PREMIER AUTOMOBILES LTD Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE above mentioned appeals are directed against the captioned order of the Commissioner of Cen. Excise (Adjudication), Mumbai.

(2.) THE appellants are manufacturing motor vehicles. Show cause notices were issued to them proposing to add interest earned on deposits received from customers for booking of the cars manufactured by them in the assessable value of the cars under Section 4 of the Central Excise Act, 1944. Three show cause notices were issued - -first one dated 4.10.90 for the period 1.7.84 to 30.6.86 demanding duty of Rs. 29,80,888/ -; second show cause notice dated 24.7.92 for the period 1.7.86 to 30.6.91 demanding duty of Rs. 6,24,19,000/ -; the third show cause notice dated 13.10.93 in which Rs. 36,55,390/ -was demanded as duty for the period 1.7.91 to 31.3.92. The Commissioner, after considering their defence observed that the department has not shown any nexus between the whole sale price and the interest earned on the advance so as to affect the price charged. But at the same time, the Commissioner held that the advances received conferred financial benefit to the appellant as a profit which would form part of manufacturing profit. Since the manufacturing profit has to be part of assessable value, the Commissioner held that the interest on deposit on this ground will be includable.

(3.) THE Id. sr. counsel Shri J.J. Bhatt for the appellants, contended that apart from the fact that the ground as set out above was not put to the appellants in the show cause notice, the matter now stands well settled in favour of the appellants by series of judgments of Supreme Court, Madras High Court and Tribunal. The sr. counsel cited and relied upon the Supreme Court judgment in the case of VST Industries v. CCE. 1998 (97) ELT 395; there, the Supreme Court referred to their earlier decision in the case of Metal Box India Ltd. v. Collector and held that where the assessee has not offered any special discount or reduced price to buyers giving the advance deposits, the notional interest thereon cannot be included in the assessable value. The Tribunal has followed the Supreme Court decision in the case of Metal box India Ltd. (supra) in the Flex Industries Ltd. v. Commissioner of C.Ex. . This Bench also followed series of judgment to hold that notional interest on advance is not includable in the assessable value (Order No. 457/98/WZB dtd. 3.3.98 in the case of Vidyut Metalics Ltd. v. Commissioner of Cen. Excise. Mumbai. III.