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of <h1>Tribunal allows appeal on interest deductions, emphasizes consistency and adherence to legal principles</h1> <h3>M/s. A Infrastructure Ltd. Versus Commissioner, Central Goods, Service Tax and Central Excise Commissionerate, Jodhpur (Raj)</h3> M/s. A Infrastructure Ltd. Versus Commissioner, Central Goods, Service Tax and Central Excise Commissionerate, Jodhpur (Raj) - TMI Issues Involved:1. Deduction of 'interest on receivables' and 'collection charges' from the assessable value.2. Compliance with Supreme Court's directions regarding the inclusion of interest in the price structure.3. Verification of documentary evidence to support deductions.4. Consistency in the Department's stance on deductions for different periods.Detailed Analysis:1. Deduction of 'Interest on Receivables' and 'Collection Charges':The appellant, engaged in manufacturing asbestos cement pipes, claimed deductions for 'interest on receivables' and 'collection charges' due to delayed payments by Government Departments. The Assistant Commissioner disallowed these deductions, resulting in a demand of Rs. 1,79,63,423/- in Central Excise duty. The appellant argued that these costs were inbuilt in the price structure, supported by Chartered Accountant certificates and past experiences.2. Compliance with Supreme Court's Directions:The Supreme Court, in its judgment dated 05.05.2004, held that credit sales include cases where interest is inbuilt in the price structure. The Court directed that the issue of whether the price structure includes interest should be established by evidence. The Tribunal initially allowed deductions only to the extent mentioned in invoices, but the Supreme Court emphasized that the entire matter should be investigated, not limited to specific cases mentioned in invoices.3. Verification of Documentary Evidence:The Assistant Commissioner, following remand from the Supreme Court, required the appellant to produce records to establish that interest was incurred and inbuilt in the price. Despite the appellant submitting calculations and documentary evidence, including a verification report by the Superintendent, the Assistant Commissioner disallowed the deductions, citing a lack of documentary evidence to substantiate the claims.4. Consistency in the Department's Stance:For the subsequent period from January 1998 to June 2000, the Deputy Commissioner allowed deductions based on actual expenses but limited to 9.5%. This decision was upheld by the Tribunal, which emphasized that deductions should be based on actual interest receivables for each invoice, not a fixed percentage. The Tribunal's decision attained finality as the Department did not appeal against it. The Assistant Commissioner and Commissioner (Appeals) failed to consider this binding decision and instead relied on earlier orders, ignoring the Tribunal's findings.Conclusion:The Tribunal set aside the impugned order dated 06.03.2018 by the Commissioner (Appeals), allowing the appeal. The Tribunal emphasized that deductions for 'interest on receivables' and 'collection charges' should be based on actual interest receivables for each invoice, consistent with the Supreme Court's directions and the Tribunal's earlier binding decision. The Department cannot take a contrary stance for different periods, ensuring consistency in the application of law.
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