TMI Blog2020 (1) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... considered under the provisions of the Rules, i.e. Rule 6 thereof. Though Commissioner has in impugned order, upheld the demand to the extent of price differential between the goods supplied by availing the benefit of EPCG License and those supplied without availing the same, the reason for limiting to the price differential is not explicit when investigations show that respondents have additional consideration much higher than the price differential. After the amendments made in Section 4 of Central Excise Act, 1944 by the Finance Act, 2000, the concept of transaction value has been introduced. Every transaction has to be examined separately and uniquely, and the assessable value determined accordingly. In the case were additional consideration has been received against a particular supply then the exact quantum of additional consideration received to be added to the transaction value of that supply. Commissioner has given the benefit of Section 11A(2B) to the Respondents for not imposing any penalties etc. - since the respondents have not paid the amount of duty required to be paid with interest, benefit of Section 11A(2B) could not have been extended to the respondents. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were issued to M/s Reliance were on the premise that these equipments (Fiber Glass Tanks) will be installed in SEZ/ EOUs engaged in the manufacture of HSD for exports, these capital goods were used by them in their petrol pumps/ filling stations (retail sale point) set up at various places all over India. Thus these Capital Goods imported in terms of EPCG Scheme as above were not eligible for the benefit under the said scheme. The Policy Interpretation Committee 9PIC) of the Ministry of Commerce in its meeting held on 30.11.2004 held that said equipment are generally used for retail outlets, not specifically covered under post production facility stipulated under EPCG scheme and hence, such goods are not eligible for this benefit. Accordingly M/s Reliance Industries, had vide their letter dated 18.10.2005 informed Commissioner Central Excise Goa, that they are paying the differential duty amounting to ₹ 5,12,28,882/- (Enclosing Demand Draft No 230495 dated 18.10.2005). Since the letter of M/s Reliance Industry was not accepted by the jurisdictional authorities, Goa. Respondents vide their letter dated 08.11.2005 addressed to Deputy Commissioner Customs, Marma Goa, deposited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision in case of IFGL [2001 (134) ELT 230 (TDel)] is not applicable to the facts of case. Respondents had attempted to manipulate the booking of said additional consideration as advance in their books of accounts with the purpose of avoiding proper payment of Central Excise Duty. They manipulated the aid amount in their books of account by showing the same as advance and not as credit received from the buyers namely M/s Reliance. Hence the Commissioner was not correct in dropping the penal proceedings against the respondents. 2.7 Respondents have filed cross objections supporting the impugned order. 3.1 Matter was listed for hearing on 12.12.2018, 24.01.2019, 24.04.2019, 01.08.2019, 29.08.2019. Respondents did not attend the hearings on any of the appointed dates. 3.2 We have heard Shri N N Prabhudesai, Superintendent, Authorized Representative, for the revenue. 4.1 We have considered the impugned order along with the submissions made in appeal and during the course of argument. 4.2 The facts have been aptly narrated in para 11 to 13 of the Show Cause Notice which are reproduced bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per letter F.No.03/37/21/1458/AM04 dated 17.10.2005, the licensing authority viz. DGFT required M/s. Reliance to forgo the duty benefits on the import made under the said licenses, duly invalidated in the name of M/s. Amiantit and, therefore, M/s. Amiantit has paid, under protest, Customs and other duties with interest, aggregating to ₹ 5.92 crores. She also produced copies of the said letter and the proof of payment. 13. Smt. Dias agreed that the price variation/difference between the EPCG supply and non-EPCG supply was mainly due to duty benefit availed by M/s. Amiantit, which it passed on to M/s. Reliance as its buyer (through lesser price) and also agreed that the said difference, therefore, represent additional consideration received from buyer in relation to goods sold by M/s. Amiantit to it (i.e., M/s. Reliance). 4.3 From the facts as stated above it is quite evident that for the supplies made against the purchase order, 18.03.2004, Respondents have over and above the contracted sale price received consideration of ₹ 5,92,34,987/-. Rule 6 of the Central Excise Valuation Rules, 2000 provide as under: 6. Where th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of Section 4 of the Central Excise Act, 1944 (hereinafter referred to as the Act ) read with Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 (hereinafter referred to as the Rules ). The assessee challenged the stand of the Revenue by filing replies. After examining the matter, the Commissioner took the view that price was not the sole consideration flowing from the buyer to the assessee. Not only such buyers, who were sold the goods at a lower price, were related persons , even the goods were sold at depressed price. Therefore, the Commissioner confirmed the demand of differential duty as mentioned in the show cause notices and also levied penalties and interest. The assessee challenged the order of the Commissioner by filing appeal before the Custom Excise Service Tax Appellate Tribunal (for short, the Tribunal ) taking the plea that additional consideration under Section 4 of the Act refers only to the additional consideration flowing from the buyer to the assessee and in the present case no such additional consideration flew from the advance licence