Custom, Excise & Service Tax Tribunal
M/S United Telcom Limited vs Commissioner Of Central Excise ... on 2 September, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/10/2004-DB, E/11/2004-DB, E/12/2004-DB [Arising out of Order-in-Appeal No. 369/2003 dated 24/11/2003 passed by Commissioner of Central Excise (Appeals), BANGALORE-I] For approval and signature: HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE SHRI ASHOK K ARYA, TECHNICAL MEMBER 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes M/s United Telcom Limited (Formerly known as U.R. Telecom Research Ltd.) Plot No.18A/19, Doddanekundi Industrial Area, Mahadevapura, BANGALORE 560048 Appellant(s) Versus Commissioner of Central Excise BANGALORE-I POST BOX NO 5400, CR BUILDINGS, BANGALORE - 560001. Respondent(s)
Appearance:
Mr. B.N.Gururaj, Advocate For the Appellant Mr. Mohd. Yusuf, A.R. For the Respondent Date of Hearing: 02/09/2015 Date of Decision: 02/09/2015 CORAM :
HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE SHRI ASHOK K ARYA, TECHNICAL MEMBER Final Order No. 22085 - 22087 / 2015 PER ASHOK K. ARYA In all these three appeals, matter concerns with the rejection of refund claim for the duty which is stated to have been paid in excess on account of deduction of liquidated damages (L.D.) from the invoice price. The appellants state that when there has been delay in supply of the goods to their customers/purchasers as per the clause in the agreement with the buyers, the liquidated damage (LD) charges were deducted as compensation from the invoice price of the goods. The appellants claim is that as the duty is payable on the transaction value and the transaction value was reduced because of the deduction of the said liquidated damages, the excess duty has been paid. The appellant relies on the following case laws in their support :
(i) Commissioner of Customs & Central Excise, Hyderabad IV Vs. Victory Electricals Ltd. [2013 (298) E.L.T. 534 (Tri.-L.B.)]
(ii) United Telecoms Ltd. Vs. CCE [2006 (2004) E.L.T. 626 (Tri.-Bang.)]
(iii) Commissioner of C. Excise, Chandigarh Vs. H.F.C.L. [2008 (231) E.L.T. 307 (Tri.-Del.)]
2. From the facts on record and from the above case laws, it is clear that duty of Central Excise has to be charged on the transaction value only and the transaction value has been defined in Section 4(3)(d) of the Central Excise Act, 1944. The said definition of transaction value of Section 4(3)(d) as quoted by the Tribunals Larger Bench decision in the case of Victory Electrical Ltd (supra), at paragraph 5, is given below :
5. Clause (d) of Section 4(3) defines the expression transaction value as follows;
means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter; but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods.
3. In the light of the above definition, the Larger Bench of the Tribunal analysed the concept of transaction value of Section 4(3)(d) of the Central Excise Act, 1944 and held that 19. In our considered view, post the amendment of Section 4 and the statutory definition of transaction value in sub-section (3)(d) thereof, of the Act, the eventual value payable after factoring in any liquidated damages contractually stipulated for delayed supply would be the transaction value and this value would be the value relevant for levy of duty.
It was further held that :
20. .. wherever the assessee, as per the terms of the contract and on account of delay in delivery of manufactured goods is liable to pay a lesser amount than the generically agreed price as a result of a clause (in the agreement), stipulating variation in the price, on account of liability to liquidated damages, irrespective of whether the clause is titled penalty or liquidated damages, the resultant price would be the transaction value; and such value shall be liable to levy of excise duty, at the applicable rate.
4. Learned A.R. appearing for the Revenue reiterated the reasons given in the impugned Orders-in-Appeal and submitted that the liquidated damages are only an adjustment between the party and the duty has to be paid on full invoice price.
5. Considering the facts on record and the decisions quoted above and especially the ratio of the Tribunals Larger Bench decision in the case of Victory Electricals Ltd. (supra), the liquidated damages (LD) had to be factored in to arrive at the correct transaction value which has to be treated as assessable value for payment of Central Excise duty; whatever the duty paid in excess on account of non-factoring of liquidated damages would be liable to be refunded to the appellants. Consequently, all the three appeals are allowed with consequential benefit to the appellants.
(Operative portion of the order has been pronounced in open court on completion of hearing on 2.9.2015) (ASHOK K. ARYA) TECHNICAL MEMBER (ARCHANA WADHWA) JUDICIAL MEMBER /vc/