Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 2021 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (10) TMI 638 - AT - Central ExciseValuation - Nature of amount received - Recovery of Central excise duty with interest and penalty - amount received by the appellant from M/s. Honda Siel Car India Ltd. [Honda India], for the loss suffered by the appellant on account of the cancellation of the contract for supply of auto parts used in the manufacture of vehicles - HELD THAT:- Section 4(1) of the Excise Act deals with valuation of excisable goods for purposes of charging of duty of excise. It provides that where 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 be, if the assessee and the buyer of goods are not related and the price is the sole consideration for the sale, be the transaction value. Transaction value has been defined under section 4(1)(d) of the Excise Act to mean the price actually paid or payable for the goods. The dispute in the present appeal relates to the amount which the appellant received from Honda India due to cancellation of the contract. This amount obviously was to make up for the reduced price which the appellant received from the sale of auto parts manufactured by the appellant. The Department alleges that this was infact the balance consideration received by the appellant from Honda India under the guise of compensation and, therefore, should be included in the transaction value - It clearly transpires from the business arrangement that the appellant had received a substantial amount from Honda India, even though the terms of the contract did not provide for payment of any amount to the appellant if the contract of supply of auto parts was cancelled by Honda India. What is also important to notice is that even for the subsequent year the appellant also claimed that it had to sell the auto parts as scrap since the contract was cancelled. It transpires from the business arrangement between the appellant, Honda India and the buyers that the appellant received some amount from the buyers of scrap and some amount from Honda India for the value of the auto parts and there is no good reason as to why this amount received by the appellant from Honda India should not be included in the transaction value of the goods - the contention of the appellant that the amount cannot be included in the transaction value since the consideration must flow only from the buyer to the seller of goods, in view of the business arrangement arrived at in the present case, cannot be accepted. Rule 5 of the Central Excise (Valuation) Rules, 1975 also talks of additional consideration flowing directly or indirectly from the buyer to the assessee. In view of the peculiar nature of the business arrangement between the appellant, Honda India and the buyers of auto parts, it is clear that the amount received by the appellant from Honda India has flown indirectly from the buyers. There is, therefore, no error in the order passed by the Commissioner (Appeals) - appeal dismissed.
|