Custom, Excise & Service Tax Tribunal
Jtekt India Ltd vs Commissioner Of Central Goods & Service ... on 29 November, 2023
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE
TRIBUNAL,
SOUTH ZONAL BENCH, CHENNAI
COURT HALL No.III
EXCISE APPEAL No.40282 OF 2014
(Arising out of Order-in-Appeal No.18/2013(M-IV) (D) dated 18.11.2013 passed
by Commissioner of Central Excise (Appeals), No.26/1, Mahatma Gandhi Marg,
Nungambakkam, Chennai 600 034)
M/s. JTEKT India Ltd. .... Appellant
(formerly known as Sona Koyo Steering Systems Ltd.)
PB 14, Chennai-Bangalore Highway (NH-4),
Sriperumbudur-602 105.
Versus
The Commissioner of GST & Central Excise, ...Respondent
Chennai Outer Commissionerate
Newry Towers, No.2054, I Block, II Avenue,
12th Main Road, Anna Nagar,
Chennai 600 040.
EXCISE APPEAL No.42479 OF 2015
(Arising out of Order-in-Appeal No.318/2015(CXA-II) dt. 30.09.2015 passed by
Commissioner of Central Excise (Appeals), No.26/1, Uthamar Gandhi Salai,
Nungambakkam, Chennai 600 034)
M/s. JTEKT India Ltd. .... Appellant
(formerly known as Sona Koyo Steering Systems Ltd.)
PB14, Chennai-Bangalore Highway (NH-4),
Sriperumbudur-602 105.
Versus
The Commissioner of GST & Central Excise, ...Respondent
Chennai Outer Commissionerate
Newry Towers, No.2054, I Block, II Avenue,
12th Main Road, Anna Nagar,
Chennai 600 040.
2
Excise Appeal No. 40282 of 2014
Excise Appeal No. 42479 of 2015
APPEARANCE :
Ms. R. Charulatha, Advocate
For the Appellant
Ms. Anandalakshmi Ganeshram, Assistant Commissioner (A.R)
For the Respondent
CORAM :
HON'BLE MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL)
HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)
DATE OF HEARING : 21.11.2023
DATE OF DECISION :29.11.2023
FINAL ORDER No.41064-41065/2023
ORDER :Per Ms. SULEKHA BEEVI C.S. Brief facts are that the appellant M/s.JTEKT India Ltd. (earlier known as M/s.Sona Koyo Steering Systems Ltd.) are engaged in the manufacture of Automotive Steering gears and parts thereof falling under Chapter Heading 87089400 of the Central Excise Tariff Act, 1985. The said steering systems are cleared to original equipment manufacturers like M/s.Hyundai Motors Ltd., M/s.Ford India Ltd. and M/s.Mondo India Steering Systems, manufacturer of steering systems, based on the purchase orders received from them. 3
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2. The appellant filed refund claim of Rs.31,47,563/- on 24.06.2010 which was received in the office of the Department on 26.06.2010. The refund claim was filed on the grounds that the appellant was manufacturing steering gears and supplying the same to M/s.Mondo India Steering Systems (Mondo India, for short) who subsequently manufacture final steering and supplies to M/s.Hyundai Motors for i10 and i20 models of cars. During the financial year 2009 they raised a claim on M/s.Mando India for the cost difference between the local and imported parts viz. ball joints used in the manufacturing steering gears. These parts are imported mainly because there was delay in developing the same in local market and getting it approved from the customer M/s.Mando India. In good faith, and anticipating that the above cost difference would be approved by the customer, the appellant paid excise duty amounting to Rs.31,47,563/- on the gross amount Rs.4.30 crores (cost difference claimed from their customer viz. M/s.Mando India). The appellant thus claimed refund of the excise duty of Rs.31,47,563/- contending that it is excess duty paid by them. This cost difference claimed by appellant was not admitted by M/s.Mando India.
