COMMISSIONER OF CENTRAL EXCISE, BHUBANESHWAR-11 versus M/S IFGT REFRACTORIES LTD.

Citation: [2005] SUPP. 2 S.C.R. 480 · Decided: 09-08-2005 · Supreme Court of India · Bench: S.N. VARIAVA · Disposal: Disposed off

Judgment (excerpt)

A 
COMMISSIONER OF CENTRAL EXCISE, BHUBAN.SSHWAR-11 
B 
c 
D 
v. 
MIS IFGT REFRACTORIES LTD. 
AUGUST 9, 2005 
[S.N. V ARIA VA AND DR. AR. LAKSHMANAN, JJ.) 
Central Excise Act, 1944/Export and Import Policy, 1992; Duty 
Exemption Scheme : 
Valuation-Refractories-Contract of sale between assessee-vendor 
and vendee-Vendee surrendering Advance Licence for import in terms of 
the contract-In lieu thereof the assessee availing benefit under 
Duty Exemption Scheme---Revenue holding it is additional consideration 
forming part of the purpose of levy of excise duty-Reversed by 
the Tribunal-On appeal, Held : Price includes money value of 
additional consideration flowing either directly or indirectly from buyer to 
seller in a contract of sale of goods-Assessee did not have any advance 
licence of their own for availing benefit under the Scheme-Assessee received 
the benefit under the Scheme only due to surrender of the Import Licence 
by the vendee-The benefit so received by the assessee could be termed as 
E 
additional consideration-Since there was a direct flow of additional 
consideration from buyer to seller-the assessee, tribunal was wrong in 
reversing the order of the Revenue-Since Tribunal did not consider the 
aspect of limitation, the matter is remitted to Tribunal to decide only on the 
issue of extended period of limitation-Sale of Goods Act. 
F 
G 
Respondent-man!-'facturer of refractories entered into contract with 
Mis. Vishakapatnam Steel Plan!-vendee for selling its product at certain 
1 
price. Jn lieu of the contract, vendee surrendered the Advance Licence 
to enable the assessee to avail of benefit under the Duty Exemption 
Scheme in terms of the Export and Import Policy, 1992. Revenue claimed 
that the benefit accrued to the assessee was an additional consideration 
towards the value of the goods and formed part of the price for the 
purpose of excise duty. The Tribunal allowed the appeal of the assessees. 
Hence the present appeal. 
H 
Disposing of the appeal, the Court 
480 
COMMR. OF C.E. v. lFGT REFRACTORIES LTD. 
481 
HELD : I. I. The Rules provided that "price" would be actual price 
A 
paid by the buyer plus the money value of additional consideration 
flowing directly or indirectly from the buyer to the seller in connection 
with the sale of goods. Such a provision has now been incorporated in 
Section 4 of the Central Excise Act itself. Thus, if any additional 
consideration is received from the buyer in connection with the sale of 
goods, then the additional consideration forms part of the price for 
purposes of excise duty. [483-G-H; 484-A-B] 
B 
1.2. It is only because of the Contract of Sale that the Vendee 
surrendered their Advance Licences to enable assessee to get Advance 
Intermediate Licences for purposes of meeting their obligations under the 
C 
contract. That the assessee have received an additional consideration/ 
benefit is clear from the letters written by the Respondents to the vendee 
in pursuance of the tender floated. Had this additional benefit not flown 
to the Respondents, they would have sold the items as per their earlier 
offer. As the additional consideration was to flow to them, they have sold 
at the rates offered subsequently. The "additional consideration" is the 
difference in prices between these two. The Commissioner had thus 
correctly worked out this difference. [484-B-C; 485-G-HJ 
1.3. It is only because of the Advance Licences being surrendered 
by the vendee and in lueu thereof Advance Intermediate Licences having 
been made available to the assessee that the assessee could offer lower 
prices to vendee. This resulted in additional consideration by way of 
"Advance Intermediate Licence" flowing from the vendee to the assessee. 
The value received therefrom is includable in the price. [485-A-C] 
1.4. 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 had ignored and/or lost sight of the fact that it was 
in pursuance of the contract of sale that the Licences were made available 
D 
E 
F 
to the assessee. The Export and Import Policy had nothing to do with the 
arrangement/contract under which the Licences flowed from the buyer G 
to the seller. [485-A-C] 
2. Since the Tribunal has not considered the limitation aspect in view 
of the fact that it has allowed the appeal on merits, the matter is remitted 
back to the Tribunal. The Tribunal is directed to on

Excerpt shown. Read the full judgment & AI analysis in Lexace.