Case: Commissioner of Central Excise, Tamil Nadu Vs. M/s. Southern Structurals Ltd

is required to be reduced to Rs.11,50,000/-.ORThe appeal is required to be allowed both on merits and on time bar in the light of judgments noted by Member (Judicial) Shri S.L. Peeran in his order." 15. The third Member being Member (Technical) agreed with the Member (Judicial) and after referring to the similar issue decided by the Assistant Commissioner vide order no.71/96 mentioned above, held that it could not be validly said that the facts were suppressed. He, therefore, held that the demand was time barred.16. On the inspection charges he held that the same are includible in the assessable value. Hence, he agreed with both the members on this point. He, therefore, allowed the appeal on merits and held that the demand was time barred and set aside the order of the Commissioner.17. Accordingly, by a majority of 2:1, the appeal of the assessee was allowed.18. Aggrieved, the Department has come up in appeal before us. 19. It is clear from the above that on the point of inclusion of inspection charges in the assessable value, all the three members have given a common finding that the said charges are to be includible in the assessable value. It is stated that the assessee has not filed any appeal on this point. Thus, the order of the Tribunal has attained finality in this regard. 20. So far as the payment of differential duty on escalation bill is concerned, the assessee in reply to the show cause notice has admitted its liability to pay the said duty and the same has already been paid and pursuant to the finding of the Commissioner, the same has been appropriated against this liability. Tribunal has also recorded the same. There is no dispute on this point also. 21. So far as the interest on advances received from the Railways is concerned, by a majority of 2:1, it has been held that the advances received and the price were in full knowledge of the Department which is clear from the order in original no.71/96 dated 15.10.1996 wherein the Assistant Collector has noted about the advances received and has also held that the advances received had no nexus with the contract and dropped similar proceedings. 22. By the majority view, the Tribunal has also held that since the facts regarding receipt of advances were already in the knowledge of the Revenue it could not be said that there was suppression of facts regarding advances received warranting invocation of extended period of limitation. The finding regarding limitation has not been specifically challenged by the Revenue in this appeal. Even otherwise, we agree with the Tribunal that since the fact regarding advances received was already in the knowledge of the Department and the earlier similar proceedings initiated by the Department were dropped by the Assistant Commissioner, the Revenue was not justified in invoking the extended period of limitation. We confirm the finding of the Tribunal on the point of limitation and hold that the Revenue was not justified in invoking the extended period of limitation. Insofar as the under-valuation on account of advances received but not included in the assessable value is concerned, suffice would it be to say that the point is concluded against the Revenue and in favour of the assessee by a judgment of this Court in the case of Commissioner of Central Excise, Mumbai III v. ISPL Industries Ltd. (2003) 5 SCC 113 in which it has been held as under : "It is clear that the mere fact of making an interest-free advance by a buyer to the manufacturer, by itself will not be a sufficient ground to reload the assessable value with notional interest. It would be necessary for the Revenue to show that such advance has influenced in the lowering of the price and that it is not depicting the normal price of the goods. There may be different reasons for taking advances, as indicated above in the earlier part of this judgment. Learned counsel for the appellant submits that all that the Revenue has to show is that interest-free advance has been made by the buyer to the manufacturer which would lead to a presumption that it is to the advantage of the manufacturer having influenced the fixation of price as well. We, however, fail to appreciate the submission made on behalf of the Revenue for drawing a presumption that fixation of price is influenced by such an advance. In this connection, we may refer to the Boards circular of 1998 quoted earlier, clause (iii) of which clearly provides that if there is no difference in the selling price for both categories of the wholesale buyers and there is also no proof that on account of advance deposits taken from some buyers, the price charged from all buyers has been reduced, then the element of notional interest on advance deposits, cannot be added. Obviously, where there are two prices, one for those who have made the advance and the other who have not, it would require no further proof of the lower price having been influenced by the interest-free advance made by the buyer. But otherwise it would require proof and the proof for the purposes of holding that interest-free advance has influenced the price would obviously be provided by the Revenue. There is no scope for any such presumption as canvassed on behalf of the appellant. We find the same position to be continued in the later amendment in the Rules of 2003 referred to above. As in Illustration 2, it talks of evidence to show that interest-free advance has resulted in lowering of the prices. The departmental circulars and the amendments in the Rules at the relevant time and subsequently too, do not envisage of any presumption to be drawn by the mere fact of interest-free advance by the buyer to the manufacturer. It requires proof and evidence to show that fixation of price has been influenced on the lower side by such a transaction of interest-free advance."

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]22. By the majority view, the Tribunal has also held that since the facts regarding receipt of advances were already in the knowledge of the Revenue it could not be said that there was suppression of facts regarding advances received warranting invocation of extended period of limitation. The finding regarding limitation has not been specifically challenged by the Revenue in this appeal. Even otherwise, we agree with the Tribunal that since the fact regarding advances received was already in the knowledge of the Department and the earlier similar proceedings initiated by the Department were dropped by the Assistant Commissioner, the Revenue was not justified in invoking the extended period of limitation. We confirm the finding of the Tribunal on the point of limitation and hold that the Revenue was not justified in invoking the extended period of limitation. Insofar as theon account of advances received but not included in the assessable value is concerned, suffice would it be to say that the point is concluded against the Revenue and in favour of the assessee by a judgment of this Court in the case of Commissioner of Central Excise, Mumbai III v. ISPL Industries Ltd. (2003) 5 SCC 113  in which it has been held as underis clear that the mere fact of making anadvance by a buyer to the manufacturer, by itself will not be a sufficient ground to reload the assessable value with notional interest. It would be necessary for the Revenue to show that such advance has influenced in the lowering of the price and that it is not depicting the normal price of the goods. There may be different reasons for taking advances, as indicated above in the earlier part of this judgment. Learned counsel for the appellant submits that all that the Revenue has to show is thatadvance has been made by the buyer to the manufacturer which would lead to a presumption that it is to the advantage of the manufacturer having influenced the fixation of price as well. We, however, fail to appreciate the submission made on behalf of the Revenue for drawing a presumption that fixation of price is influenced by such an advance. In this connection, we may refer to the Boards circular of 1998 quoted earlier, clause (iii) of which clearly provides that if there is no difference in the selling price for both categories of the wholesale buyers and there is also no proof that on account of advance deposits taken from some buyers, the price charged from all buyers has been reduced, then the element of notional interest on advance deposits, cannot be added. Obviously, where there are two prices, one for those who have made the advance and the other who have not, it would require no further proof of the lower price having been influenced by theadvance made by the buyer. But otherwise it would require proof and the proof for the purposes of holding thatadvance has influenced the price would obviously be provided by the Revenue. There is no scope for any such presumption as canvassed on behalf of the appellant. We find the same position to be continued in the later amendment in the Rules of 2003 referred to above. As in Illustration 2, it talks of evidence to show thatadvance has resulted in lowering of the prices. The departmental circulars and the amendments in the Rules at the relevant time and subsequently too, do not envisage of any presumption to be drawn by the mere fact ofadvance by the buyer to the manufacturer. It requires proof and evidence to show that fixation of price has been influenced on the lower side by such a transaction of