JUDGMENT

MAJMUDAR, J:- These two appeals are filed by the assessee, Metal Box India Limited, under Section 35-L of the Central Excises and Salt Act, 1944 read with Order XX-A and B of the SC Rules, 1966, challenging the order of the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi, in two appeals filed by the appellant-assessee on the one hand and the Collector of Central Excise, Madras, on the other. The appellant is aggrieved by the aforesaid decision of the Tribunal by which it was held that the Department was entitled to reload the price of the concerned goods manufactured by the assessee and sold to M/s. Ponds (I) Limited by ignoring the deduction claimed by the assessee by way of trade discount and also by adding the interest accruing on advances made by the said buyer, Ponds (I) Limited to the assessee during the relevant years of assessment. A few relevant facts may be stated at the outset. The appellant is a Public Limited Company carrying on the business of manufacturing and marketing metal containers which were classified under Tariff Item No. 46 of the erstwhile schedule to the Central Excises and Salt Act, 1944 and liable to excise duty ad valorem. The Company for the purpose of its aforesaid business has factories in several parts of the country including Madras. The present appeals relate to the Madras factory.

2. That the applicant is manufacturing goods as per the individual customers requirements and supplies to the customers against negotiated prices which are printed in the contract. It is the case of the appellant that one such customer is Ponds (I) Limited, an independent corporate body, which is neither related to the appellant nor has it any interest either directly or indirectly in the business of the appellant. The said Ponds (I) Limited which is engaged in the business, inter alia, of marketing cosmetic products being in need of steady supply of containers for its aforesaid business approached the appellant by way of an arrangement under which the appellant was to manufacture containers as per the specification supplied by the Ponds (I) Limited and in consideration of the appellants maintaining a steady and regular supply of the containers, the Ponds (I) Limited agreed to pay as advance certain amounts with a view to seeing that ready stocks of raw materials and components were made available by the appellant to meet the demands of containers as put forward by Ponds (I) Limited. An agreement was entered into between the parties about certain discounts to be given to Ponds (I) Limited which were to be deducted from the gross price which reflected various factors that went into the determination of a negotiated contract price.

3. The appellant submitted the price list in Part-II in respect of its sales to Ponds (I) Limited in which the contract price of the goods sold was shown as net price after deducting discounts and rebates as appearing in Schedule II. Earlier these price lists were approved by the appropriate Officer. However, a show-cause notice was issued by the Assistant Collector of Central Excise, Madras, On 27th June, 1984, calling upon the appellant to show cause:-

(1) Why the gross price indicated in the aforesaid agreements should not be treated as the true price for the purpose of arriving at the assessable value and why the additional consideration by way of interest accruing on the advances made by Ponds (I) Limited should not be added to arrive at the assessable value for the period of July 1, 1983 onwards?

(2) Why the gross prices should not be arrived at after adding the interest accruing on the advances and the assessable value arrived at on this basis for the period from July 1, 1983?

(3) Why the consequential duty should not be demanded from the appellant under the proviso to sub-rule (1) of Rule 10 of the Central Excise Rules, 1944, and under the proviso to Section 11A of the Central Excises and Salt Act.

4. The appellant replied to said show-cause notice. Another noti