TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Tribunal Upheld Duty Demand, Dismissed Interest Charges Appeal</h1> The Tribunal upheld the order confirming the demand of duty, interest, and penalty on the respondent for undervaluation. The revenue's appeal against ... Undervaluation - Interest on deposits - It was alleged that the respondent have been receiving advances/deposits towards orders placed by them towards contract/agreement and by utilising such advances/deposit the respondent gained on account of interest – Held that:- assessee took advances from the buyer as security advances as in case the buyer fails to take delivery of the specified product after manufacturing, the respondent should not suffer the losses. Therefore, they are taking the advances as security deposit. It is also on record that no such security deposit has been taken from the Government Institutions. It is also on record that in some cases where no advances has been received, the price are lower than from the customers to whom advances has been taken, advances/deposit received by the respondent does not affect the assessable value, Appeal filed by the revenue is dismissed Issues:- Appeal against the demand of duty on interest accrued on advances/deposits- Whether interest charges earned on advances/deposits should be included in the assessable value of the final productAnalysis:The appeal was filed by the revenue against an order confirming the demand of duty, interest, and penalty on the respondent for undervaluation. The respondents, engaged in manufacturing lift elevators, were issued a show-cause notice for not including interest charges earned on advances/deposits in the assessable value of the final product. The revenue alleged that the interest accrued on advances/deposits was an additional consideration flowing from the buyers to the respondents, impacting the price of the final product.During the proceedings, the revenue reiterated the allegations in the show-cause notice, emphasizing that the advances/deposits received had influenced the price of the final product, making the duty on interest accrued/earned payable by the respondent. However, despite notice, no one appeared on behalf of the respondents, leading to them being proceeded ex parte.Upon examination, the Tribunal referred to a Supreme Court judgment in the case of ISPL Inds., which established that notional interest should not be included in the assessable value of goods if the price is not influenced by interest-free advances. The Tribunal found that the respondents took advances as security deposits to avoid losses in case of non-delivery by the buyer, and such advances did not impact the assessable value. It was noted that prices were lower in cases where no advances were received, indicating that the advances did not affect pricing.Based on the above observations and in line with the lower appellate authority's decision, the Tribunal upheld the impugned order, dismissing the revenue's appeal. The judgment highlighted the importance of proving that interest-free advances influenced the price, placing the onus on the revenue to establish such influence rather than drawing presumptions based solely on the receipt of advances.In conclusion, the Tribunal's decision clarified the treatment of interest charges earned on advances/deposits in the context of assessable value, emphasizing the need to demonstrate a direct impact on pricing to justify inclusion for duty calculation purposes.
TaxTMI 
TaxTMI 
