COMMR. OF C. EX. Vs. KALPATARU POWER TRANSMISSION

JUDGEMENT

(1.) The appellants are manufacturers of fabricated, galvanized steel structurals which are used in the construction of electricity distribution towers by various electricity Boards and NTPC. The manufacture is against specific orders. The appellants were paid certain advances ranging from 10% to 15% of the value of the orders. The adjudication proceedings were initiated alleging that the advances are liable to be treated as additional consideration (over and above contracted price) and amounts equal to notional interest on the advance amounts should be added to the contract price in order to arrive at the assessable value (normal price) of the goods manufactured and sold. The adjudicating authority accepted the assessee's submission that the deposit was not an additional consideration and it doesn't amount to any indirect flow of benefit from the buyer on account of notional interest on advances. It was noted by the adjudicating authority that the deposits were in accordance with the standard terms of the contracts and that while 10% to 15% of the price was paid in advance, 10% of the prices were received much after the sale of the goods, after proper certification of the goods by the designated authority of the buyer, the assessee's submission being that, as a matter of fact, part of the payment always remained in long credit and the assessee only lost in terms of interest on the goods sold.

(2.) Aggrieved by the above order, the Revenue filed appeal before the Commissioner of Central Excise (Appeals), Vadodara. That Commissioner noted that the department has failed to substantiate that a notional interest on advances had the effect of depressing the sale price. He also noted that the issue remains covered against the Revenue by the judgment of the Apex Court in the case of VST Industries case, 1998 (97) E.L.T. 395. The Commissioner therefore, dismissed the appeal. Purportedly aggrieved by the order of the Commissioner (Appeals), Commissioner of Central Excise Ahmedabad has filed the present appeal.

(3.) We have heard both sides and have also perused the records. It is settled law that the question of any addition to the sale price on account of deposit can arise only if it is the case that sale price has been depressed and fixed at lower than the normal price on account of the advance. Both the adjudicating authority and the appellate Commissioner, Vadodara passed their orders following this well settled legal position. We find that even in the present appeal, no material has been cited to show that the contracted prices were lower than the normal prices. That too on account of the advances. In fact, it would appear to be admitted that sale prices had not been affected by the deposit of 10% to 15% advance. In the grounds of appeal, it is stated as under : -