- (1.) The Respondent -assessee is in the business of manufacturing motorcycles since 1985. On this product, the Respondent has been paying excise duty at ad valorem basis. In July, 1991, a show cause notice was issued to the Assessee alleging that it had not declared correct value of motorcycles in the price lists and that evasion of duty had taken place. The period covered by the said notice was 1985 -86 to 1990 -91. The precise allegation in the show cause notice was that the Assessee was taking a deposit of Rs. 500/ - per motorcycle at the time of booking of the motorcycle from the customers and this deposit was an additional consideration.
(2.) The Assessee replied to the said show cause notice taking the plea that the said deposit had no relevance with the cost of the motorcycle. It, however, was not accepted by the Commissioner who passed the Order -in -Original whereby he included the fact of deposit of Rs. 500/ - to the price of the motorcycles and thereby arrived at the valuation of the said motorcycles for the purpose of excise duty. In this mariner, a differential duty of Rs. 2 cores along with penalty of Rs. 50 lakhs was demanded. Aggrieved by that order, the Assessee filed appeal before the Customs, Excise and Gold (Control) Appellate Tribunal (hereinafter referred to as 'Tribunal') which was allowed by it vide order dated 6 -10 -1998 [2000 (124) E.L.T. 552 (Tri. - Del.)]. Against that order, the Department came in appeal before this Court. This Court, after considering the matter, remanded the same to the Tribunal for fresh disposal [2005 (183) E.L.T. 120 (S.C.)]. The reason for the remand was that the Tribunal had dealt with the issue in a perfunctory manner and did not examine as to whether the aforesaid deposit which was termed as "customer's advance" had contributed to the pricing of the motorcycle. This was so discussed by this Court in following manner: "At the outset, we may point out that in this case the Annual Reports of the Assessee show the opening and closing balance of the funds received under the capital "Customers' Advances'. They show deployment of funds so received. The income accruing to the Assessee was reflected in profit & loss accounts. For the year ending 31 -3 -1986 the outstanding balance under the above head was Rs. 33.40 crore out of which Rs. 28.90 crore was invested in various securities/deposits leaving a balance of Rs. 4.42 crore (see Schedule 4). The said schedule further indicates utilization of capital gains and interest income to reduce the liability under the said head. That, the said Schedule 4 indicated not only liquidation of liabilities under the head "customers advances" by utilization of income on investments from such advances, they also indicated flow -back of the benefits from the customers to the Assessee. Moreover, the income from such investments was shown under the head "Sales & Other Income". The said "Other Income" included interest on deposits, profit on sale of units and income from units (schedule 10). Even the Report of the Directors under the head "Financial Reports" show that the profits of the company have been based on implication of Sales with Other Incomes. For example, for the year 1985 -86, Sales & Other Incomes were of Rs. 49.20 crore (rounded to '0') out of which Income from Sales was Rs. 45.02 crore (Round to '0') whereas Rs. 4.06 crore was on account of other Income. Therefore, according to the adjudicating authority, the total income (Sales & Other Income) contributed to the profits which had a direct impact on pricing. According to the adjudicating authority the said "Other Income" had contributed to the pricing. That, but for the said "other Income", it was not possible for the company to sell the motorcycles at a price lower than the unit cost of production. Lastly, the adjudicating authority found on facts that since interest paid at 9% to the customers was indicated as an expense, the income on the investments from the advances was includible in the assessable value. This aspect has also not been considered by the Tribunal. For the above reasons, we hold that the tribunal has disposed of the appeal before it in a most perfunctory manner without going into any figures at all but by merely on the statement made by counsel and on the basis of material which appears to have been produced first time before the Tribunal. We, therefore, set aside the order of the Tribunal and remand the matter back to the Tribunal. The Tribunal will consider in detail, if necessary by taking the help of a cost accountant and after looking into the accounts of the Respondent whether or not the advances or any part thereof have been used in the working capital and whether or not the advances received by the Respondent and/or the interest earned thereon have been used in the working capital and/or whether it has the effect of reducing the price of the motorcycle. The Tribunal to so decide on the material which was placed before the Commissioner and not to allow any additional documents/materials to be filed before it. None of our observations made herein shall bind the Tribunal to which this case is remitted."
(3.) After remand, the Commissioner once again reiterated the conclusion of his earlier order which compelled the Assessee to approach the Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as 'Tribunal') again challenging the order of the Commissioner. The finding of the Commissioner was that the huge amount of customers' booking advances were used to meet their working capital requirements as well as were partly invested in deposits/securities. On that basis, he concluded that the interest, dividends and capital gains from such investment enabled them to meet the working capital requirements which resulted in lowering their capital borrowings.;