3. However, M/s.Mando India had agreed to support the appellant with a loan and the money of Rs.4.30 crores was paid by Mando India as a loan. The appellant repaid the loan by making adjustments in the clearances made to M/s.Mando India. Subsequent to the clearances and repayment of loan by adjustments the appellant 4 Excise Appeal No. 40282 of 2014 Excise Appeal No. 42479 of 2015 raised debit notes No.001 and 002/09-10 dated 30.06.2009 for Rs.4.30 crores inclusive of excise duty of Rs.31,47,563/-. This duty was paid by the appellant through debit in their cenvat credit account in the month of June 2009. M/s.Mando India did not agree for the price revision and did not honour debit notes of Rs.4.30 crores. According to appellant, they thus happened to pay the excess excise duty of Rs.31,47,563/-. The refund was sanctioned in full vide OIO No.173/2010 dt. 03.12.2010. The Department filed Appeal No.1/2011 (M-IV) (D) dt. 19.01.2011 against the said OIO before Commissioner (Appeals). The Department appeal was allowed by Commissioner (Appeals) vide OIA No.18/2013 dt. 18.11.2013 thus setting aside the sanction of refund. Aggrieved by this OIA, the Appellant has filed Appeal E/40282/2014 before the Tribunal.
4. In the meanwhile, the Department after filing an appeal before Commissioner (Appeals) also issued a SCN No.159/2010 dt. 21.02.2011 to the appellant proposing to recover the erroneous refund granted. After due process of law, the original authority vide OIO No.12/2014 dt. 20.08.2014 confirmed the recovery of erroneous refund of Rs.31,47,563/-. Against this order, an appeal was filed by the appellant before Commissioner (Appeals) who vide OIA No.318/2015 dt. 30.09.2015 upheld the order of original authority for recovery of erroneous refund. This OIA is challenged by appellant in Appeal E/42479/2015 before the Tribunal.
5. The Ld. Counsel Ms. R. Charulatha appeared and argued for the appellant.
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Excise Appeal No. 40282 of 2014 Excise Appeal No. 42479 of 2015 5.1 It is submitted by the learned counsel that the appellant manufacture and supplies a product called "PA Assembly" to M/s.Mando India on payment of excise duty which was used by M/s.Mando India in their further manufacture of steering systems as per the price agreed in the Purchase Order No.B.P.O No.L/RM/PUR /265 dt. 02.02.2009.
5.2 The two of the components of PA Assembly are Inner Ball Joint (IBJ) and Outer Ball Joint (OBJ). It was initially understood that IBJ and OBJ would be procured locally. However, due to commercial impediments, it could not be done. Therefore, the appellant had to import IBJ and OBJ as the production schedule of M/s.Mando India and M/s.Hyundai Motors would be affected without the timely supply of PA assembly.
5.3 As the Appellant used imported ball joints, there was an increase in the price to the extent of Rs.4.30 crores for the period 02.02.2009 to 31.03.2009. Appellant sought to increase the price of PA assembly. Mando India did not agree for the price revision but agreed to give a loan of Rs. 4.30 crores as repayable advance with the condition that the same may be repaid in six months. 5.4 Accordingly, in January 2009, the Appellant and Mando India entered into a Trade Advance Agreement vide which Mando India agreed to sanction a loan of Rs. 4.3 Crores. The first part of loan of Rs. 2 Crores was given by Mando India vide cheque dated 07.11.2008 and the remaining amount of Rs. 2.30 Crores was given vide cheque dated 30.03.2009.
6
Excise Appeal No. 40282 of 2014 Excise Appeal No. 42479 of 2015 5.5 The said loan was repaid and adjusted by the Appellant through subsequent clearances. The same is an admitted fact in the Impugned Orders itself (Paragraph 3 of the Order in Appeal No. 18/2013 dated 18.11.2013).
5.6 In good faith and in anticipation that the increase will be approved by Mando India, the Appellant raised debit notes No. 001 &002/09-10 dated 30.06.2009 for Rs.4.30 crores inclusive of excise duty of Rs.31,47,563/-. The duty was paid through in cenvat account during the month of June 2009. The debit notes were raised suo-moto and were never accepted by Mando India and accordingly Mando India did not take CENVAT Credit of Excise Duty paid, nor the Input Tax Credit of the VAT paid. As the increase in price was not accepted by Mando India, the Appellant filed refund claim for the excise duty of Rs. 31,47,563 paid on the debit notes on 24.06.2010.
