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2015 (11) TMI 1474
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....ermined under Section 4(1)(a) of the Central Excise Act, 1944 (hereinafter referred to as the 'Act'). 1.2 Consequent to the judgment of the Apex Court in the case of Commissioner of Central Excise Vs. FIAT India Pvt. Ltd. reported in 2012 (283) ELT 161 (SC), the officers of LTU, Delhi, with which the appellant company is registered for central excise, sought details of the manufacturing cost /transaction value from the appellant and accordingly, the appellant submitted the details of the cost of production under their letter dated 19.12.2012. It was from the cost data made available by the appellant regarding cost of production of various models of cars and the transaction value of the same models, it appeared that the cost of production of Jazz, Brio, City, Civic, Accord, CRV and Amaze models of cars manufactured by the appellant was much higher than the price at which the cars were being sold through their dealers to the ultimate customers. Selling of the cars at a price below the cost of production appeared to indicate existence extra commercial consideration while fixing of the price of the cars. In view of this, the investigating officers took the view that the transaction ....
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....ant date. Accordingly by this order, she confirmed the duty demand of Rs. 95,61,79,874/- for the period from Jan. 2012 to November, 2012 under Section 11 A of the Central Excise Act along with interest under Section 11 AB ibid and she did not impose any penalty on the appellant under Section 11 AC. The duty demand of Rs. 29,54,73,189/- being beyond the period of one year from the relevant date was dropped. Against this order of the Commissioner, this appeal has been filed along with stay application. 2. Heard both the sides in respect of stay application. 3. Shri V. Laxmikumaran, Advocate, ld. Counsel for the appellants, pleaded that the show cause notice has been issued on 8.2.2013 for demand of duty of Rs. 1,64,31,68,579/- in respect of the cars of various modals viz. Accord, City, Civic, Jazz, Brio, CRV and Amaze cleared during the period of Jan. 2008 to November, 2012 on the ground that during this period, the sale price of the cars was influenced by the considerations other than the price, as the cars had been sold at the price below the manufacturing cost to compete in the market and on this ground, the Commissioner by impugned order has rejected the transaction value o....
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....eriod of dispute are comparable in with the prices of the comparable cars being manufactured by other manufacturers, that the price of any manufactured product is determined by the demand and supply and depending upon the demand and supply, the prices are increased or decreased and the manufacturer in this regard cannot always keep the prices above the cost of the production, that in such circumstances, the judgment of the Apex Court in the case of Fiat India Ltd. (supra) would not apply, even if the goods have been sold at a loss, that in the appellant's case, it is the judgment of the Apex Court in the case of Collector of Central Excise, New Delhi Vs. Guru Nanak Refrigeration Corporation reported in 2003 (153) ELT 249 (SC), which would be applicable and wherein it has been held that in absence of any evidence of flow back from the buyers to the assessee, just because the sale price of the goods, declared as 'normal price' , was below the cost of production, it cannot be alleged that the sale price was not the 'normal price', that the Apex Court in its judgment in the case of Fiat India Ltd. (supra), has not over-ruled its earlier judgment in the case of Guru Nanak Refrigeration ....
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....2012-2013, the company issued 209,973,753 equity shares of face value of Rs. 10 per share at premium of Rs. 53.03 per share for an aggregate value of Rs. 1300 cores on right basis, as no investor would invest in equity shares of a company at a huge premium when the company is a loss making company, that the appellants case is squarely covered by the Board's Circular No.979/3/2014-CX dated 15.1.2014 interpreting the Apex Court's judgement in the case of Fiat India Ltd. (supra), wherein the Board has clarified that the Apex Court in this judgment has not ruled that transaction value can be rejected in all cases where the declaration value is lower than the manufacturing cost and profit, as, as mentioned in para 66 of the judgment, the Apex Court had declined to hold its earlier judgment in the case of Guru Nanak Refrigeration (supra) as per incurium and has distinguished its earlier judgment on the basis of the facts of this case, that it has further been clarified that the Apex Court in para 50 of its judgment in case of Fiat India Limited has cited two instances where a manufacturer may sell the goods at a price lower than the cost of manufacture and yet the declared value can be ....
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....hich have been given by the appellant themselves, it is clear that during the period of dispute, the cars were being sold deliberately at a lower price than the manufacturing cost and profit in order to penetrate the market, that in para 5.6 and 5.8 of the impugned order, it is mentioned that the appellant were selling their cars at a price lower than the manufacturing cost and manufacturing profit in order to compete in the market and as such, the price was influenced by extra commercial consideration. He also pointed out to para 5.13 and 5.13.1 of the impugned order passed by the Commissioner, wherein the Commissioner has given a finding that during 2010-2011, 2011-2012 and 2012-2013, the appellant company had suffered losses of Rs. 213 crores, 604 crores and 1101 crores respectively, from which it is clear that the goods were sold at loss marking price, which cannot be accepted as normal price, as such, loss making price was influenced by extra commercial consideration for competing in the market with other manufacturer who also manufactured similar cars. He, therefore, pleaded that the appellant have not been able to establish prima facie case in their favour. 4. We have con....
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.... other taxes, if any, actually paid or actually payable on such goods." 6. In this case, there is no allegation that the appellant were receiving any amount from their buyers over and above the price being charged by them. There is also no allegation that the appellants customers (dealers), in terms of any agreement with the appellant, were incurring certain expenses related to manufacture or in connection with the advertisement or publicity of the goods or selling organisation, expenses etc. The departments objection is that in these cases, the price is not the sole consideration for sale as the appellant in order to compete with the other manufacturer manufacturing the similar goods have sold their cars at a price below the manufacturing cost and manufacturing profit. This ground for rejecting the declared transaction value is clear from the Commissioner's findings and observations in para 5.6, 5.8 and 5.13.1 which are reproduced below:- "5.6 A plain reading of Section 4(1)(a) of the Act ibid reveals that the valuation of excisable goods chargeable to duty of excise on ad-valorem basis would be based upon the concept of transaction value provided (i) where the goods....
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....f production for their cars is higher, they are selling the cars at a lower price to compete with the other manufacturers of similar cars. This is certainly a factor in depressing the sale price to an artificial level; and lastly, the full commercial cost of the manufacturing and selling was not reflected in the lower price". 6.1 Though in this para, the Commissioner has observed that the noticee have themselves admitted that the lower price of the cars was not based on the manufacturing cost and manufacturing profit and they fixed lower price to 'penetrate/compete' the market, we prima facie, do not find any admission by the Appellant in their reply to show cause notice or at the time of personal hearing that in order to penetrate the market and increase their market share, they were selling the cars at below the cost of production. In any case, the expressions 'penetrate the market' and 'compete with other manufactures of similar goods' cannot be equated as, while fixing price of the goods manufactured keeping in view the price at which comparable goods are being sold in the market by competitors is a commercial compulsion and such price cannot be said to be influenced by extr....