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TMI Blog2023 (12) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... The refund claim was filed on the grounds that the appellant was manufacturing steering gears and supplying the same to M/s.Mondo India Steering Systems (Mondo India, for short) who subsequently manufacture final steering and supplies to M/s.Hyundai Motors for i10 and i20 models of cars. During the financial year 2009 they raised a claim on M/s.Mando India for the cost difference between the local and imported parts viz. ball joints used in the manufacturing steering gears. These parts are imported mainly because there was delay in developing the same in local market and getting it approved from the customer M/s.Mando India. In good faith, and anticipating that the above cost difference would be approved by the customer, the appellant paid excise duty amounting to Rs.31,47,563/- on the gross amount Rs.4.30 crores (cost difference claimed from their customer viz. M/s.Mando India). The appellant thus claimed refund of the excise duty of Rs.31,47,563/- contending that it is excess duty paid by them. This cost difference claimed by appellant was not admitted by M/s.Mando India. 3. However, M/s.Mando India had agreed to support the appellant with a loan and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impediments, it could not be done. Therefore, the appellant had to import IBJ and OBJ as the production schedule of M/s.Mando India and M/s.Hyundai Motors would be affected without the timely supply of PA assembly. 5.3 As the Appellant used imported ball joints, there was an increase in the price to the extent of Rs.4.30 crores for the period 02.02.2009 to 31.03.2009. Appellant sought to increase the price of PA assembly. Mando India did not agree for the price revision but agreed to give a loan of Rs. 4.30 crores as repayable advance with the condition that the same may be repaid in six months. 5.4 Accordingly, in January 2009, the Appellant and Mando India entered into a Trade Advance Agreement vide which Mando India agreed to sanction a loan of Rs. 4.3 Crores. The first part of loan of Rs. 2 Crores was given by Mando India vide cheque dated 07.11.2008 and the remaining amount of Rs. 2.30 Crores was given vide cheque dated 30.03.2009. 5.5 The said loan was repaid and adjusted by the Appellant through subsequent clearances. The same is an admitted fact in the Impugned Orders itself (Paragraph 3 of the Order in Appeal No. 18/2013 dated 18.11.2013). 5.6 In good fait ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 Crores, thus, loan shall form part of the transaction value. B.3 In this regard, it is submitted that the Impugned Order has nowhere alleged that the grant of loan/raising of debit notes has increased the transactional value of the goods. Thus, there is no nexus between the loan amount and the transaction value of the goods manufactured and supplied by the Appellant. Thus, the loan which has subsequently been paid in full by the Appellant does not result in the increase in transaction value and therefore, does not form part of the transaction value. C. The reliance placed on judgment of the Supreme Court in FIAT India Pvt. Ltd. is incorrect. It is submitted that in the present case, the Appellant is neither selling below cost for a long period of time nor the Appellant deliberately sold below the cost of production with any ulterior motive. Further, there is no commercial consideration received at the time of fixing the price of PA Assembly in the Purchase Order. . Hence, the decision of Fiat Case does not apply to the facts here. Reliance in this regard is placed on CBEC's Circular No. 979/03/2014-CX dated 15.01.2014. D. The burden to prove that the loan sanct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bit notes have been raised in connection with the sale of goods. The transaction value therefore includes the cost raised in the debit notes and the duty discharged is correct. There are no grounds to sanction the refund. 8.3 It is submitted by Ld. A.R that on the one hand, the appellant states that unless the request for price revision is accepted along with debit notes, only then revision would be included in the debit notes. On the other hand, it is contended by them on the 'wishful thinking' that M/s.Mando India will reimburse the higher cost they have raised the debit notes. It is clear that after the sale transaction was over, the appellant has sought for further amount. This means, there is admission on the part of the appellant that the value at the time of clearance of the goods as stated in the invoices was not the correct value and the cost was not correctly added to the finished goods and the debit notes have been raised subsequently to include the cost of imported inputs. 8.4 The contention of appellant is that the manufacture and clearance of PA assembly by the appellant using the imported inputs has resulted in an increase of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said debit notes would form part of the transaction value so as to make the excise duty paid to be correct in regard to transaction value of the goods cleared. 