6. Ld. Counsel submitted that it is the case of the Department that the price of the goods as per the 'transaction value' under Section 4(1)(d) of the Central Excise Act, 1944 also includes the amounts raised through the Debit Notes. Accordingly, the Excise Duty paid by the Appellant is correct and refund is not warranted. Further that, after clearance of goods and raising debit notes, there is a mutual agreement between the parties regarding the price and that the Appellant is compensated in the form of loan. 7
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7. The main grounds put forward by appellant are as under :
A. The Debit notes raised were not accepted by Mando India, therefore, the amount raised through Debit notes cannot form part of transaction value under Section 4 of the Central Excise Act as the basis of "transaction value" is the agreed contractual price between the parties i.e., the price quoted in the purchase order. Reliance in this regard is placed on the case of Purolator India Ltd. v.
Commissioner of Central Excise, Delhi-III 2015 (323) E.L.T. 227 (S.C.) B. The loan sanctioned by the Mando India cannot form part of the transaction value:
B.1 It is submitted that the Appellant and Mando India entered into a Trade Advance Agreement vide which Mando India agreed to sanction a loan of Rs. 4.3 to Appellant as a repayable advance on the condition that the same may be repaid within a period of 6 months. The said loan was repaid and adjusted by the Appellant on their subsequent clearances. The same is not disputed in the Impugned Orders itself.
B.2 It is submitted that the impugned Orders have not accepted the submissions of the Appellant on the mere presumption that the loan amount granted by Mando India is the same as the increased cost i.e., Rs. 4.30 Crores, thus, loan shall form part of the transaction value.8
Excise Appeal No. 40282 of 2014 Excise Appeal No. 42479 of 2015 B.3 In this regard, it is submitted that the Impugned Order has nowhere alleged that the grant of loan/raising of debit notes has increased the transactional value of the goods. Thus, there is no nexus between the loan amount and the transaction value of the goods manufactured and supplied by the Appellant. Thus, the loan which has subsequently been paid in full by the Appellant does not result in the increase in transaction value and therefore, does not form part of the transaction value.
C. The reliance placed on judgment of the Supreme Court in FIAT India Pvt. Ltd. is incorrect. It is submitted that in the present case, the Appellant is neither selling below cost for a long period of time nor the Appellant deliberately sold below the cost of production with any ulterior motive. Further, there is no commercial consideration received at the time of fixing the price of PA Assembly in the Purchase Order. . Hence, the decision of Fiat Case does not apply to the facts here. Reliance in this regard is placed on CBEC's Circular No. 979/03/2014-CX dated 15.01.2014.
D. The burden to prove that the loan sanctioned/debit notes raised has resulted in increase in the transaction value of the goods manufactured and supplied by the Appellant is on the Department which has not been discharged and the demand of refund is based on mere conjectures and presumptions. Reliance in this regard, is placed on the case of Commissioner of Customs, Kolkata v. Initiating Explosives Systems (I) Ltd., 2008 (224) E.L.T. 343 (S.C.) which holds that Burden to prove under-valuation lies on Revenue. Ld. Counsel prayed that the appeals may be allowed. 9
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8. Ld. A.R Ms. Anandalakshmi Ganeshram supported the findings in the impugned order.
8.1 Ld. A.R submitted that the appellants have themselves admitted that under 'wishful thinking' that M/s.Mando India would reimburse the higher cost, the debit notes have been raised by them and the duty discharged. It is proved from the facts that the higher cost is part of the transaction value of goods cleared on payment of duty and therefore the duty paid by appellant is in order. As per Section 4 (1) (d) of Central Excise Tariff Act, 1944, on 'transaction value', any amount charged through invoice/debit note in the course of sale of goods constitute transaction value. Therefore, any duty paid on such transaction value cannot be claimed as refund. The appellant has not only charged towards the price of the goods on the invoices raised at the time of clearance of goods but also charged an amount of Rs.4.30 crores through debit notes and paid the duty correctly on the amounts charged in respect of the debit notes. 8.2 It is asserted by the Ld. A.R that by raising debit notes subsequently to the clearance of goods, it is established that there is mutual agreement between the appellant and the buyer regarding the price according to which, the appellant was compensated in the form of loan. The refusal by M/s.Mando India to pay a part of the price charged cannot be a ground for claiming refund when the duty discharged is proper and correct. Under Section 4 (1) of the Central Excise Act, 1944 while defining the 'transaction value', it is stated that the price actually paid or payable for the goods, when sold, and 10 Excise Appeal No. 40282 of 2014 Excise Appeal No. 42479 of 2015 also includes in addition to the amount charged as price, any amount that the buyer is liable to pay, on behalf of assessee, by reason of, or in connection with the sale. In the present case, debit notes have been raised in connection with the sale of goods. The transaction value therefore includes the cost raised in the debit notes and the duty discharged is correct. There are no grounds to sanction the refund.
