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TMI Blog2024 (7) TMI 545X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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. Extended period of limitation - penalty - HELD THAT:- It is found that various show cause notices have been issued to the appellants over the years based on very same financial records. In case, the department missed out on certain issues during the earlier scrutiny, the blame cannot be put on the appellants and extended period cannot be invoked in the instant case. Moreover, it is amused to find that the Ld. Commissioner hold that Mens rea is not required in transaction matters for imposition of penalty. This is against the settled principle of law as envisaged in a catena of judgments. Therefore, the Department has not made out any case for either invoking extended period or for imposition of penalty. Both the appeals are partly allowed restricting the demand to normal period and setting aside the penalty. However, the appellants are required to pay interest, as applicable, on the duty confirmed for the normal period. Appeal allowed in part. - HON BLE Mr. S. S. GARG , MEMBER ( JUDICIAL ) And HON BLE Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s cannot be considered as an amount received by the appellant by the reason of, or in connection with the sale of the vehicles at the time of removal; the charges do not affect the sale of the vehicles and in no way enriches the values of the vehicles; the vehicles are sold to all the dealers at the same price irrespective of whether the vehicles sold from the charged pool or otherwise; the pool lifting charges collected are towards the out of turn dispatch of vehicles to the dealers, who did not initially place an order for the vehicles. Learned Counsel submits that pool lifting charges are towards provision of service by the appellant for allowing the dealers to lift the vehicles irrespective of their seniority indent; it has no connection with the sale of the vehicles by the appellant to the dealers; they are in the nature compensation paid to the appellant for taking the delivery of vehicles out of turn. He relies on the following cases: CCE, Belgaum Vs. Praxair India Ltd 2008 (223) ELT 596 (Tri.-Chennai) CCE, Bombay Vs. Ram Decorative Industries Limited 2000 (124) ELT 659 (Tribunal) Jindal Praxair Oxygen Co. Ltd. Vs. CCE, Belgaum 2007 (208) ELT 181 (Tri.-Bang.) Inox Air Produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (POS); the appellants have been consistently submitting their annual reports/balance sheets to the department; the show cause notices were issued on other issues on the basis of the annual reports; therefore, extended period of cannot be invoked. He submits that the appellants had a bona fide belief that the pool lifting charges are not includible in the assessable value; extended period cannot be invoked. He submits that the facts and the circumstances interest and penalty cannot be levied. He relies on the following cases: The Commissioner of Central Tax, Bangalore North Commissionerate Vs. ABB Limited 2021 (6) TMI 1110 (Kar.) CCE C Vs. Reliance Industries Ltd. 2023 (385) ELT 481 (SC) International Merchandising Company, LLC Vs. CST, New Delhi 2022 (67) GSTL 129 (SC) 6. Shri Ravinder Singh Bhati, learned Authorized Representative, assisted by Shri Anurag Kumar and Shri Narinder Singh, Authorized Representatives, for the Revenue, submits that whereas the show cause notice was issued for inclusion of four items i.e. Penalty on dealers; income from pool cancellation; income from pool lifting charges and cancellation charges for extended warranty, learned Commissioner has confirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... March, 2012. However, Ld. Commissioner Vide impugned order confirmed the duty of Rs. 3,83,03,480 on account of Pool Lifting Charges against which the appellants are before us; Revenue has not filed any appeal on the portion of the demand dropped by the Commissioner. 10. Learned Commissioner has given the following findings as regards the pool lifting charges: 137. In this situation the dealers as per scheme places order for number of vehicles of certain type, model, colour, etc required by them in future for ultimate sale to the customers. But later on he receives more order for vehicles. Then, he lifts these vehicles from pool created by M/s MSIL. In order to receive vehicles from this pool, he has to pay certain charges to get vehicle from this pool. In this case, M/s MSIL is clearing the excisable goods i.e. cars to their dealers on invoices on which central excise duty has been paid by them. The dealers in turn sell these cars to their customers by adding their margin on the total invoice amount pool lifting charges. It is important to mention here that no dealer will like to sell the goods at loss. In the instant case, M/s MSIL is charging certain amount from their dealers wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vehicles not purchased by the dealers, learned Commissioner has rightly held that these penal charges do not relate to the vehicles sold to the dealers, the penal charges cannot be included in the assessable value. Learned Commissioner finds in respect of pool lifting charges that they are relatable to the number of vehicles sold to a particular dealer and as such the charges are includable in the assessable value. Whenever, any dealer fails to lift the specified number of vehicles he indented, he is penalized for the same and the vehicles are transferred to a pool from which other dealers can indent vehicles over and above their initial indent on payment of certain charges known as pool lifting charges. The pool lifting charges, as we understand, are to be paid by a dealer who places an order for additional number of vehicles, over and above his initial indent. Therefore, it is seen that they are relatable to the number of vehicles sold. In terms of the agreement with the appellants, though, the dealers cannot sale the vehicles over and above recommended MRP, they are free to charge a price lower than the MRP. Therefore, it is clear that the dealers can vary the price subject to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We also find that the reasoning given by the appellants, stating that the pool lifting charges do not add any value to the marketability of the vehicles sold, is not acceptable. We find that Tribunal in the case of Victory Electricals Ltd (Supra) held that on the aforesaid analysis, we answer the reference by holding that whatever 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. 14. We further find that Tribunal held in the case of Rajasthan Prime Steel Processing Center Pvt. Ltd. that: 15. Both the adjudicating authority and the Commissioner (Appeals) have recorded a categorical finding that the amount received by the appellant from Honda India should be included in the transaction value since the amount received was for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal, the prices had to be reduced by the assessee on account of competition in the market. Further, the prices stood reduced on account of concession given by M/s. Britco, supplier of concentrates (raw material), to the assessee. There is no evidence of flow back of any additional consideration from the buyers of aerated water (beverage) to the assessee. On account of cut throat competition from Pepsi, M/s. Britco had to provide incentive to the assessee. But for the incentive from the supplier of concentrates (raw material), the assessee was not in a position to face acute competition from Pepsi. On the other hand, the evidence on record indicates that price uniformity was maintained. No favour for extra commercial reasons were shown to any of the buyers of aerated water. There is no evidence of any concession to any of the buyers. There is no evidence of existence of any favoured buyers. In the circumstances, Rule 5 is not applicable. 20. It is clear from the aforesaid paragraph that the price has been reduced by the assessee on account of competition in the market and there was no evidence of flow back of any additional consideration from the buyer of aerated water to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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