Order Date – 29 November 2023

Parties: M/s. JTEKT India Ltd. Vs The Commissioner of GST & Central Excise

Facts –

• The Appellant, M/s.JTEKT India Ltd., are engaged in the manufacture of Automotive Steering gears and parts. The appellant has paid excess duty on parts imported and anticipating that the cost difference would be approved by the customer M/s.Mando India. 
• However M/s.Mando India didn’t accept the revision and agreed to pay loan to the appellant which repaid by adjustment in the clearances made to M/s.Mando India. The excess duty was paid by the appellant using their cenvat account.
• Accordingly they raised a debit note including the excess duty paid, however M/s.Mando Indiadid not agree for the price revision and did not honour debit notes. Therefore they filed a refund claim of the excess duty paid. The refund was rejected by the Commissioner (Appeals).

Issue –

• Whether the amount raised in debit notes by the appellant as the cost difference would form part of the transaction value or not?

Order –

• The Tribunal observed that debit notes have been raised after the clearances of the goods i.e. after sale of the goods. Further, the repeated communications by M/s.Mando India shows that they have never accepted to honour the increased price or the cost difference. If M/s.Mando India had agreed to pay the higher revised price it would definitely form part of the transaction value. As per the purchase orders or as per the communications between the parties there is no evidence to show that M/s.Mando India has agreed or is liable to pay the cost difference.
• Further the loan advance to the appellant by M/s.Mando India cannot be considered as an additional consideration or a consideration that has influenced the price agreed between the parties. The loan has been completely repaid by the appellant by adjusting in the invoices while making clearances of the products to M/s.Mando India. Further the debit notes have been raised subsequent to sale.
• Therefore, the higher revision of price not agreed by the buyer cannot form part of transaction value. The debit notes do not form part of transaction value. The excise duty paid is therefore excess.
• Hence it was held that the Commissioner (Appeals) has erred in allowing the appeal filed by the department and in upholding the order of recovery of erroneous refund passed by the adjudicating authority. It was held that the appellant is eligible for refund.