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2023 (12) TMI 3 - AT - Central ExciseRefund of Excise Duty - transaction value - amount raised through Debit notes (cost difference) can form part of transaction value under Section 4 of the Central Excise Act or not, so as to make the excise duty paid to be correct in regard to transaction value of the goods cleared? - HELD THAT - The 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. 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. In the case of PETROFAB VERSUS COMMISSIONER OF C. EX. CUS., VADODARA 2007 (11) TMI 118 - CESTAT AHMEDABAD a similar issue came up for consideration - 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 Commissioner (Appeals) has relied upon the decision in the case of FIAT India Pvt. Ltd. 2012 (8) TMI 791 - SUPREME COURT . The facts of the said case do not apply to the situation here 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 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 - the appellant is eligible for refund. The impugned orders passed by Commissioner (Appeals) are set aside - Appeal allowed.
Issues Involved:
1. Eligibility for refund of excise duty amounting to Rs.31,47,563/-. 2. Whether the amount raised through debit notes forms part of the "transaction value" under Section 4 of the Central Excise Act, 1944. 3. The impact of a loan provided by M/s. Mando India on the transaction value. Summary: Issue 1: Eligibility for Refund of Excise Duty The appellant, M/s. JTEKT India Ltd., filed a refund claim for Rs.31,47,563/- on the grounds that they had paid excess excise duty on a cost difference claimed from M/s. Mando India, which was not admitted by M/s. Mando India. Initially, the refund was sanctioned, but the Department appealed, and the Commissioner (Appeals) set aside the sanction. The appellant then filed an appeal before the Tribunal. Issue 2: Whether the Amount Raised Through Debit Notes Forms Part of the "Transaction Value" The appellant contended that the debit notes raised were not accepted by M/s. Mando India and thus cannot form part of the transaction value as defined under Section 4 of the Central Excise Act. The Tribunal agreed, stating that "transaction value" means the price actually paid or payable for the goods, and since M/s. Mando India did not agree to the price revision, the debit notes do not form part of the transaction value. The Tribunal referenced the case of Purolator India Ltd. v. Commissioner of Central Excise, Delhi-III and other similar cases to support this conclusion. Issue 3: Impact of Loan Provided by M/s. Mando India on the Transaction Value The appellant argued that the loan provided by M/s. Mando India was a repayable advance and not an additional consideration affecting the transaction value. The Tribunal found that the loan was repaid through subsequent clearances and did not influence the agreed price between the parties. The Tribunal held that the loan does not form part of the transaction value, and the excise duty paid was therefore in excess. Conclusion: The Tribunal concluded that the Commissioner (Appeals) erred in upholding the recovery of the erroneous refund. The appellant is eligible for the refund of Rs.31,47,563/-. Both appeals were allowed with consequential reliefs. The decision was pronounced in court on 29.11.2023.
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