11. The facts narrated bring out that the appellant could not obtain the inputs (ball joints) locally and they had to import these items. They incurred higher cost on such inputs and therefore were not in a position to sell the products to M/s.Mando India on the price as agreed by the purchase order. The purchase orders are placed in pages 26 to 28 of the appeal paper book. This is the agreement entered between the appellant and M/s.Mando India for supply of the goods viz. PA gear assembly. As the appellant could not make up the price difference of the imported inputs, they requested for a price revision to M/s.Mando India. However, M/s.Mando India did not favour such price revision and agreed to give a loan of an amount of Rs.4.30 crores with the condition that the same may be repaid in 6 months. The appellant received the said loan amount in two cheques; one is dated 1.12.2008 for an amount of Rs.2 crores and the other dt. 3.3.2009 for Rs.2.30 crores. The said loan was repaid and adjuste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised two debit notes on M/s.Mando India for a total amount of Rs.4.30 crores which includes excise duty. The said debit notes are reproduced as under : 13.1 However, M/s.Mando India did not honour these debit notes and the appellant had not received the amount as per these debit notes. This is clear from the letter issued by M/s.Mando India to Superintendent of Central Excise Department, Ponnamallee, Chennai dt. 24.09.2010. The said letter reads as under : 13.2 In the above letter, M/s.Mando India has stated that they do not have any agreement with the appellant to honour the higher price for the goods supplied to them. It is also stated in the said letter that they have not availed any cenvat credit of the debit notes. 14. The documents as stated above bring out the facts that the appellant has received Rs.4.30 crores from M/s.Mando India which was repaid by adjustment in the clearances made to M/s.Mando India. Subsequently, after completing the clearances as per the purchase order, the appellant has raised debit notes on M/s.Mando India for a total amount of Rs.4.30 crores including the excise duty. The said debit notes has not been honoured by M/s.Mand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no evidence to show that M/s.Mando India has agreed or is liable to pay the cost difference. 16. At this juncture, it also requires to be stated that 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. 17. In the case of Petrofab Vs. CCE & Cus. Vadodara - 2008 (223) ELT 656 (Tri.-Ahmd.) a similar issue came up for consideration. The facts of the said case bring out that the assessee therein supplied manway plugs at the price as per contract. Subsequent to clearance of the goods, they raised supplementary invoices for additional amount on the ground that they had used more material and had undertaken more work than tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise, Madras has been followed by the Tribunal in the case of Anil Hitkari v. Commissioner of Central Excise, Delhi - 2005 (186) E.L.T. 97 for price enhancement. 9. In the light of the above we allow the appeal on both grounds with consequential relief, if any." 18. In the case of Shri Bhagawati SSK Ltd. Vs CCE Pune - 2000 (115) ELT 120 (Tribunal) it was held that fluctuation in price of excisable goods subsequent to clearance of goods would not affect the assessable value and there is no liability to pay excise duty. Relevant part of the order reads as under : "3. Consequent to such refixation notices were issued, among others, to the appellant before us, by the Central Excise department. These notices proposed to levy duty on the differential amount received by the sugar mills on the view that this differential price amounted to a consideration for the sale. It was therefore part of the assessable value. In the orders impugned in the appeal, the commissioner has confirmed the proposal in the notice. 4. The advocate for the appellant relies upon the judgment of the Supreme Court in MRF Ltd. v. C.C.E., 1997 (92) E.L.T. 309 in support of the proposition that an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuation when the price revision is subsequent to clearance of the goods. 21. The Commissioner (Appeals) has relied upon the decision in the case of FIAT India Pvt. Ltd. (supra). The facts of the said case do not apply to the situation before us 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 Hon'ble Court was of the view that it was an extra-commercial consideration entered between the parties while fixing the price for sale to customer and that the price is not the sole consideration. In the present case, the purchase order shows that the parties had never varied from the price fixed as per the purchase orders. Only because the appellant had to incur more cost due to the situation of importing the inputs they had requested the customer viz. M/s.Mando India to give a higher price revision. This was not accepted by M/s.Mando India. The facts in the case of FIAT India Pvt. Ltd. (supra) is not applicable to the facts before us. 22. From the foregoing, we hold that the Commissioner (Appeals) has erred in allowing the appeal filed by the department and in uphold ..... X X X X Extracts X X X X X X X X Extracts X X X X
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