ORDER
Shri S.L. Peeran
1. The appeals have been filed by the Revenue against the common issue decided by the Commissioner (Appeals) Trichy by his Order-in-Appeal No. 19,20,21 & 22/97 dated 16.1.97 upholding the appeals of four assessees namely (1) Sree Sowdeswari Modern Spinners (2) Sree Rangan Engineering Industry (3) Sree Andal & Co. and (4) Sree Venkatachalapathi Industries.
2. The Commissioner has clubbed all the Orders-in-Original passed by the respective original authorities in respect of each of the assessees and have taken up the bunch of appeals and disposed of by a common order. The issue pertains to addition of notional interest on advances received by the appellants and whether they are required to be added in the assessable value.
3. Ld.SDR submits that Revenue has made out large number of appeals and have been coming in bunches. In submits that the appeals were disposed by the same Commissioner and the Revenue was aggrieved with the grant of relief by the Commissioner (Appeals) and the Revenue is seeking for restoration of order-in-original. However, the Tribunal has been pleased to accept the assessee’s plea and also confirmed the OIO. He reiterates the grounds which are made out in these appeals and seeks for favourable order in favour of the Revenue.
4. On the other hand, Shri J.Narayanswamy, Ld.Advocate appears for all the assessees in these matters and submits that the issue is no longer res integra and this Bench decided all the appeals on various dates arising from same Commissionerate upholding the Commissioner’s order. He submits a copy of the final order No.806 to 840/01 dated 1.6.2001 in the case of CCE Coimbatore Vs GEC Alsthom & Others. He points out that one of the assessees today was also a party there namely Sri Andal & Co. He points out to the findings given by this Bench and number of judgments noted therein which covers the issue. He submits that this Bench have clearly taken a view that findings recorded by the Commissioner that Revenue have not produced evidence to show that interest on advances influenced the price has not been adverted to again by any further evidence. He submits that findings already recorded by the Tribunal is required to be confirmed. He also pointed out to the earlier order of the Tribunal on the same issue in final order No. 737 to 761/2001 dated 24.5.01.
5. We have carefully considered the submissions made by both sides and have perused the impugned order. We notice that the Commissioner (Appeals) has taken up all the Orders-in-Original pertaining to all the four assessees and has passed a detailed considered order. He has noted that the advances received by these assessees have not influenced the price. The findings recorded by the Commissioner in para 3 to 8 is reproduced herein below :-
3. I have given my careful consideration to all the submissions here and I have also seen the impugned orders. The short issue that arises is these appeals is whether the national interest on the advance would form part of the assessable value or not. Since I have decided similar appeals earlier I am deciding the main appeals themselves without a hearing.
4. From the records I find that I have disposed off similar matters earlier vide order in appeal No. 555 to 559/96 (CBE) dated 18-7-96 based on the Madras High Court Judgement as also on the Board’s latest instructions dt: 27th May’96. The relevant paras 6, 7 and 8 of the above order in appeal, are extracted below for the sake of easy reference:-
” 6. I find force in the above submissions made by the appellants. The issue here was examined in details by the Honourable High Court of Madras in the case of Laxmi Machine Tools reported in 1992 (57) ELT 211 (Mad) laying down the principle that the national interest on deposits made by the customers will be includible only if such deposits have a nexus to the sale price of the excisable goods and that this question will depend upon the facts of each case. Accordingly, the High Court held that the Board a earlier Circular dated 20-10-86 was valid and should be implemented in all cases and set aside the Board’s Circular No. 18/90 CX.1 dated 13-6-90 (i.e. the subject matter of writ before the Court) dispensing with the proof of nexus between the security deposits and the ultimate price of the goods as these orders were contrary to Section 4(a) of the Act read with Rule 5 of the Valuation Rules.
” 7. On appeal, the division Bench of the High Court vide decision reported in 1995 (77) ELT 799 (Mad) modified and upheld the earlier single Judge decision (as above) taking the support of the Supreme Court decision in the Metal Box case vide 1995 (75) ELT 449 (SC) only to rule that it is necessary for the department to point out the extent of benefit obtained by the assessee in the interest free advance and to that extent only the price could be loaded for the purpose of determining the assessable value. In the light of the above pronouncements and after consulting the ministry of law in the matter, the Board has issued fresh instructions vide Board’s Circular 215/48/96 CX dated 27.5.96 reported in 1996 (85) ELT T5 to the effect that normally, when the same price is charged from buyers who have given the deposit and from those who have not given the deposit or where the advance is purely on security deposit and the interest earned by such deposit is credited to the buyer, the national interest on such advance cannot be added to the price. The Board has also instructed that the extent of the benefit if any derived out of such advance has to be ascertained as laid down in above judgements.
