TaxTMI 
TaxTMI 
2006 (3) TMI 609
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....that price. The Superintendent (Preventive) found that the appellant was entitled to a 30% subsidy (20% from the Government of India and 10% from the said customer ONGC) on the sale price agreed under the contract and that the amount was not included in the assessable value declared by the appellant. By including that amount the assessable value would be Rs. 59,65,12,043/- and not the amount declared. A show cause notice was, therefore, issued in respect of the differential amount of Rs. 1,44,53,945/-. The show cause notice also included the item of 13,451 coated pipes which were cleared during 1-3-1986 to 19-8-1989, but this appeal relates only to the demand of the differential duty in respect of the jack-up rig. 3. According to the appellant, 10% subsidy payable by ONGC had been included in the contract price while 20% receivable from the Government of India did not form part of the assessable value. The Collector of Central Excise on the basis of the material on record found that the fact that a total of 30% subsidy was payable to the appellant had come to light only during the course of investigation, and that the subsidy received/receivable by the appellant had a nexus....
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....that would not be includible in the price of the goods for the purpose of excise. As regards 10% subsidy receivable from ONGC, the Hon'ble the Supreme Court observed: "However, it is an admitted position that 10% subsidy was received by the respondent from the buyer. It is therefore additional consideration received by the respondent from the buyer." It was observed that the fact that the subsidy was received under the policy of the Government did not detract from the said position and it was, therefore, includible. The finding of the Tribunal that the entire subsidy including 10% payable by ONGC was not includible, was accordingly set aside. It is clear that before the Hon'ble the Supreme Court while contending that 10% subsidy was received from the buyer, the appellant had simultaneously contended that the said 10% was included in the price, which fact was denied by the Revenue. It is clear that the appellant had not admitted that 10% subsidy was received over and above the contracted fixed price from the buyer. 6. It has been contended on behalf of the appellant before us that the appellant was not entitled to receive anything beyond the contracted price as subsidy from ....
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....and including delivery of the Jack-up Rig at ex-contractor's yard in Bombay and such price shall not be subject to escalation on any grounds whatsoever. 25.2 Contract Price : The price of the rig shall be as under: - (a) Rupee content Rs. 21.32 cross per Rig (b) Foreign Exchange Rs. 20.48 crores per Rig content. equivalent to US$ 20.90 Million at the exchange rate of Rs.l00-US$ 10.204 Total Rs. 41.80 Crores per Rig. Total Contract Price = Rs. 83.60 Crores for 2 Rigs" 9.1 It is evident from the terms of the contract that, there was no reference to any subsidy amount to be paid by the ONGC. Subsidy was payable by ONGC at 10% over and above the international parity price, as per the pricing policy. 10. It appears from the record that a dispute had arisen between the appellant and the ONGC in view of the claim made by the ONGC for liquidated damages to the tune of Rs. 33.24 crores. Attempts were made to resolve the issue relating to liquidated damages claimed by the ONGC and payments required to be made by the appellant relating to the development of Nahva Yard. In a meeting betwee....
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....the Government in respect of indigenous construction of jack-up rigs, suitable reduction in price was offered by the MDL to ONGC". The contract price of Rs. 41.80 crores was taken as the international parity price and the Government's share of subsidy at the rate of 20% of this IPP, worked out at Rs. 8.36 crores, was decided to be paid to the appellant. It was further decided that, "no additional payment would be made by ONGC to MDL (appellant) in view of the fixed price in the contract between the two companies". The above decision was approved by the Committee of Secretaries in the Ministry of Petroleum, in their meeting held on 18-8-1988, a copy of which is at Annexure 'C' to the paper book, which fact is not disputed before us. 11. It is thus evident from the material on record that no amount towards subsidy was paid by the ONGC in view of the decision approved by the Committee of Secretaries and the consensus arrived at during the meetings that the contract in respect of the rigs was to be treated as fixed price contract in line with the decision of the Committees of three Secretaries in their meeting held on 9-1-1986, and that the appellant cannot make any claim for f....