buyers of the deemed exports . The Tribunal, in arriving at this c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal has ignored and/or lost sight of the fact that it was in pursuance of the contract of sale between the respondents and M/s. Visakhapatnam Steel Plant that the licences were made available to the respondents. The Export and Import Policy had nothing to do with the arrangements/contract under which the licences flowed from the buyer to the seller. At the cost of repetition it must be mentioned that had the respondents had advance intermediate licence on their own i.e. without M/s. Visakhapatnam Steel Plant having to surrender its licences for the purposes of the contract, then the reasoning of the Tribunal may have been correct. But here, in pursuance of the contract of sale, there is directly a flow of additional consideration from the buyer to the seller. The value thereof has to be added to the price. We are thus unable to accept the broad submission that where parties take advantage of policies of the Government and the benefits flowing therefrom, then such benefit cannot be said to be an additional consideration . 4. In a matter like this, this Court could simply follow the aforesaid judgment and set aside the order of the Tribunal, allowing this ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts for deemed exports were specified. Advance licence for intermediate supply/deemed export was specified as one of the benefits for deemed exports. 8. The aforesaid narratives would demonstrate that the assessee could get the duty drawback and it could happen when advance licence holder category of buyers got their advance licences invalidated thereby surrendering the benefits accrued under such advance licence. Issue for consideration is as to whether it would constitute additional consideration received by the assessee as per the definition of transaction value contained in Section 4 of the Act read with Rule 6 of the Rules. We, therefore, shall reproduce the relevant portion of the provisions of Section 4 which existed at the material time, which read as under : 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 - (a) in a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue plus the amount of money value of any additional consideration flowing directly or indirectly from the buyer to the assessee . The implication of this Rule is that any form of additional consideration which flows from the buyer to the assessee, monitory value thereof is to be included while arriving at the transaction value. It is not necessary that such an additional consideration is to flow directly and even indirect consideration is includible. It is in this context we have to examine as to whether the consideration in the form of drawback, which accrued in favour of the assessee, could be connected with the buyer. To put it otherwise, though the immediate source of the duty drawback is the Government, whether its flow can be traced back to the buyer? If it is so, it may become a case of indirect consideration coming from the buyer and can be added to the transaction value. 12. This argument does not convince us at all. Fact remains that the issuance of advance licence for intermediate supply to the assessee was facilitated as a result of surrender of advance licence in favour or the buyer by the buyer. Thus, getting the licence invalidated for direct imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upply in favour of the assessee and the said licence enured certain benefits in favour of the assessee. In the present case, on these facts, we have to simply see as to whether the definition of transaction value , as contained in Section 4 of the Act read with Rule 6 of the Rules, would encompass this benefit as amounting to additional consideration. Our conclusion is that it would come within the ambit of additional consideration indirectly flowing from the buyers to the assessee. Therefore, the instant case is more akin to the decision in Re Soames. 18. At this stage, we would like to recall the following findings arrived at by the Commissioner, which are not upset by the Tribunal in the impugned decision or even disputed by the assessee : (a) The assessee had supplied goods to a particular type of buyers at much lower price than the price charged from the general buyers in the normal course of trade as it had obtained the facility of invalidating of advance licences from such buyers and procured imported raw material (duty free) against such licences for manufacturing of finished goods. It is, therefore, alleged that the assessee and the buy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the benefit of EPCG License and those supplied without availing the same, the reason for limiting to the price differential is not explicit when investigations show that respondents have additional consideration much higher than the price differential. After the amendments made in Section 4 of Central Excise Act, 1944 by the Finance Act, 2000, the concept of transaction value has been introduced. Every transaction has to be examined separately and uniquely, and the assessable value determined accordingly. In the case were additional consideration has been received against a particular supply then the exact quantum of additional consideration received to be added to the transaction value of that supply. 4.7 Since we are setting aside the impugned order on merits, other issues linked with the matter needs to be examined afresh. Commissioner has given the benefit of Section 11A(2B) to the Respondents for not imposing any penalties etc. In our view since the respondents have not paid the amount of duty required to be paid with interest, benefit of Section 11A(2B) could not have been extended to the respondents. Thus issue in respect of penal proceedings in terms of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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