By TIOL News Service

MUMBAI, JULY 31, 2017: IN This Revenue appeal, the dispute pertains to clearance of ‘polyester staple fibre' to some customers who were in possession of import licences.

It is the contention of the appellant-Commissioner that the price was lower than that charged from other buyers who were not similarly situated.

While the original authority had confirmed demand of Rs.29,74,609/- arising thereon and imposed penalty of like amount, the Commissioner(A) set aside the demand on the ground that the investigation had failed to adduce evidence of additional consideration flowing from the buyer to the appellant to sustain enhancement of the assessable value by Rs.1,84,13,379/-.

In doing so, the first appellate authority has distinguished the circumstances from that in the decision of IFGL Refractories Ltd - 2005-TIOL-103-SC-CX

As mentioned, Revenue is before the CESTAT whereas none appeared for the respondent.

After considering the submissions made by the AR, the Bench observed –

"5. We do appreciate the logic in the plea that benefits of transfer by buyer to seller of goods of licence for duty-free imports, would constitute economic gain for the recipient which is amenable to quantification as additional consideration. The appellant-Commissioner has relied upon the terms of contract requiring invalidation of licence issued to customer of respondent as conferring a gain to the respondent without throwing light on the economic consequences of such invalidation. It would appear that the buyers of the respondent in the impugned transactions had been issued with licences for import of raw materials for use in the manufacture of export products, and instead of procuring from abroad, opted to source them from respondent. Needless to say, the licence, being rendered superfluous, was liable for any incentives prescribed in the Foreign Trade Policy. We also do not find any flaw in the reasoning of first appellate authority that in re IFGL Refractories Ltd. the assessee having charged price, contingent upon transfer of advance licence and otherwise, the differential amount could be treated as additional consideration whereas the present dispute pertains to clearance effected to two different buyers."

Concluding that there was no reason to interfere with the impugned order, the Revenue appeal was rejected.

(See 2017-TIOL-2670-CESTAT-MUM)