TMI Blog2006 (9) TMI 321X X X X Extracts X X X X X X X X Extracts X X X X ..... s should be delivered on a particular date and when there is delay in delivery, the price is reduced depending on the delay. As a result of above adjustments, the appellant has received lesser payment of transaction value. When the price at which the goods are transacted has to be taken, there is no question of any deduction. Due to the provision of liquidated damages, the price actually payable is reduced and it is the reduced price which is to be taken for Central Excise duty purposes in the light of the definition of transaction value. Thus, we find that the liquidated damage is 0.5% of the invoice value per week of delay. Considering the quantum of the liquidated damages and taking into account the submissions of the learned Advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 11B of the Central Excise Act, 1944. The appellant was aggrieved and he approached the Commissioner (Appeals). The Commissioner (Appeals) upheld the order of the lower Authority. Hence the appellants have come before the Tribunal for relief. 3. S/Shri Arvind Dattar, Sr. Advocate and BN Gururaj, Advocate appeared on behalf of the appellants and K.S. Reddy, JDR appeared for the Revenue. 4. The learned Sr. Advocate cited from Standard Text Books on Contracts and Damages to drive home the points that courts have laid down tests by which one could always find out whether the amount to be paid in the case of breach of contract is a penalty or liquidated damage. The following extracts from Chitty on Contracts, 27th Edition, Volume I, Ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... breach consists only in not paying a sum of money, and the sum stipulated is a sum greater than the sum which ought to have been paid... (c) There is a presumption (but no more) that it is a penalty when a single lump sum is made payable by way of compensation, on the occurrence of one or more or all of several events, some of which may occasion serious and others but trifling damage. On the other hand : (d) It is obstacle to the sum stipulated being a genuine pre-estimate of damage, that the consequences of the breach are such as to make precise pre-estimation almost as impossibility. On the contrary, that is just the situation when it is probable that pre-estimated damage was the true bargain between the parties. Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd such a provision is generally to prevent a breach of the contract by establishing a greater incentive for its performance. The onus, however, of proving that a stipulated sum is a penalty rather than liquidated damages is upon the party against whom the stipulated sum if claimed. 444. The same sum cannot, in the same agreement, be treated as a penalty for some purposes and as liquidated damages for others. For if the same sum is extravagant and unconscionable in relation to one breach to which it applies it cannot be a genuine pre-estimate, and the sum becomes branded as having a penal nature which it cannot lose in relation to other more serious breaches to which it also applies. It adds nothing to say that it would not have been a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee, the latter would be the normal value. This phrase has come up for consideration under the Customs Valuation cases, wherein the consistent view is that the price actually paid by the importer in India is the transaction value. Eicher Tractor Ltd. v. CC, 2000 (122) E.L.T. 321 (Supreme Court) is the most leading decision on this issue. By parity of reasoning, price actually received by the appellant ought to be the transaction value and not the contracted price. (vi) One of the grounds of rejection of refund claim is that there is no provision for deduction of LD from transaction value. (vii) It is submitted that such a provision is unnecessary and would be superfluous. From the definition of trasaction value it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iquidated damages for delayed supply of goods is not permissible deduction from the assessable value. In our view the ratio of this decision cannot be made applicable for cases where the value is in terms of Section 4 which came into effect from 1-7-2000 for the reason that under the old section, the concept of normal price was enforced but in terms of new Section 4, what is important for assessment purposes is the transaction value. The definition of transaction value is re-produced below :- Section 4(3)(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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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