8.3 It is submitted by Ld. A.R that on the one hand, the appellant states that unless the request for price revision is accepted along with debit notes, only then revision would be included in the debit notes. On the other hand, it is contended by them on the 'wishful thinking' that M/s.Mando India will reimburse the higher cost they have raised the debit notes. It is clear that after the sale transaction was over, the appellant has sought for further amount. This means, there is admission on the part of the appellant that the value at the time of clearance of the goods as stated in the invoices was not the correct value and the cost was not correctly added to the finished goods and the debit notes have been raised subsequently to include the cost of imported inputs.
8.4 The contention of appellant is that the manufacture and clearance of PA assembly by the appellant using the imported inputs has resulted in an increase of the manufacturing cost (cost difference) of an amount of Rs.4.30 crores. Excise is a duty on manufacture. The appellant is liable to pay the increased manufacturing cost so, the duty paid is correct. 11
Excise Appeal No. 40282 of 2014 Excise Appeal No. 42479 of 2015 8.5 It is not accepted that value of the debit notes has not been honoured by the buyer. It is a fact that as per Section 4 (1) (d), transaction value includes any amount charged through invoice/debit note in the course of sale of goods constituting transaction value. The appellants themselves have submitted in grounds of appeal that the debit notes were raised so that the buyer would reimburse the higher cost due to the use of imported ball joints in the PA assembly manufactured. This proves that the costing made by the appellant when the goods left the factory of the appellant was not inclusive of the cost of imported ball joints and thus duty discharged was less. Subsequently, they have raised the debit notes and the duty has been correctly discharged. 8.6 The Ld. A.R placed reliance on the judgment of the Hon'ble Supreme Court in the case of CCE Mumbai Vs FIAT India Pvt. Ltd. - 2012 (283) ELT 161 (SC). The circular issued by Board in F.No.6/7/2012-CX-1 dated 15.01.2014 was also referred to. 8.7 In para 60 of the judgement rendered by the Hon'ble Apex Court in the case of FIAT India Pvt. Ltd. (supra), it was held that since under new Section 4 (1) (a) the price should be the sole consideration for the sale, it will be open for the Revenue to determine on the basis of evidence whether a particular transaction is one where extra-commercial consideration has entered into or not. In the present case, the loan granted to the appellant is in the nature of an extra-commercial consideration. So also, the debit notes raised is consequent and part of the transaction and therefore the duty 12 Excise Appeal No. 40282 of 2014 Excise Appeal No. 42479 of 2015 discharged on the debit notes is correct and for the same reason, the appellant is not eligible for any refund. It is prayed that the appeal may be dismissed.
9. Heard both sides.
10. The issue is whether the appellant is eligible for refund of excise duty to the tune of Rs.31,47,563/-. It is brought out from the facts that the appellant has raised the debit notes to the tune of Rs.4.30 crores including the excise duty on their customer M/s.Mando India, after the clearances. The issue then that arises for consideration is whether the said debit notes would form part of the transaction value so as to make the excise duty paid to be correct in regard to transaction value of the goods cleared.
