Brief of the Case
Supreme Court has held in the case of CCE v M/s Indorama Synthetics (I) Ltd. of India held that the surrendering of advance licence in order to receive the products at lower rate will be considered as “additional consideration” under section 4 of Central Excise Act, 1944.
Facts of the Case
The Assessee is engaged in the manufacture of polyester chips, polyester staple fibre, polyester filament yarn and other goods. The goods were cleared as ‘deemed exports’ to advance licence holders which were at a price lower than what was being charged to the other buyers who did not hold an advance licence. According, to the Revenue the reason for selling the goods to the aforesaid particular class of buyers at a lesser price was that the assessee had received ‘additional consideration’ and, therefore, its inclusion was necessitated having regard to the formula provided for arriving at the ‘transaction value’ contained in the statutory scheme.
On surrender of advance licence with the aforesaid buyers, the assessee could receive drawback from the Director General of Foreign Trade as per the Export-Import Policy and this was stated to be the additional consideration.
Order of the Commissioner
The ld. Commissioner was of the view that price was not the sole consideration flowing from the buyer to the assessee.
Judgment of the Hon’ble Tribunal
The Hon’ble Tribunal, relied on the case of IFGL Refractories Ltd. v. Commissioner of Central Excise, Bhubaneswar-II 2001 (134) ELT 230, wherein it was held that statutory benefits allowed by statutory authorities cannot be considered as additional consideration flowing to a manufacturer from the buyer. The drawback was received from the Government and not from the buyers and, therefore, such drawback could not be treated as additional consideration for the purpose of arriving at ‘transaction value’ as per the definition thereof under Section 4 of the Act.
Held by the Hon’ble Supreme Court
