TaxTMI 
TaxTMI 
2013 (12) TMI 81
X X X X Extracts X X X X
X X X X Extracts X X X X
....he assessee, the manufacturer and supplier of goods occurred subsequent to 1.7.2000 is not in dispute. Prior to 1.7.2000, Section 4 of the Central Excise Act, 1944 (the Act), in so far as is relevant for the purposes of the present case, read as follows:- Section 4. Valuation of excisable goods for purposes of charging of duty of excise (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to value, such value, shall, subject to the other provisions of this section, be deemed to be - (a) the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale 4. With effect from 1.7.2000, as a result of provisions of Act 10 of 2000 (Finance Act, 2000), vide Sec. 94 thereof, Section 4 of the Act was substituted. To the extent relevant and material to the present appeal, Section 4 (1) (a) of the Act, (post the amendment) reads: (1) Where under this Act, the duty of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of reference identified a conflict of opinion between decisions of the Tribunal, in United Telecom Ltd. Vs CCE Bangalore - 2006 (204) ELT 626 (Tri.-Bang.) and subsequent decisions, particularly, in CCE Noida Vs Electron Energy Equipments Ltd. - 2011 (264) ELT 153 (Tri.-Del.). There are other decisions referred to in the order of reference, which followed the decision in United Telecom Ltd. (supra). Hence the reference to the Larger Bench. 9. In MRF Ltd. Vs CCE Madras - 1997 (92) ELT 309 (SC), the Supreme Court, considering provisions of Section 4 (prior to amendment in 2000) and approving an earlier decision of this Tribunal in Indo Hacks Ltd. Vs Collector of Central Excise, Hyderabad - 1986 (25) ELT 69 (Tribunal) ruled that once the assessee had cleared the goods on the classification and price indicated by him at the time of removal of goods from the factory gate, the assessee becomes liable to payment of duty on that date and time and subsequent reduction in prices for whatever reason cannot alter the transaction value and liability to duty thereon. The court ruled that subsequent fluctuation in prices of the commodity has no relevance whatsoever so far as the liability to ex....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n item of expenditure which can be deducted for arriving at the assessable value. 12. The Tribunal in Faridkod Cooperative Sugar Mills Ltd. Vs CCE Ludhiana - 2004 (171) ELT 174 (Tri.-Del.) , followed its earlier decisions in Spring Fresh Drinks Vs Collector - 1991 (54) ELT 333 (Tribunal) ; Commissioner Vs Bhagwati Oxygen Ltd. - 2000 (117) ELT 647 (Tribunal) and Inox Air Products Ltd. Vs Commissioner - 2001 (134) ELT 224 (Tribunal) , to hold that liquidated damages received by the assessee cannot be added to the assessable value. The facts in Faridkod Cooperative Sugar Mills Ltd. were slightly distinct. The assessee was a manufacturer of molasses. One of the distilleries with which an agreement for supply of molasses was entered into did not lift the allocated quantity of molasses during the relevant period. Consequently, the assessee had to sell molasses at a lower price and thereafter received liquidated damages on account of the failure of the distillery to lift molasses as agreed upon. Revenue assumed that the amount of liquidated damages received is liable to be added to the assessable value of molasses cleared by the assessee to different purchasers, for computation of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....st be considered a penalty and was not in the nature of a stipulation in terrorem. The stipulation was clearly in the nature of liquidated damages and not penalty, ruled the Tribunal. After referring to the definition of the expression "transaction value" under Section 4 (3) (d) of the Act, the Tribunal held that the definition of the term "transaction value" represents the price actually paid or payable for the goods. In that case, even though a price is fixed for the goods, qua the contract, the goods are required to be delivered on a particular date and if there is delay in delivery, the price is reduced depending on the delay. As a result of such adjustments, the assessee received a lesser payment, which was the transaction value. On this factual basis, the Tribunal concluded that the provision in the contract, for variation in the price by application of the clause, was related to liquidated damages and the same is in the nature of a compensation payable for delayed delivery in the supply of goods and not in the nature of penalty. The Tribunal concluded that in terms of the definition of "transaction value", duty is payable only on the price arrived at by taking into account t....