KeihIn Fie Private Limited. Vs. Commissioner of Central Excise, Pune-i - Court Judgment

Per : Ashok Jindal, Member (Judicial)

This appeal has been filed by the appellant against the rejection of refund claim under Section 11B of the Central Excise Act, 1944.

2. The facts of the case are that the appellant had cleared Carburetors to their customer, M/s. Hero Honda Motors Ltd. (HHML) under 36 invoices on payment of Central Excise duty. M/s. HHML had subsequently on receipt of the goods reduced the price and communicated that payments would be made to the appellants as per this reduce price. Based on this the appellant filed refund claim for Rs.2,61,629/- claiming that the reduce price was the transaction value on which duty was payable and therefore claimed that they were entitled for refund of excess duty paid on the goods cleared. Show cause notice was issued to the appellants denying refund on the ground that the mutual adjustment, subsequent to clearance of goods was not a transaction value under Section 4 of the Central Excise Act, 1944 and that the value of excisable goods shall be based on the value of such goods sold by the appellant for delivery at the time of removal of goods. The refund claim was rejected holding that subsequent reduction in price was a mutual adjustment and if the price was not known to the assessee at the time of clearance, the appellants should have resorted to provisional assessment. Same was confirmed by the appellate authority. Aggrieved from the same the appellant is before me.

3. The learned Advocate appearing on behalf of the appellant submitted that the

authorities below have wrongly invoked the provisions of Section 4(1) (b) of the Central Excise Act. In fact the transaction value is to be determined in this case as per Section 4(1) (a) of Central Excise Act, 1944. He submitted that in this case the sole consideration to arrive at the transaction value was the amount payable by the buyer. Infact the price paid by the buyer was less as compared to the invoice price and duty is liable to be paid on the price which have been received by the appellant from its buyer. He drew my attention to the definition of transaction value which is reproduced here as under:-

‘transaction value’ means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or nay other matter; but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods’.

and submitted that which clearly shows that price actually paid or payable for the goods. In this case the actual price received or payable was less than the invoice price. Hence appellant is entitled for refund claim. In support of his contention he placed reliance on Telephone Cables Ltd. Vs. Commissioner of Central Excise, reported in 2003 (154) ELT 237 (Tri.-Del.) wherein it was held that the ‘Refund-Price variation clause’ Excise duty paid on higher amount that received by the assessee as price of cables - Clearance of goods for the reduced price, under terms of agreement-provisional assessment though not made, claim for refund not to be rejected ‘Section 11B of Central Excise Act, 1944. He further relied on in the case of SKF India Ltd. wherein the Hon’ble Apex Court held that variation of price by virtue of retrospective revision of price the transaction value will be the actual payment received from the buyer.

4. On the other hand, the learned DR submitted that in this case when the actual price was not known to the appellant, the appellant has to sought provisional assessment but the appellant raised the bill as per their price list. Accordingly, goods were cleared on the price quoted in the invoice which is the transaction value at the time of clearance of the goods. Later on it was only a price adjustment between buyer and the seller. In that case appellant is not entitled for any refund. If the actual price was not known to the appellant, the appellant has sought provisional assessment, which he failed to do so. In that situation, appellant is not entitled for the refund. To support his contention he placed reliance on Shri Vighnahar SSK Ltd. Vs. Commissioner reported in 2009 (240) E.L.T. A80 (Bom.)].

5. Heard both sides.

6. On careful examination of the submissions made by both the sides. I find that it is a case of refund claim filed by the appellant on subsequent reduction of price by the buyer at the time of payment. It is true that the buyer M/s. HHML has not availed the Cenvat credit for the excess amount of invoice as per the actual payment made by M/s. HHML. But in this case, the appellants were known to the transaction value and accordingly they raised the invoice as per that value. It is only at the time of payment, the buyer reduced the price. No provisional assessment was sought by the appellant in this case as the appellant was known to the actual price which latter on reduced by the buyer himself at the time of payment. Hence, as per Section 4(1) (a), the transaction value is the value at which the price of the goods means the price payable by the buyer and while raising the invoice, the appellant was known the agreed price because the appellant has raised 36 invoices during the period from 17.7.2006 to 30.11.2007, Hence, in these circumstances, the case law cited by the Ld. DR is applicable to the facts of this case wherein the Tribunal had rejected the refund claim of the assessee holding that when the assessee has paid the duty at correct rate prevailing at the time of storing of molasses in Kutcha pits, the question of refund does not arises even when rate at which molasses cleared subsequently was reduced, which was upheld by the Hon’ble High Court of Bombay. The case law cited by the Ld. Advocate in the case of SKF India Ltd. deals with the differential duty payable on the subsequent revision of the price from retrospective effect wherein the demand was raised on supplementary invoices issued later on. Hence the decision of the SKF India is not relevant to this case. The case law cited by the Ld. Advocate in the case of Telephone Cables Ltd. (supra) is not applicable to this case. In fact in that case also the price was reduced at the time of clearance of the goods, which is not in this case. In fact, in this case the goods were cleared at the higher price and later on it was reduced by the buyer at the time of payment. Hence, the arguments advanced by the Ld. Advocate are not acceptable. Accordingly, I do not find any merit in the appeal, the same is rejected impugned order is upheld.