2001 (11) TMI 662 - AT - Central Excise

Tribunal rules against adding notional interest to assessable value of tailor-made goods

The Tribunal rejected the appeal filed by the Commissioner of Central Excise, emphasizing that notional interest on advances should not be added to the ... Valuation Issues:- Whether notional interest on advances would form part of the assessable value.Analysis:The appeal was filed by the Commissioner of Central Excise against the Order-in-Appeal passed by the Commissioner (Appeals) setting aside the order of the AC due to lack of evidence showing that advances taken by the appellants depressed the price or that they derived benefits from such advances. The Revenue argued that the goods manufactured were tailor-made against specific orders, and the interest accruing on deposits influenced the price. They relied on previous decisions and judgments to support their stance.The Revenue contended that advances forming the working capital of the manufacturer should be added to the assessable value. The respondent, although absent, referred to previous decisions where similar issues were decided against the Revenue. The Tribunal considered submissions from both sides regarding whether notional interest on advances should be included in the assessable value.The Tribunal reviewed past cases where similar issues were disposed of, noting that the issue was no longer res integra. They cited the law laid down by the Supreme Court, which held that notional interest on advances or security deposits from customers should not be added to the assessable value. The Tribunal found no merit in the appeal as the Revenue failed to provide evidence of price depression due to advances or security deposits taken by the appellants.Based on the legal principles established in previous judgments and the Supreme Court ruling, the Tribunal rejected the appeals filed by the Revenue. They emphasized that the advances were taken to secure the sale of tailor-made goods to customers, and not adding notional interest to the assessable value was in line with established legal precedent.