11. The facts narrated bring out that the appellant could not obtain the inputs (ball joints) locally and they had to import these items. They incurred higher cost on such inputs and therefore were not in a position to sell the products to M/s.Mando India on the price as agreed by the purchase order. The purchase orders are placed in pages 26 to 28 of the appeal paper book. This is the agreement entered between the appellant and M/s.Mando India for supply of the goods viz. PA gear assembly. As the appellant could not make up the price difference of the imported inputs, they requested for a 13 Excise Appeal No. 40282 of 2014 Excise Appeal No. 42479 of 2015 price revision to M/s.Mando India. However, M/s.Mando India did not favour such price revision and agreed to give a loan of an amount of Rs.4.30 crores with the condition that the same may be repaid in 6 months. The appellant received the said loan amount in two cheques; one is dated 1.12.2008 for an amount of Rs.2 crores and the other dt. 3.3.2009 for Rs.2.30 crores. The said loan was repaid and adjusted by the appellant on their subsequent clearances made to M/s.Mando India. There was a clause for payment of interest, if the repayment was delayed beyond a period of 6 months. The appellant did not have an occasion to pay interest as the loan amount was paid and adjusted towards the clearances made to M/s.Mando India within a period of 6 months.
12. The above fact that loan was advanced to appellant by M/s.Mando India and the appellant has repaid the same by making adjustment in the clearances made to M/s.Mando India has been verified by the adjudicating authority. In para-3 of the order dt. 03.12.2010 passed by the adjudicating authority it is seen that the Range officer vide letter OC No.656/2010 dt. 14.09.2010 had filed a verification report which stated that major input for PA assembly viz. Inner Ball Joint and Outer Ball Joint was imported by the appellant and that M/s.Mando India had offered an advance of Rs.4.30 crores. It is also reported that the loan has been repaid by the appellant by adjustment in the clearances made to M/s.Mando India. The appellant has also furnished the agreement viz. Trade Advance 14 Excise Appeal No. 40282 of 2014 Excise Appeal No. 42479 of 2015 Agreement executed between the appellant and M/s.Mando India in 2009. Clause 2 of the agreement reads as under :
"2. TERMINATION 2.1 This Agreement shall automatically stand terminated when the entire Advance Payment has been set off against the purchase price of the Goods delivered to Mando by the Supplier.
2.2 This agreement may also be terminated at the option of MANDO in case of supplies are stopped for any reason or the Purchase Order / Basic Purchase Agreements are get cancelled.
2.3 In the event clause 2.2 and the supplier fails to refund the Outstanding Amount for any reason within a period of 15 (fifteen) days from the date of the termination of this Agreement, the Supplier shall be liable to pay the said outstanding amount together with an interest @ 8% P.A."
13. The above document as well as verification report of Range office would establish that M/s.Mando India had advanced loan of Rs.4.30 to appellant and the same was repaid, by adjustment in clearances made by M/s.Mando India. It is the case of the appellants that after the clearances they had requested M/s.Mando India to honour the increased price of the goods supplied to them. Later, on 30.06.2009 the appellant has raised two debit notes on M/s.Mando India for a total amount of Rs.4.30 crores which includes excise duty. The said debit notes are reproduced as under :
15
Excise Appeal No. 40282 of 2014 Excise Appeal No. 42479 of 2015 16 Excise Appeal No. 40282 of 2014 Excise Appeal No. 42479 of 2015 13.1 However, M/s.Mando India did not honour these debit notes and the appellant had not received the amount as per these debit notes. This is clear from the letter issued by M/s.Mando India to Superintendent of Central Excise Department, Ponnamallee, Chennai dt. 24.09.2010. The said letter reads as under :17
Excise Appeal No. 40282 of 2014 Excise Appeal No. 42479 of 2015 13.2 In the above letter, M/s.Mando India has stated that they do not have any agreement with the appellant to honour the higher price for the goods supplied to them. It is also stated in the said letter that they have not availed any cenvat credit of the debit notes. 18
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14. The documents as stated above bring out the facts that the appellant has received Rs.4.30 crores from M/s.Mando India which was repaid by adjustment in the clearances made to M/s.Mando India. Subsequently, after completing the clearances as per the purchase order, the appellant has raised debit notes on M/s.Mando India for a total amount of Rs.4.30 crores including the excise duty. The said debit notes has not been honoured by M/s.Mando India. The appellant thus contends that they have paid excess Excise duty to the tune of Rs.31,47,563/-.
15. From the facts the question that arises for consideration is whether the amount of Rs.4.30 crores raised by debit notes by the appellant as the cost difference would form part of the transaction value or not. For better appreciation, the definition of transaction value as in Section 4 (1) (d) is reproduced as under :
"SECTION 4. Valuation of excisable goods for purposes of charging of duty of excise. -- (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to their value, then, on each removal of the goods, such value shall, subject to the other provisions of this section, be deemed to be -
... ... ....
