TaxTMI 
TaxTMI 
2010 (7) TMI 544
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and consequential default in compliance with the performance of the terms of the contract between the parties, certain amount of percentage of the price was deducted by M/s. U.P. Power Corporation Ltd. while paying the dues payable to the respondent in relation to the said meters supplied by them to the said corporation. Pursuant thereto the respondents filed refund claim application dated 3-9-2003 claiming refund, of Rs. 22,95,510/-. The said claim was rejected by the adjudicating authority, but was allowed in the appeal before the Commissioner (Appeals). Hence, the present appeal. Learned DR while placing reliance on the decision in the matters of 4. Bhartia Cutler Hammer Ltd. v. CCE, New Delhi reported in 1998 (99) E.L.T. 436 (Tribunal), Commissioner of Central Excise, Calicut v. BPL Telecom Ltd. reported in 2003 (157) E.L.T. 35 (T-Bang.) and HPL Socomac Pvt. Ltd. v. CCE, Delhi-III (Gurgaon) reported in 2005 (182) E.L.T. 191 (Tribunal-Delhi) submitted mere deduction of some amount from the price payable by the buyer in respect of the goods supplied by the manufacturer on account of breach of conditions of the contract between the manufacturer and the buyer cannot be a gro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ned till tomorrow, the 8th of July, 2010. Resumed on 8th July, 2010. Having heard for some time the learned Advocate for the respondents as the 8. Tribunal's hearing time being over, further hearing is adjourned to 15th July, 2010. Resumed on 15th July, 2010. The learned DR drawing attention to the memo of appeal submitted that the 9. impugned order is sought to be challenged on three grounds. Firstly, the refund has been allowed wholly on the ground that the burden of duty claimed as refund had not been passed over to the buyers by the respondents while ignoring other relevant aspects of the matter. Secondly, the Commissioner (Appeals) failed to take note of the fact that in terms of the agreement and the purchase order, the prices for the goods to be supplied were clearly agreed upon and deductions on account of late delivery of goods could not amount to price variation. Thirdly, the concept of price variation is to be considered, bearing in mind, the concept of "transaction value" and not on the basis of use of the threshold "price variation" in the contract between the parties. He has placed reliance in the decisions in the matter of Bhartia Cutler Hammer Ltd., BP....
X X X X Extracts X X X X
X X X X Extracts X X X X
....plied by the respondents to M/s. U.P. Power Corporation Ltd. was fixed under the contract and the same remained static and firm, even in case of late delivery. This fact cannot be disputed is also apparent from the terms of the contract. Only aspect which is sought to be vehemently argued on behalf of the respondents is relating to effect of the right of the consignee of the product supplied by the respondents for the deduction which can be made by the said consignee from the price payable to the respondents for such late supply of goods in view of Clause 27 of the purchase order, which reads thus : "If the contractor shall fail in the due performance of his contract within the time fixed by the contract or any extension thereof, the contractor agrees to accept a reduction of the contract price by half percent per week reckoned on the contract value of such portion only of the plant as cannot, in consequence of the delay, be sued commercially and efficiently during each week between the appointed or extended time, as the case may be, and the actual time of acceptance under Clause 29, and such reduction shall be in full satisfaction of the contractor's liability for delay but shall....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on clause under 2.18 is concerned it relates 14. to the price in general as prevalent in the market. It specifically uses the phrase "the relevant indices of applicable price variation formula". Undoubtedly, the third sub-para of the clause also relates to the situation arising on account of late delivery subsequent to the price variation. It does not relate to price variation on account of late delivery. But it relates to the right of the consignee for reduction even from the price varied, in case of late delivery. In other words, in case of late delivery the Clause 2.18 provides for the right of the consignee not only to pay the price as per the price variation but also to exercise the right assured under Clause 27 quoted above. Being so, the contents of Clause 2.18 cannot be read into Clause 27, though the contents of Clause 27 will have to be read in Clause 2.18 even after establishing the price variation. The method of ascertaining the price variation is also specified in Clause 2.18, but the same does not include the case of deduction from price on account of late delivery, as specified under Clause 27. The Tribunal in Telk Ltd. case was dealing with the issue as to whe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bunal referring to a 17. similar situation and after taking note of Section 73 of the Indian Contract Act as well as one of the terms of the agreement between the parties which provided that in case of delay in supply of the goods on the part of the consignor, liquidated damages at the stipulated rate shall be payable by the consignor and shall be deducted from the consignor invoices, held that : "The question of payment of damages arises when there is a breach of the contractual clause regarding time for performance. The parties stipulated time for performance, and provided for breach of contract, and payment of liquidated damages. The mode of payment has also been stipulated by providing that the amount will be deducted from the invoice price. When the contract goes through price is payable. Compensation is payable to the buyer when there is a breach of contract. Damages or compensation cannot be regarded as price or part of price. The provision for the deduction of the quantum of damages from the invoice price is only for the purpose of recovery of the damages. Payment of damages cannot be regarded as reducing the agreed price. The price remains constant, namely at the agr....