” 8. Coming to the subject appeals, it appears from the records that the advance amounts received by the appellants were towards the order of specialised equipment manufactured and had no bearing on the sale price of the goods. The plea taken by the appellants that the advance serves as a security since the goods are tailor made, is understandable. From the record, it is apparent that the price is already fixed by contract depending on the customer and the type of specifications/ equipment to be supplied and the deposits have been taken only as an insurance against cancellatation of orders. Therefore, unless it is proved by evidence that the deposits received had a nexus with the price or had served to depress the price, the interest on such deposits cannot be included applying the ratio of the Madras High Court’s decision referred to above. The Assistant Commissioner has not cited any evidence in this regard nor has be ascertained the extent of benefit derived by such advance. So, his conclusion to add the national interest on account of advance across the board in all cases is not maintainable”.
5. In more or less identical orders, the Assistant Commissioner has noted that any manufacturer requires money towards working capital and this working capital is required to be borrowed from banks or other financial institutions and that the appellant have to pay interest at market rate in all such cases. He also noted that advances were received in 75% to 86% of purchase orders. The advances received being used in the nature or working capital have enabled the appellant not to borrow the same from banks etc. on interest. So the Assistant Commissioner held that the national interest worked out at the normal Bank rate for the number of days the advance is kept has to be taken as additional consideration flowing indirectly from the buyers to the appellants in addition to the price shown in the invoice in terms of Rule 5 of the Valuation Rules & would (sic) part of the assessable values. The AC also felt that (sic) was no requirement to establish clear nexus between the (sic) price and the advances received, since the prices vary over a period and with the purchasers.
6. Challenging the above findings it has been submitted by all the appellants in the grounds of appeal that they do not receive advance deposits from all the customers. They have pointed out that the items produced by them are textile machinery etc. made as per specific requirements of customers & cannot be sold in the open market. They have stated that if advance is not taken it would not be binding on the buyers. They have also submitted that 2% to 3% discount is given due to hard bargaining by the buyers and this has no nexus with the advance received. Moreover, they point out that the AC has now taken the view that no nexus is required to be established whereas in the initial stage and AC took a contrary view & he has not established any nexus between the advances and the price.
7. I find force in these pleadings & in the light of the above, I have no reasons to change my views taken in the earlier decisions, I therefore held that the Assistant Commissioner’s orders cannot be sustained in law in the absence of any evidence brought on record to show that the advance taken by the appellant had in fact depressed the price or that the appellants had derived benefit by such advance, particularly in the absence of any quantification thereof by the department. As explained by the appellants, the case law in Resistance Alloys vide 1995 (77) ELT 721 (T) is distinguishable from the facts of the subject appeals, wherein advance is not taken from everyone. The impugned orders therefore do not survive in law and the demands confirmed have to be set aside.
8. For the aforementioned reasons, I allow all the four appeals.
6. We notice that this very findings were the subject matter of appeals before the Tribunal and the Tribunal has passed the final order and has noted the above and confirmed the Commissioner’s findings. We find no reason to differ from the findings already recorded wherein we have noted that in the absence of any evidence brought on record to show that the advances taken by the assessees had in fact depressed the price or the assessee had derived the benefit by receipt of such advances, particularly, in the absence of quantification thereof, the order does not sustain and Commissioner(Appeals) Order-in-Appeals are required to be confirmed. In this regard the Tribunal has noted the ratio of the judgements in the following cases:-
(1) FORT WILLIAM INDUSTRIES LTD Vs CCE Calcutta-IV as reported in 2000 (122) ELT 174(T);
(2) CCE New Delhi Vs SCHENCK AVERY LTD reported in 2000 (119) ELT 852 (T);
3. ACC MACHINERY COMPANY LTD Vs CCE, MUMBAI VI as reported in 2000(117) ELT 231 (T)
(4) CCE Coimbatore Vs FESTO ELGI PVT. LTD reported in 1998 (100) ELT 175 (T) and the final orders already noted.
7. We notice that the issue being fully covered, there is no need to take a different view and in terms of judicial discipline, the impugned order of the Commissioner is required to be confirmed following the ratio of the judgements noted above. In the view of the matter, we do not find any merit in these appeals and these appeals are rejected accordingly.
(Dictated and Pronounced in open court)