TaxTMI 
TaxTMI 
TaxTMI 
2006 (9) TMI 321
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....y the above equipment to M/s. BSNL. They filed a refund claim dated 2-9-2003 for a sum of Rs. 29,27,350/- before the Assistant Commissioner. The Revenue took the view that the difference in price quoted in the purchase order and invoices under the cover of which goods were cleared is on account of Liquidated Damages and it is in the nature of a penalty imposed by the customer for delayed delivery of goods. Hence it is not an abatable discount from the transaction value as per Section 4(3)(d) of Central Excise Act, 1944. The lower authority rejected the refund claim under Section 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 lo....
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....nt circumstances of each particular contract, judged of at the time of the making of the contract, not at the time of the breach. (4) To assist this task of construction various test have been suggested which, if applicable to the case under consideration, may prove helpful or even conclusive. Such are : (a) It will be held to be a penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison with the greatest loss which could conceivably be proved to have followed from the breach. (b) It will be held to be a penalty of the 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....
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....ly to be uncertain, the difficulty of proving the extent of the actual damage at the trial of the action for breach. 443. A stipulated sum will, however, be classed as a penalty where it is in the nature of a threat fixed in terrorem of the other party. This is again the modern phrase, also to be found in Clydebank Engineering Co. v. Don Jose Ramos Yzquierdo Y Castaneda, this time in Lord Halsbury's speech, and also incorporated by Lord Dunedin in his list of "rules" in Dunlop Pneumatic Tyre Cop. v. New Garage and Motor Co. The intention behind 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 th....
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....ifferent from the actual wholesale price. (iv) Under the new Section 4, the concept of normal value is done away with. Instead, transaction value for "each removal" is treated as the value on which duty is payable. Explanation to Section 4(1)(a) also emphasises price actually paid to the assessee for the goods sold, less duties and taxes. (v) Under Section 4(3)(d), transaction value has been inter alia, defined as "price actually paid or payable". If the price in the order or the invoice is different from the price actually received 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....
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....f receipt of cesser payment is not in dispute, it would be entirely within four corners of "transaction value" definition to treat LD as deductible from the price which is not received, so as to determine the price actually received. 4. The learned JDR reiterated the orders of the lower Authorities. 5. We have gone through the records of the case carefully. In the context of old Section 4 of the Central Excise Act, 1944, the Tribunal in the case of CCE, Calicut v. BPL Telecom [2003 157 E.L.T. 35 (Tri.-Bang.) has held that liquidated 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 w....