TaxTMI 
TaxTMI 
2017 (3) TMI 767
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....), Customs, Central Excise and Service Tax, Indore. Since these appeals are against the very same order and filed by the assessees as well as Revenue , they are being disposed of by a common order. 2. The relevant facts that arise for consideration are that the assessee/appellants are engaged in manufacturing of welding electrodes which are sold through their dealers as well as directly to industrial/institutional consumers. 60% of the sales are to dealers and remaining 40% is to the industrial/institutional consumers. The policy of the appellant/assessee in order to promote receipt of the payment in advance from its dealers, is to control their bad debts and their dealers are asked to make payment and if they are making such payment, the ....
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....h the entire case records and submits that the whole issue is regarding central excise duty on the amount of cash discount offered by the assessee to the dealers, from whom they received advance payments. It is his submission that the appellant did not receive any advance deposit from the buyers, instead, it received advance payment for the price of the goods to be supplied from its buyer and the price remains the same for all ultimate customers. Thus, the provision of Rule 6 of Central Excise Valuation Rules, 2000 did not apply to the present case. It is also his submission that list price remains the same for all the dealers regardless whether the dealers made such advance payment or not, no advance deposit was received by them for a cons....
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....he submissions made by both sides, we find that the issue is regarding whether notional interest accruable on advance is includible in the assessable value. 5. We find that as per the business policy of the assessee they are seeking advance payment from the dealers for the supplies to be made by them. The dealers who make advance payment are extended the benefit of the 5% of the value /price as cash discount. According to revenue this cash discount offer will be covered by the provisions of Rule 6 of the Central Excise Valuation Rules, 2000 and more specifically Explanation 2. 6. In order to appreciate the correct position, we need to reproduce Rule 6 of the Valuation Rules, 2000 which is as under: RULE 6. Where the excisable goods are ....
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.... maps and charts and similar items used in the production of such goods; (iii) value of material consumed, including packaging materials, in the production of such goods; (iv) value of engineering, development, art work, design work and plans and sketches undertaken elsewhere than in the factory of production and necessary for the production of such goods. Explanation 2. - Where an assessee receives any advance payment from the buyer against delivery of any excisable goods, no notional interest on such advance shall be added to the value unless the Central Excise Officer has evidence to the effect that the advance received has influenced the fixation of the price of the goods by way of charging a lesser price from or by offering a spe....
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.... received has influenced the fixation of the price by way of charging lesser price from or by offering a special discount to the appellant buyer who has made the advance deposit. It is an admitted position in this case that appellant offered 5% cash discount to the dealers who made advance payment. On a specific query from the Bench as to whether the same 5% cash discount is offered to any other dealer who is not making any advance to make payment, Ld. C.A. fairly states that they did not extend this cash discount to those dealers who are not making advance payment. On this factual position we have to hold that Explanation 2 to Rule 6 categorically covers the issue as in the case in hand is against the appellant-assessee; as the assessee ha....