that the appellants have not been able to satisfy us that the price charged contained an element of interest inbuilt therein and charged from buyers, which is required as per the apex court s decision in A.Infrastructure Ltd. Vs CCE Jaipur, 2004 (167) ELT 369 (SC) and CCE Hyderabad Vs Novapan Industries Ltd., 2007 (209) ELT 161 (SC), which have been followed by the Tribunal in Castrol India Ltd. Vs CCE Chennai, 2007 (216) ELT 30 (Tribunal) and CCE Bangalore Vs Bangalore Paints Ltd., 2008 (231) ELT 460 (Tri.-Chennai). As the appellants have not discharged the burden of showing that the interest on receivables was inbuilt into the price charged, it is not deductible from the assessable value. In the light of the above, we follow the judgments cited (supra), uphold the impugned orders and reject the appeals.