ORDER
U.L. Bhat, J. (President)
1. The dispute in this appeal arises on two price lists referred to in the order-in-original passed by the Assistant Collector of Central Excise, Kanpur. The price lists were filed with reference to Detergent Washing Powder – Nirma Brand. The price declared was Rs. 7.10 per kg. Note (2) indicated that the above price was applicable for payment made against delivery. Note (3) indicated that interest will be charged @ Rs. 0.10 per kg. for payments made during the credit period of 20 days. Note (4) indicated that interest will be charged @ 17% P.A. for payments made after the credit period of 20 days. In Columns 9 and 10 deduction of Rs. 0.10 as interest for 20 days credit period. The Assistant Collector declined deduction of Rs. 0.10 as interest. This order having been confirmed by the Collector (Appeals), the present appeal has been filed.
2. As the learned Counsel for the appellant explains, the appellant fixed price inclusive of interest for the first 20 days and indicated that that price will govern if payment is not made against delivery but on the 20th day and where payment is made against delivery, the interest element would be refunded by credit note. Where payment is made within 20 days there would be refund of proportionate interest. However, according to the department, the interest element for first 20 days is deliberately included in the price subject to the liability to return it if, under the contract, interest did not actually accrue. If payment is delayed beyond 20 days, appellant would charge interest @ 17%. The question is whether interest element of Rs. 0.10 is eligible for deduction.
3. Let us see how the trade pattern would work out in actual practice. The trade customer places order and is required to pay the price @ Rs. 7.10 per kg. subject to the condition already indicated. He makes the payment against delivery which will create an obligation on the manufacturer of refund the interest element already collected and this is to be done by way of credit note. Another customer makes payment not against delivery but on the 20th day. He would have incurred the liability for interest and since interest has already been collected for the period, the manufacturer has no obligation to refund any part of the interest. If the customer makes payment on the 10th day and since the interest element on the remaining 10 days is included in the price, he is entitled to refund of proportionate interest. This method of collecting advance interest was adopted, evidently to safeguard against difficulties in collection of interest subsequently but subject to liability to refund interest in case there is no delay. The principle laid down in MRF Ltd. case 1995 (77) E.L.T. 433 (S.C.) is squarely applicable to all instances where interest is liable to be paid for delayed payment. The lower authorities were not justified in rejecting outright the claim for deduction of the interest element. The Assistant Collector ought to have approved the price list subject to the qualification indicated above.
4. For the aforesaid reasons, we set aside the impugned order and direct that the price lists shall be treated as having been approved with right for deduction of the interest element if liability to pay on the alleged element in all cases is within the period.
5. Appeal is allowed as indicated above.