TaxTMI 
TaxTMI 
TaxTMI 
2020 (1) TMI 141
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.... M/s Amiantit Fiber Glass Industries India Pvt Ltd, Village Navelim (near Amona), Taluka Bicolim, North Goa 403505 are liable to pay interest at the applicable rate under Section 11AB of the Central Excise Act, 1944 on the differential Central Excise duty of Rs. 45,17,372/- paid by them and accordingly direct them to pay the same forthwith. (iii) I drop all further proceedings proposed in the Show Cause Notice." 2.1 Respondent use various types of resins and glass fiber as main raw materials, which they procure indigenously or by way of import. They avail admissible CENVAT Credit of duty paid on inputs and other raw material procured by them. They also avail import duty concessions under EPCG scheme for procurement of raw materials, used in manufacture of FRP tanks supplied as Capital Goods to the user holding EPCG Authorization i.e. M/s Reliance Industry Ltd., Mumbai. 2.2 Investigations conducted by DGCEI revealed that though the EPCG License were issued to M/s Reliance were on the premise that these equipments (Fiber Glass Tanks) will be installed in SEZ/ EOUs engaged in the manufacture of HSD for exports, these capital goods were used by them in their petrol pumps/ fillin....
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....les, 2002. 2.5 Show Cause Notice was adjudicated by Commissioner as per impugned order, referred in para 1, supra. 2.6 Committee of Chief Commissioner reviewed the order of Commissioner and directed the appeal to be filed against the same on the following grounds: * Duty amount of Rs. 5.92 Crores paid by the buyer towards import duty has effected the sale value of goods; * By application of Rule 6 of Central Excise Valuation (Determination of Price of Excisable Goods), Rules, 2000, the value of the goods for determination of duty shall include any additional consideration flowing from the buyer to assessee, which, in this case is the import duty paid by the buyer to the Respondents. This amount is additional consideration and should have be added to the assessable value. * The decision in case of IFGL [2001 (134) ELT 230 (TDel)] is not applicable to the facts of case. * Respondents had attempted to manipulate the booking of said additional consideration as advance in their books of accounts with the purpose of avoiding proper payment of Central Excise Duty. They manipulated the aid amount in their books of account by showing the same as advance and not as credit rec....
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.... 12. With respect to pricing of the tanks supplied/sold by using the imported raw material in pursuance of the said purchase orders requiring use of EPCG and Non EPCG inputs, Smt. Dias clarified that since M/s. Amiantit had availed the duty benefit in case of EPCG imports, therefore, for execution of purchase order dated 18.03.2004, the price charged by M/s. Amiantit for supply of PRP tank was lesser than the price charged for FRP tanks in respect of non EPCG supply. Smt. Dias further explained that import of raw material under the EPCG scheme was intended for manufacture of tanks to be installed as capital goods by M/s. Reliance for specified or notified purpose; that, however, as per letter F.No.03/37/21/1458/AM04 dated 17.10.2005, the licensing authority viz. DGFT required M/s. Reliance to forgo the duty benefits on the import made under the said licenses, duly invalidated in the name of M/s. Amiantit and, therefore, M/s. Amiantit has paid, under protest, Customs and other duties with interest, aggregating to Rs. 5.92 crores. She also produced copies of the said letter and the proof of payment. 13. Smt. Dias agreed that the price variation/difference between the EPCG supply a....
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.... that on surrender of advance licence with the aforesaid buyers, the assessee could receive drawback from the Government/Director General of Foreign Trade (DGFT) as per the Export-Import (EXIM) Policy and this was stated to be the additional consideration. Suffice it to point out at this juncture that the Revenue issued five separate show cause notices asking the assessee to pay the differential duty as the said additional consideration was to be included while arriving at the 'transaction value' of the said goods in terms of Section 4 of the Central Excise Act, 1944 (hereinafter referred to as the 'Act') read with Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 (hereinafter referred to as the 'Rules'). The assessee challenged the stand of the Revenue by filing replies. After examining the matter, the Commissioner took the view that price was not the sole consideration flowing from the buyer to the assessee. Not only such buyers, who were sold the goods at a lower price, were 'related persons', even the goods were sold at depressed price. Therefore, the Commissioner confirmed the demand of differential duty as mentioned in the show cau....
