2023 (9) TMI 9 - AT - Central Excise

Tribunal allows appeals, excludes interest on receivables from excise duty, emphasizes invoice clarity

M/s Swaraj Engines ltd. Versus CCE-Chandigarh-I

M/s Swaraj Engines ltd. Versus CCE-Chandigarh-I - TMI Issues involved: The deduction of interest on receivables from the assessable value.Summary of the Judgment:Issue 1: Deduction of interest on receivables from the assessable valueThe appeals were against an order rejecting the appellant's appeals and upholding the demand of excise duty on the deduction of interest on receivables from the assessable value. The appellant contended that interest for the credit period was included in the price as per purchase orders and invoices, making it eligible for deduction. They argued that the legislative intention was clear regarding interest on receivables. The appellant cited various judgments supporting their claim, emphasizing that interest on receivables should be excluded from the assessable value. They also highlighted that in a previous case for a different period, the department had allowed such deduction, indicating inconsistency. The appellant further argued that the impugned order went beyond the show cause notice and violated natural justice principles. They claimed that since the tax demand itself was unjustified, the penalties should not be imposed. The appellant relied on legal precedents to support their arguments. The Department reiterated the findings of the impugned order.Decision:The Tribunal found that interest on receivables was deducted based on purchase orders and invoices explicitly mentioning the interest for the credit period. Referring to a department circular, it clarified that delayed payment charges should be excluded from the transaction value if separately indicated in the invoice. The Tribunal noted that various Tribunal benches consistently held that interest on receivables, even if part of the price, should be admissible to the assessee. Additionally, the Tribunal highlighted that in a previous case involving the same appellant, the deduction of interest on receivables was allowed without any appeal from the department, establishing a precedent. The Tribunal emphasized that the department could not demand duty based on the appellant's accounting treatment, citing a relevant case. Regarding interest and penalty, the Tribunal ruled that if the tax demand itself was not sustainable, the imposition of interest and penalties was unjustified. Consequently, the Tribunal set aside the impugned order, allowing the appeals of the appellant with any consequential relief as per law.*(Pronounced on 29.08.2023)*