COMMISSIONER OF CENTRAL EXCISE, PUNE versus HINDUSTAN NATIONAL GLASS AND INDUSTRIES LIMITED

Citation: [2016] 1 S.C.R. 250 · Decided: 14-01-2016 · Supreme Court of India · Bench: DIPAK MISRA · Disposal: Appeal(s) allowed

Judgment (excerpt)

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[2016] l S.C.R. 250 
COMMISSIONER OF CENTRAL EXCISE, PUNE 
v. 
HINDUSTAN NATIONAL GLASS AND INDUSTRIES LIMITED 
(Civil Appeal No.1829 of 2008) 
JANUARY 14, 2016. 
[DIPAK MISRA AND N.V. RAMANA, JJ.] 
Central Excise Act, 1944 - Under Valuation - Short payment 
of duty - Manufacturers-assessee received advance from purchasers 
for the goods and was giving discount to the said companies -
Non-addition of additional consideration received from customers 
in form of advance, thus, notional interest accrued thereon is to be 
added to sale price - Non-addition resulting in depression of 
assessable value of the goods - Demand raised by Adjudicating 
Authority being duty payable on the said additional consideration 
as also imposition of penalty - Appeal before tribunal - Tribunal 
held that the revenue had not been able to discharge the onus by 
adducing cogent material evidence that the advances obtained from 
buyer had been instrumental in depression of price; and that there 
was no nexus of interest with price, thus, the order of demand was 
not acceptable and no penalty could be levied - On appeal, held: 
Sale price agreed between two competing parties may get depressed, 
when substantial and huge advances are periodically extended and 
given with the objective and purpose that the sale price paid or 
charged would be lowered, to set off the consideration paid by grant 
of advances - There should be a connect and link between the two 
i.e. the money advanced it should be established was a consideration 
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paid which could form the basis for depression of sale price -
Evidence and material to establish the same should be placed on 
record - On facts, there has to be application of mind by the tribunal 
regard being had to the amount of money paid by purchasers, and 
what is the effect of the sales made to the two companies in percentile 
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terms, whether this had the effect of depressing the sale price -
Onus would be on the revenue - Revenue granted liberty to produce 
the documents to discharge the onus - Matter remitted to the tribunal 
for fresh disposal. 
Commissioner of Central Excise, New Delhi vs. Hero 
Honda Motors Ltd. (2005) 4 SCC 182:2005 (3) 
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SCR 588; Metal Box India Ltd. vs. Collector of Central 
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COMMNR. OF CENTRAL EXCISE, PUNE v. HINDUSTAN 
251 
NATIONAL GLASS AND INDUSTRIES LTD. 
Excise, Madras (1995) 2 SCC 90:1995 (1) SCR 136 -
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referred to. 
Case Law Reference 
2005 (3) SCR 588 
1995 (1) SCR 136 
referred to. 
Para 5 
referred to. 
Para 6 
From the Judgment and Order No. A/637/20071C-ii(EB) dated 
17 .09 .2007 of the Customs, Excise and Service Tax Appellate Tribunal, 
West Zonal Bench in Appeal No. E/1104104. 
Yashank Adhyaru, Nisha Bagchi, A.K. Srivastava, Pooja Sharma, 
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B. Krishna Prasad for the Appellants. 
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Aarohi Bhalla, Anlcit Singh, Sujata Kurdukar for the Respondents. 
The Order of the Court was delivered by 
DIPAK MISRA, J. 1. A show cause notice under F. No. Prevl 
CEX/AEI/OBL/ 141/991797 dated 16'" August, 2002, was issued to Ml D 
s. Owens Brockway (I) Pvt. Ltd., the predecessor-company of the 
respondent which is presently known as Hindustan National Glass and 
Industries Limited, by the Commissioner of Central Excise, Pune-I, 
alleging that the manufacturing company was not adding the additional 
consideration received from the customers in the form of advance and, 
therefore, the notional interest accrued thereon is to be added to the sale 
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price, for such non-addition had resulted in depression of the assessable 
value of the goods, namely, the bottles manufactured by the respondent-
assessee. 
2. In the show qmse notice, it was mentioned that the assessee 
had short paid the duty on its products, that is, printed glass bottles, by 
under-valuing the same at the time of clearance from its factory inasmuch 
as it did not add "additional consideration" received from Mis. Coca 
Cola India and Mis. Pepsico India Holdings Pvt. Ltd. The show cause 
notice referred to the statement of the Manager (Sales) of the Company 
from which it was discernible that the respondent-assessee had received 
90% advance from Mis. Coca Cola India and 100% advance from Mis. 
Pepsico India Holdings Pvt. Ltd. for the goods and it was giving 3-4% 
discount to the said Companies. 
3. After the reply to the show cause was received, the adjudicating 
authority passed an order on 28'' November, 2003, making a demand of 
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Rs. 33,91,934,001- under Section llA(l) of the Central Excis

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