2008 (10) TMI 76 - AT - Central Excise

Tribunal: Additional Payments by Buyer Post-Removal Part of Transaction Value

LUCAS TVS LTD. Versus COMMISSIONER OF CENTRAL EXCISE, CHENNAI

The Tribunal concluded that the additional amount paid by the buyer under supplementary invoices post-removal constitutes part of the transaction value ... Price escalation – held that payment of duty under supplementary invoice is covered u/s 11A (2B) – held that interest is leviable u/s 11AB from the first date of the month succeeding the month in which duty was paid in the first instance in terms of the original invoice – held that additional amount paid by buyer in terms of supplementary invoice issued by the assessee after removal of the goods can be considered to be part of the T.V. – Tribunal’s LB decision in Arvind Mills Ltd. ,is disagreed Issues Involved:1. Whether the additional amount paid by the buyer towards the price of goods under supplementary invoices post-removal can be considered part of the 'transaction value' under Section 4 of the Central Excise Act.2. Whether the payment of duty under the supplementary invoice by the assessee is covered by sub-section (2B) of Section 11A of the Act.3. Whether interest is leviable under Section 11AB on the amount of duty paid under the supplementary invoice from the first date of the month succeeding the month in which duty was initially paid.4. Whether the Central Excise Act or Rules contain any provision for the recovery of interest payable under Section 11AB on any amount of duty paid under supplementary invoices.Detailed Analysis:Issue (a): Transaction Value:The Tribunal considered whether the additional amount paid by the buyer under supplementary invoices post-removal forms part of the 'transaction value' under Section 4 of the Central Excise Act. The Tribunal noted that 'transaction value' includes any amount the buyer is liable to pay to the assessee in connection with the sale, whether payable at the time of sale or at any other time. It was concluded that the differential price collected subsequently due to price revision is part of the transaction value. The Tribunal emphasized that the 'transaction' does not end with the removal of goods and includes any amount received from the buyer in connection with the sale, making it part of the transaction value.Issue (b): Coverage under Section 11A(2B):The Tribunal examined whether the payment of duty under supplementary invoices falls under sub-section (2B) of Section 11A of the Act. It was observed that when the assessees paid differential duty based on price revision, they acted in terms of Section 11A(2B), which allows for self-ascertainment and payment of duty before the service of notice. The Tribunal noted that the payment of differential duty under supplementary invoices is a belated payment of duty with reference to the time of removal of goods, thus falling under Section 11A(2B).Issue (c): Interest under Section 11AB:The Tribunal addressed whether interest is leviable under Section 11AB on the differential duty paid under supplementary invoices. It was concluded that interest under Section 11AB is payable from the first day of the month succeeding the month in which the duty ought to have been paid, which is at the time of removal of the goods. The Tribunal rejected the argument that there was no delay in payment with reference to the time of price increase, stating that the delay must be considered with reference to the time of removal of the goods. The Tribunal emphasized that the interest under Section 11AB serves as compensation for the delayed payment of duty.Issue (d): Provision for Recovery of Interest:The Tribunal considered whether the Central Excise Act or Rules provide a mechanism for the recovery of interest payable under Section 11AB. It was held that sub-rule (4) of Rule 8 of the Central Excise Rules, 2002, which allows for the recovery of interest under Section 11AB, is applicable. The Tribunal noted that this rule mandates that any unpaid duty along with interest can be recovered by the proper officer of Central Excise under Section 11 of the Act. The Tribunal rejected the argument that there was no provision for recovering such interest, concluding that Section 11 provides the necessary mechanism for recovery.Conclusion:The Tribunal held that the additional amount paid under supplementary invoices is part of the transaction value, the payment of duty under supplementary invoices is covered by Section 11A(2B), interest is leviable under Section 11AB on the differential duty, and the Central Excise Act and Rules provide a mechanism for the recovery of such interest. The Tribunal directed the records to be placed before the Hon'ble President for constituting a bench of five Members to resolve the conflict with the coordinate Bench's view in Arvind Mills case.