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....ondents getting the licences had nothing to do with any Import and Export Policy. It was directly a matter of contract between the two parties. This resulted in additional consideration by way of "advance intermediate licence" flowing from M/s. Visakhapatnam Steel Plant to the respondents. The value received therefrom is includible in the price. The Tribunal was wrong in stating that such an arrangement can never be placed upon the platform of additional consideration. In so stating the Tribunal has ignored and/or lost sight of the fact that it was in pursuance of the contract of sale between the respondents and M/s. Visakhapatnam Steel Plant that the licences were made available to the respondents. The Export and Import Policy had nothing to do with the arrangements/contract under which the licences flowed from the buyer to the seller. At the cost of repetition it must be mentioned that had the respondents had advance intermediate licence on their own i.e. without M/s. Visakhapatnam Steel Plant having to surrender its licences for the purposes of the contract, then the reasoning of the Tribunal may have been correct. But here, in pursuance of the contract of sale, there is directl....
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....cence was to be invalidated for direct import and permission in the form of ARO was to be issued entitling the supplier of the goods the benefits of deemed export. Para 10.2 of the EXIM Policy laid down the categories of supply which would be recorded as 'deemed exports' under the policy. The first such clause (a) was 'supply of goods against advance licence/DFRC under the duty exemption/ remission scheme. Under para 10.3, benefits for deemed exports were specified. Advance licence for intermediate supply/deemed export was specified as one of the benefits for deemed exports. 8. The aforesaid narratives would demonstrate that the assessee could get the duty drawback and it could happen when advance licence holder category of buyers got their advance licences invalidated thereby surrendering the benefits accrued under such advance licence. Issue for consideration is as to whether it would constitute 'additional consideration' received by the assessee as per the definition of 'transaction value' contained in Section 4 of the Act read with Rule 6 of the Rules. We, therefore, shall reproduce the relevant portion of the provisions of Section 4 which existed at the material time, which....
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....ranty commission etc. In the present case, we are not concerned with this aspect. However, Rule 6 of the Rules specifies that if the goods are sold in the circumstances specified in clause (a) of sub-section (1) of Section 4, then the value of such goods shall be deemed to be the aggregate of such transaction value plus the 'amount of money value of any additional consideration flowing directly or indirectly from the buyer to the assessee'. The implication of this Rule is that any form of additional consideration which flows from the buyer to the assessee, monitory value thereof is to be included while arriving at the transaction value. It is not necessary that such an additional consideration is to flow directly and even indirect consideration is includible. It is in this context we have to examine as to whether the consideration in the form of drawback, which accrued in favour of the assessee, could be connected with the buyer. To put it otherwise, though the immediate source of the duty drawback is the Government, whether its flow can be traced back to the buyer? If it is so, it may become a case of indirect consideration coming from the buyer and can be added to the transaction....
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....tion between the buyers and the assessee was seen in isolation. However, in the present case, it needs to be emphasized at the cost of repetition that the resultant effect of invalidating the advance licence by the buyer was issuance of licence for intermediate supply in favour of the assessee and the said licence enured certain benefits in favour of the assessee. In the present case, on these facts, we have to simply see as to whether the definition of 'transaction value', as contained in Section 4 of the Act read with Rule 6 of the Rules, would encompass this benefit as amounting to additional consideration. Our conclusion is that it would come within the ambit of additional consideration indirectly flowing from the buyers to the assessee. Therefore, the instant case is more akin to the decision in Re Soames. 18. At this stage, we would like to recall the following findings arrived at by the Commissioner, which are not upset by the Tribunal in the impugned decision or even disputed by the assessee : (a) The assessee had supplied goods to a particular type of buyers at much lower price than the price charged from the general buyers in the normal course of trade as it had obt....