ORDER
V.P. Gulati, Vice President
1. The issue in the appeals falls in a short compass and is covered by our earlier orders. The ld. lower authority has decided the issue without affording the appellants an opportunity of hearing. The ld. lower authority has held that since the issue was covered by the ratio of the decision of the Hon’ble Supreme Court in the case of Metal Box reported in 1995 (75) E.L.T. 449, the matter could be decided ex parte.
2. The ld. Advocate has pleaded that the appellants would have adduced arguments to distinguish the facts of their case if they had been given an opportunity to explain their position. He has therefore pleaded there has been a denial of principles of natural justice.
3. The ld. JDR has no objection to the remand of the matter.
4. We observe it goes without saying that the law laid down by the Hon’ble Supreme Court has to be followed. But that is not to say that applicability of the ratio of the decision has not to be examined after taking into consideration the facts of each case. This can be done only after the appellants are given an opportunity to plead their case regarding the applicability of the ratio of the judgment in a given case. This has not been done in the present case. The judgment in the case of Metal Box has been interpreted by the Hon’ble Divisional Bench of Hon’ble High Court of Madras in the Lakshmi Mills reported in 1995 (77) E.L.T. 799. This judgment will also have to be considered along with the judgment of Hon’ble Supreme Court in the case of Metal Box supra. Further the Board has also issued a circular bearing No. 17/41 /96 issued in the above context after taking into consideration the judgments cited supra; First Bench of the Tribunal has also in the case of Flex Industries v. CCE reported in 1997 (91) E.L.T. 120 has held as under in paras .7 and 8 :
7. The next contention relates to the addition of notional interest on advances received from the customers of price of cylinders in arriving at the assessable value of printed pouches. This aspect arises for consideration in Appeal E/1047/94. The cylinders are made to suit the designs and matter, appropriate to each customers and are custom made. If the customer does not accept or approve the cylinder made for this purpose, the appellant will be put to severe loss and hence appellant was collecting a part of the price of the cylinders in advance. According to appellant, the amount was being collected as security and this was a recognized trade practice. The law in this regard has been settled by the Supreme Court. See Metal Box India Ltd. v. Collector of Central Excise – 1995 (75) E.L.T. 449 (S.C.). In that case the wholesaler was buying 90% of the total production and advancing huge amount free of interest and was obtaining 50% discount from the normal price. It was held that advance of huge amounts free of interest had necessarily entered into consideration between the parties leading to 50% discount being allowed. This was regarded as a special treatment to the wholesaler. It was further pointed out that in the absence of the advances, the manufacturer would have been required to borrow the amounts from Banks or the like on interest which materially would have got reflected in the price structure as it would be a part of cost of production to be passed on to the customers. The advances in that case were of the order of Rs. 75 Lakhs in 1980, Rs. 1 Crore in 1981 and Rs. 2 Crores in 1982 and were maintained at the same level on the first working day of each month and this was held to have a direct impact on the pegging down of purchase price. It was held that the price charged to this wholesaler could not be said to be normal price since a favoured treatment was given to the wholesaler who had advanced huge amounts free of interest. Loading of the price appropriately was upheld.
8. In the present case, there was no favoured buyer who advanced huge amounts free of interest. Advance of a part of the price was secured free of interest from all buyers of cylinder and cylinders were manufactured within a month of the placing of the order. Price of a set of 4 to 5 containers ranged between Rs. 20,000 to Rs. 25,000, a part of which was received as advance and retained for about a month. Though the total amount of advance collected during four years ranged from Rs. six and odd crores to Rs. ten and odd crores, they were received not from a single or a few buyers, but proportionately from all buyers. The Department did not marshal any evidence to show that a part of the price being received as an advance and being retained for a short period had been or would have been taken into consideration in fixing the uniform price for all buyers. In the circumstances, it does not appear probable that this factor had, to any extent, depressed or otherwise affected the price charged. That being so, there was no extra consideration received, over and above the declared price. The lower authorities failed to consider any one of these aspects while finding that the price has to be loaded to the extent of the notional interest. The finding is accordingly set aside.
5. The issue therefore has to be examined after taking into consideration what has been held above by the Hon’ble Supreme Court, Hon’ble Madras High Court and the Tribunal. The ld. lower authority’s orders therefore in the circumstances cannot be considered as proper and the same are set aside and the matters remanded to the said authority for de novo consideration and decision after allowing the appellants an opportunity of hearing and in the light of our observations above.
6. Appeals are therefore allowed by remand.