CEAT LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) The issues involved in this appeal go as far back as in 1974. The appellant was engaged in the manufacture of automobile tyres. In the price lists that it had filed from 1974 onwards for assessment of these tyres, it claimed deduction from the sale price on various count in order to arrive at the assessable value. One of the items was deduction on account of interest on receivables. The counsel for the appellant states that, in the light of the fact that the Assistant Collector did not take any decision either granting or rejecting, the deduction on this count in the price lists that it had filed, it approached the Bombay High Court seeking orders allowing this deduction. The High Court granted it relief. The matter went up to the Supreme Court. That Court, based on its judgment in Union of India v/s. Bombay Tyres International Ltd 1983 ELT 1896 passed a format order in the appellant's case, as was done in the case of many other assessees. In a letter dated 28. 10.1983, the appellant filed a revised statement of deduction to the Assistant Collector including the deduction under consideration. The Assistant Collector passed orders in July 1984 disallowing the claim of deduction on interest on receivable and by a corrigendum to this order determined the duty payable to be Rs. 22,84,31,072/ -. In terms of the Supreme Court's format order, the appellant filed the objection to the Supreme Court in April 1986. By orders passed in July 1995, the Court remanded the matter to the Commissioner (Appeals) who passed orders on 20.7.1996. Her conclusion is reproduced below:

(2.) The Superintendent wrote to the appellant in September 1996 asking it to pay excise duty payable "on the following inadmissible deductions" amongst which was deduction of average equalised interest cost in sales other than credit basis. He also required it to furnish monthwise details of the exact quantum of inadmissible deductions out of the total deductions claimed by it during the entire period of such claim from the year 1974 to August 1996. The letter also informed the appellant that interest on duty in terms of Sec. 11A of the Act was payable after the expiry of the prescribed period. The appellant in its reply dated 6.11.1996 stated that the deductions had been claimed on account of interest on receivables only in respect of sales effected on credit basis. Therefore, the claim for deduction of interest on receivable was fully allowable. It requested two months time to submit the statement. The Assistant Commissioner thereafter passed two orders dated 31.3.1997 and 17.12.1997 for two periods dealing with 26 show cause notices issued to the appellant. He directed the Range Superintendent to "quantify the demand in view of the judgment delivered by the Hon'ble Supreme Court in M/s MRF Ltd as well as Commissioner (Appeals) as stated above to recover the same'. While the matters were pending in the Court, the department issued notices proposing to disallow deductions from 1989 onwards till 1996 and demanding duty of total of 27 such notices for the duty involved of Rs. 349 crores was issued. The Superintendent thereafter passed three orders quantifying the demand of duty payable for different periods, totalling Rs. 13.17 crores approx. The appellant thereafter paid the amount in question. The Assistant Commissioner passed order on 31.3.1997 directing the Superintendent to quantify the demand in the light of the MRF judgment and the Commissioner (Appeals)' order.

(3.) The department wrote to the appellant on 17.1.1999 asking it to deposit Rs. 98596353 being the interest on receivables to which it was not entitled for deduction from 1994 to March 1996. The appellant declined to do stating that the claim was admissible. The department thereafter issued a notice dated 7.4.1999 proposing to recover the duty under Sec. 11A of the Act the duty. The basis for the demand was that, in the light of the judgment of the Supreme Court in Assistant Collector v/s. MRF Ltd 1995 (77) ELT 4334, the interest on receivables was eligible for deduction only when the goods were sold on credit and that equalised interest on sales other than on credit was not eligible for deduction. The notice invoked the extended period of limitation alleging suppression on the ground that the appellant had not furnished "full details to the department and deliberately suppressed vital information withholding details of monthwise calculation of interest on receivables." It is the order of the Commissioner, confirming this notice that is in appeal before us.