TaxTMI 
TaxTMI 
2009 (3) TMI 760
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....on in the transaction. It has been incorrectly represented by the Revenue that the advances are taken from all the buyers. 6. The notices involved in the present case, were adjudicated against the respondents by the Dy. Commissioner, Central Excise, vide Order-in-Original dated 20-9-2002. On appeal, the Order-in-Original has been set aside by the Commissioner (Appeals) vide Order.-in-Appeal dated 29-1-2003. Now the Revenue is in appeal against that part of the order of Commissioner (Appeals), which relates to the period 1-7-2000 onwards. 7. It is seen that vide Order-in-Original dated 20-9-2002, the Dy. Commissioner had originally, confirmed demand under five notices and also imposed penalty of Rs. 2,40,000/-. Later, on being pointed out that of the five notices, two had already been adjudicated in another order, he deleted the said two notices from the impugned order thereby reducing the amount demanded. However, the penalty was not reduced. Now, the Revenue has appealed only against that part of the order, which relates to the period from 1-7-2000 onwards thereby again reducing the amount of disputed duty. But the penalty sought to be restored continues to be the ....
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....they satisfy the following conditions, viz. (a) It is an amount that the buyer is liable to pay to the assessee; or (b) It is an amount that the buyer is liable to pay (to someone) on behalf of the assessee; and (c) The payment is by reasons of sale or in connection with the sale. 9.5 The 'notional interest' is not such an amount. It is not an amount paid by the buyer to the respondents. Neither is it an amount paid by the buyer to someone on behalf of the respondents. What is paid by the buyer in connection with the sale is the 'amount of advance' and not the interest thereon. 9.6 The interest is not a payment received by reasons of sale or in connection with the sale. 10. Initially, when Section 4 was proposed in the Finance Bill, 2000, the definition of 'Transaction Value' included - - the amounts charged for, or to make provision for 'Financing'. These words were subsequently deleted. This is an unambiguous indication that the legislature did not intend to include 'Financing Charges' in the assessable value. 10.1 Thus, where the buyer paid financing charges to ....
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....e 'interest' is not an additional consideration. 13. Whether a manufacturer receives material or money, it has the similar effect of obviating borrowals. 13.1 In various circulars and trade notices issued from time to time, the Revenue has clarified that wherever any material is supplied free to the manufacturer, its landed cost at the manufacturer's gate is to be included in the assessable value. Never has Revenue sought to include the interest on these materials to be includible in the assessable value. 13.2 For example, in case of patterns supplied free by the customer for manufacture of castings, the Board clarified that : ".....proportionate cost of pattern has to be included in the assessable value of the castings ...." (CBEC circular 170/4/96-CX., dated 23-1-1996) 13.3 It is notable that the pattern would remain with the manufacturer for a long period and if the same were to be manufactured/or purchased by the casting manufacturer, he would have to spend money. Thus (similar to the case of receipt of advances), supply of the patterns too would obviate need for borrowal. But the Revenue did not require addition of the notional interest. 1....
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....essary 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 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 Board's 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 element of notional interest on advance deposits, cannot be added. Obviously where there are two prices, one for those who have made....