(d) "transaction value" 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."19
Excise Appeal No. 40282 of 2014 Excise Appeal No. 42479 of 2015 15.1 From the definition, it can be seen that transaction value 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. This has two parts. Firstly, the price actually paid or payable when the goods are sold. Secondly, it includes in addition to the amount as price, any amount that the buyer is liable to pay. It is an admitted fact that debit notes have been raised after the clearances of the goods i.e. after sale of the goods. Further, the repeated communications by M/s.Mando India shows that they have never accepted to honour the increased price or the cost difference. If M/s.Mando India had agreed to pay the higher revised price it would definitely form part of the transaction value. As per the purchase orders or as per the communications between the parties there is no evidence to show that M/s.Mando India has agreed or is liable to pay the cost difference.
16. At this juncture, it also requires to be stated that the loan advance to the appellant by M/s.Mando India cannot be considered as an additional consideration or a consideration that has influenced the price agreed between the parties. The loan has been completely repaid by the appellant by adjusting in the invoices while making clearances of the products to M/s.Mando India. Further the debit notes have been raised subsequent to sale. Therefore, the higher revision of price not agreed by the buyer cannot form part of transaction value. The debit notes do not form part of transaction value. The excise duty paid is therefore excess. 20
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17. In the case of Petrofab Vs. CCE & Cus. Vadodara - 2008 (223) ELT 656 (Tri.-Ahmd.) a similar issue came up for consideration. The facts of the said case bring out that the assessee therein supplied manway plugs at the price as per contract. Subsequent to clearance of the goods, they raised supplementary invoices for additional amount on the ground that they had used more material and had undertaken more work than that was expected at the time of contract. The said supplementary invoices were not honoured by the buyer. The department was of the view that the appellant had to pay duty on the amount shown in the supplementary invoices also and have to be made part of the transaction value. The Tribunal held in favour of the assesee holding that the supplementary invoices have been issued after the goods have been sold and cannot form part of transaction value. The relevant part reads as under :
"5. We have carefully considered the submissions. We agree with the submissions of the learned Advocate. No evidence have been produced to show that these items supplied by the appellant as spares were manufactured by the appellant and, therefore, the reversal of credit taken at the original price on which these items were procured is as per law.
6. Coming to the other issue in the appeal, the appellant supplied manway plugs at a particular price as per contract. Subsequent to the clearance of the goods they raised supplementary invoices for additional amount on the ground that they have used more materials and undertaken more work than what was expected at the time of the contract. The said supplementary invoices have not been honoured by the buyer. The department seeks to demand duty on the ground that once invoice was raised, the duty becomes payable irrespective of whether the amount mentioned in the supplementary invoices have been paid for or not.
7. The learned Advocate relied on the decision of the Hon'ble Supreme Court in the case of MRF Ltd. v. Collector of Central Excise, Madras - 1997 (92) E.L.T. 309 (S.C.) in support of his contention that subsequent change in price cannot alter the duty liability after the 21 Excise Appeal No. 40282 of 2014 Excise Appeal No. 42479 of 2015 goods have been cleared on payment of duty. He also submits that there was no price variation clause in the contract.
8. We have carefully considered the submissions. While realisation can not be criteria for charging to duty, in this case, we find that there was no allegation or finding of price variation clause in the original contract. Further, the supplementary invoices have not been honoured. Therefore the transaction price has not been altered. The decision of the Hon'ble Supreme Court in the case of MRF Ltd. v. Collector of Central Excise, Madras shall be applicable in this case. The decision in the case of MRF Ltd. v. Collector of Central Excise, Madras has been followed by the Tribunal in the case of Anil Hitkari v. Commissioner of Central Excise, Delhi - 2005 (186) E.L.T. 97 for price enhancement.
