2011 (7) TMI 263 - AT - Central Excise

Refund - in terms of the Purchase Order dt. 22.09.2006, the appellants supplied 16 transformers declaring the value at Rs. 23,52,00,000/- and paid excise duty amounting to Rs. 3,84,78,720 - According to the Price Variation Clause, the prices of the goods can be increased or decreased subsequently based on the Price formula prescribed by India Electric and Electronics Manufacturers Association (IEEMA) - The prices were reduced by the buyer unilaterally in terms of the price variation clause contained in the purchase order - The certificate issued by PSEB clearly shows that excise duty amounting to Rs. 3,69,48,023/- has been reimbursed to the appellants against the excise duty paid was Rs. 3,84,78,720/- resulting in an excess payment of Rs. 14,44,529 - in case where the duty is paid provisionally under the Act or rules made thereunder the claim for refund can be lodged within a period of one year from the date of adjustment of duty after the final assessment thereof - Since the price variation clause empowers the buyer to reduce the price subsequent to the clearance of the goods and actually the price is reduced, therefore, the manufacturer is entitle for refund of the difference between the amount actually paid and amount becoming payable in terms of modified price - Such a variation of price or lesser payment of price subsequent to the clearance of the goods either on account of some agreement between the manufacturer and the buyer which has no sanction under the statute dealing with the duty liability can be of no help to the assessee to claim refund Regarding contention about non applicability of principles of unjust enrichment - Merely because the manufacturer receives an amount lesser then what has been disclosed in the invoice issued at the time of clearance of goods and payment of duty that itself cannot construe to means that the manufacturer has not passed on the burden of excise duty on the customer - Such receipt of lesser amount could be for various reasons, being so, it cannot be said that the principles of unjust enrichment would not be applicable in relation to the cases of the type in the matter in hand - Decided against the assessee

Summary

Issues Involved:
1. Entitlement to refund of excise duty due to price reduction.
2. Relevance of provisional assessment for refund claims.
3. Applicability of principles of unjust enrichment.

Issue-Wise Detailed Analysis:

1. Entitlement to Refund of Excise Duty Due to Price Reduction:
The appellants, engaged in manufacturing electric transformers, entered into a contract with Punjab State Electricity Board (PSEB) which included a price variation clause. Initially, the appellants paid excise duty based on the higher price stated in the invoices. However, due to the price variation clause, the final price paid by PSEB was lower, leading to an excess payment of excise duty by the appellants. The appellants claimed a refund of this excess amount, which was initially sanctioned by the Assistant Commissioner but later rejected by the Commissioner (Appeals). The Tribunal noted that there is no provision under the Central Excise Act, 1944, that allows for a refund of excise duty based on a subsequent reduction in price after the clearance of goods. The duty liability is determined at the time of removal of goods, and any subsequent price variation does not affect this liability.

2. Relevance of Provisional Assessment for Refund Claims:
The appellants argued that provisional assessment was not mandatory and cited Rule 7 of the Central Excise Rules, 2002, which allows for provisional assessment if the assessee is unable to determine the value of excisable goods or the applicable duty rate. The Tribunal, however, emphasized that the appellants did not request a provisional assessment and that the duty was paid based on the value disclosed in the invoices at the time of clearance. The Tribunal concluded that the absence of a provisional assessment does not entitle the appellants to a refund based on subsequent price reductions.

3. Applicability of Principles of Unjust Enrichment:
The appellants contended that the principles of unjust enrichment do not apply as the excess duty paid was not passed on to the buyers. They provided certificates from PSEB and a Chartered Accountant to support their claim. However, the Tribunal held that merely receiving a lesser amount than what was disclosed in the invoices does not automatically prove that the burden of excise duty was not passed on to the buyers. The Tribunal noted that the receipt of a lesser amount could be due to various reasons unrelated to excise duty. Therefore, the principles of unjust enrichment were applicable, and the appellants failed to establish that they did not pass on the duty burden to the buyers.

Conclusion:
The Tribunal dismissed the appeal, affirming the order of the Commissioner (Appeals) and holding that the appellants were not entitled to a refund of the excess excise duty paid due to the subsequent reduction in price. The Tribunal emphasized that the duty liability is determined at the time of removal of goods, and any subsequent price variation does not affect this liability. The principles of unjust enrichment were applicable, and the appellants did not sufficiently prove that they had not passed on the duty burden to the buyers.