LexMETAL BOX INDIA LTD. versus THE COLLECTOR OF CENTRAL EXCISE, MADRAS
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A METAL BOX INDIA LTD. v. THE COLLECTOR OF CENTRAL EXCISE, MADRAS JANUARY 10, 1995 B [B.P. JEEVAN REDDY AND S.B. MAJMUDAR, JJ.) ...... Central Excises and Salt Act, 1944-Ss.4(l)(a), 4(4)(d)(ii), JJA-Ex- ~t- cisable good~Valuation off or charging excise dutyRecove1y of duties short c levied--Limitation f 01~Assessee-manufacturer rec;eiving interest free advances of large amounts from its wholesale buye~Revenue reloading purchase price by notional interest on advances made to manufacturer and rejecting assessee's claim for deductions of rebates and discounts given to wholesale buye~Held, notional rate of interest on advances given by buyer to manufac- turer should be reloaded in the price so as to reflect correct price of goods D sold by manufacturer--For a wholesale buyer concession by way of trade discount cannot be said to be uncalled for or a special treatment contrary to trade practice and the amount has to be deducted for computing nonnal price ~ of goo~Manufacturer while submitting price lists suppressed details of in- terest free advances made to it by buyer which resulted in short levy of duty E Revenue justified in invoking period of limitation under proviso to s.11-A. The appellant-company carried on the business of manufacturing and marketing metal containers which were classified under Tariff Item No. 46 of the Schedule to the Central Excises & Salt Act, 1944, and were liable to excise duty ad volorem. The goods were manufactured as \'.er F individual customers' requirement. One of such customer (the buyer com- ?· pany) entered into an agreement with the appellant whereunder the latter . was to be paid as advance certain amount in consideration of maintaining a steady and regular supply of containers to the former allowing it certain discounts from the gross price of the containers. The appellant submitted G to the Assisstent Collector of Central Excise, a price list in which the contract price of the goods sold to the buyer-company was shown as net price after deducting the discounts and the rebates. The Assistant Collec- tor of Central Excise issued a notice datd 27.6.1984 to the appellant to ·>.. show cause as to why the gross price indicated in the agreement should not be treated as the true price and the additional consideration by WflY of / H interest accruing on the advances made by the buyer-company should not 136 METAL BOX v. COLLECTOR OF C. EXCISE 137 be added thereto in order to arrive at the assessable value. Accordingly, a A A'. demand-cum-show cause notice was issued to the appellant where under the appellant was to pay basic excise duty and special excise duty for the period July 1, 1980 to November 30, 1984. After hearing the appellant, the Assistant Collector, Central Excise, confirmed the demand of duty and the special excise duty. On appeal, the Collector of Central Excise allowed the B claim of the assessee relating to loading of ad hoc interest on the advance made by the buyer-company, but did not allow its claim regarding rebates -+. and discounts given to the buyer-company. The assessee as well as the revenue filed appeals before the Customs, Excise and Gold (Control) Appellate Tribunal, which allowed the appeal of the revenue and dismissed that of the assessee, confirming the entire order of the Assistant Collector. c Aggrieved, the assessee filed the appeals. It was contended for the appellant that the Tribunal had patently erred in restoring the loading of purchase price by the ad hoc interest on advance made by the buyer-company to the asessee and in rejecting the D Jr" assessee's claim regarding rebates and discounts given to the buyer-com- pany for being deducted from the gross price. It was also contended that only a shorter period of limitation was available to the revenue and the revenue authorities were not right in invoking the period of five years under the proviso to Section llA of the Act. E Allowing the appeals in part, this Court HELD : 1. The Tribunal was perfectly justified in holding that charging a separate price for the goods supplied to the buyer-company could not stand justified under the proviso to s.4(1) (a) of the Central F Excise and Salt Act, 1944. It has rightly confirmed the decision of the Assistant Collector, Central Excise to the efftct that notional rate of interest on the advances given by the buyer-company to the appellant should be reloaded in the price so as to reflect the
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