9. In the light of the above we allow the appeal on both grounds with consequential relief, if any."
18. In the case of Shri Bhagawati SSK Ltd. Vs CCE Pune - 2000 (115) ELT 120 (Tribunal) it was held that fluctuation in price of excisable goods subsequent to clearance of goods would not affect the assessable value and there is no liability to pay excise duty. Relevant part of the order reads as under :
"3. Consequent to such refixation notices were issued, among others, to the appellant before us, by the Central Excise department. These notices proposed to levy duty on the differential amount received by the sugar mills on the view that this differential price amounted to a consideration for the sale. It was therefore part of the assessable value. In the orders impugned in the appeal, the commissioner has confirmed the proposal in the notice.
4. The advocate for the appellant relies upon the judgment of the Supreme Court in MRF Ltd. v. C.C.E., 1997 (92) E.L.T. 309 in support of the proposition that an alternate in the price of excisable goods subsequent to clearance of the goods would not affect the liablility to Central Excise duty already accrued. The Court orders to the view of the Tribunal in Indo Hacks Ltd. v. C.C.E., 1986 (25) E.L.T. 69 that duty chargeable is at the rate, and at price in force when 22 Excise Appeal No. 40282 of 2014 Excise Appeal No. 42479 of 2015 the goods are cleared from the factory gate and not on the price reduced later. The court therefore held that reduction in the price of tyres by the Government of India would not entitle the appellant before it to claim refund of the excise duty paid paid on the price cleared.
5. The same principles would hold true in cases where subsequent to the clearance price is increased as in the present case. The price for assessment would therefore be the price at which the goods were cleared, and not the price now determined. In this view of the matter, we do not think it necessary to consider the arguments on limitation, raised by the appellant."
19. The Tribunal decision in the case of Harsiddh Detergents Ltd. Vs CCE Ahmedabad - 1998 (98) ELT 194 (Tribunal) and the case of Indian Explosives Ltd. Vs CCE Hyderabad - 2012 (284) ELT 259 (Tri.- Bang.) were relied by the learned counsel to argue that in situations where there was reduction in prices subsequent to the clearance of the goods, it was held that the same would not affect the manufacturer's liability to pay excise duty and refund cannot be allowed when there is downward revision of the price.
20. In the case of Maria Udyog Ltd. Vs CCE - 2007 (207) ELT 31 (P&H) the issue as to the liability to pay duty when there is downward revision was examined. It was held that when the clearances were made on provisional basis, the reduction of price at a later date would not absolve the assessee from discharging duty on the agreed price. The said decision was appealed before the Hon'ble Supreme Court. Though appealed before the Supreme Court, the decision was affirmed by the Apex Court holding that the 23 Excise Appeal No. 40282 of 2014 Excise Appeal No. 42479 of 2015 reduction of price at a later date cannot be made foundation for seeking refund when goods were not cleared on provisional basis. The Ld. counsel in the present case has much asserted that the increase in the price (the debit notes raised on M/s.Mando India) was subsequent to the clearances of the goods. The decision in the case of Petrofab Vs CCE (supra) has considered the situation when the price revision is subsequent to clearance of the goods.
21. The Commissioner (Appeals) has relied upon the decision in the case of FIAT India Pvt. Ltd. (supra). The facts of the said case do not apply to the situation before us for the reason that in the said case the assessee was consciously clearing the goods for a lesser price to make way into the market. The Hon'ble Court was of the view that it was an extra-commercial consideration entered between the parties while fixing the price for sale to customer and that the price is not the sole consideration. In the present case, the purchase order shows that the parties had never varied from the price fixed as per the purchase orders. Only because the appellant had to incur more cost due to the situation of importing the inputs they had requested the customer viz. M/s.Mando India to give a higher price revision. This was not accepted by M/s.Mando India. The facts in the case of FIAT India Pvt. Ltd. (supra) is not applicable to the facts before us.
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Excise Appeal No. 40282 of 2014 Excise Appeal No. 42479 of 2015
22. From the foregoing, we hold that the Commissioner (Appeals) has erred in allowing the appeal filed by the department and in upholding the order of recovery of erroneous refund passed by the adjudicating authority. We hold that the appellant is eligible for refund.
23. In the result, the impugned orders passed by Commissioner (Appeals) are set aside. Both the appeals are allowed with consequential reliefs, if any.
(Pronounced in court on 29.11.2023)
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(VASA SESHAGIRI RAO) (SULEKHA BEEVI C.S.)
Member (Technical) Member (Judicial)
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