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2011 (8) TMI 873 - AT - Central ExciseRefund - Principle of unjust enrichment - Provisional assessment - High Court in the case of Mauria Udyog Ltd. vs. C.C.E. reported in 2006 -TMI - 929 - HIGH COURT OF PUNJAB & HARYANA (CHANDIGARH) . It was clearly held therein that once it is not shown that the clearance of goods was made on provisional basis, reduction of price at a later date could not be made foundation for seeking refund - Decided against the assessee
Issues Involved:
1. Principle of unjust enrichment. 2. Provisional price versus provisional assessment. 3. Applicability of Section 11B of the Central Excise Act, 1944. 4. Refund claims based on subsequent price reduction. Detailed Analysis: 1. Principle of Unjust Enrichment: The primary issue in these appeals is whether the refund claims are hit by the principle of unjust enrichment. The lower appellate authority dismissed the Department's appeals, holding that the principle of unjust enrichment did not apply because the clearances of goods were on a provisional basis, as per decisions in Telephone Cables Ltd. vs. C.C.E., Chandigarh and Birla Ericsson Opticals Ltd. vs. C.C.E., Bhopal. However, the Tribunal found this contrary to the law laid down by the Larger Bench in Grasim Industries (Chemical Division) vs. C.C.E., Bhopal, which held that the claim for refund was not maintainable as it was hit by the principle of unjust enrichment. 2. Provisional Price versus Provisional Assessment: The respondents contended that the sales were on a provisional price basis, and the final prices were lower, justifying the refund claim. However, the Tribunal clarified that there is no concept of "provisional price" under the law. Instead, the correct procedure would be to seek a provisional assessment if there is any doubt about the price at the time of clearance. The Tribunal emphasized that any arrangement between the parties regarding the price cannot override statutory provisions. 3. Applicability of Section 11B of the Central Excise Act, 1944: The Tribunal referred to Commissioner of Central Excise, Madras vs. Addison & Co., which elucidated that the assessee is entitled to a refund only if it can prove that the duty burden has not been passed on to the customers. If the duty burden has been passed on, the buyer is entitled to the refund, not the assessee. This principle was reinforced in Sangam Processors (Bhilwara) Ltd. vs. C.C.E., Jaipur, which held that issuing credit notes to customers after passing on the duty burden does not entitle the assessee to a refund under Section 11B. 4. Refund Claims Based on Subsequent Price Reduction: The Tribunal reiterated that once goods are cleared at the price indicated in the invoice, subsequent price reductions cannot affect the duty liability. This was supported by the decision in MRF Ltd. vs. C.C.E., Madras, where the Supreme Court held that subsequent price reductions are irrelevant to the liability to pay excise duty. Similarly, Mauria Udyog Ltd. vs. C.C.E. and Commissioner of Central Excise, Delhi IV vs. CESTAT held that subsequent price reductions do not justify refund claims. Conclusion: The appeals by the Department were allowed, and the impugned orders granting refunds were set aside. The Tribunal concluded that the authorities erred in allowing the refund by ignoring the principle of unjust enrichment and statutory provisions. The refund claims were dismissed, emphasizing that any post-clearance price adjustments between the parties cannot override the statutory requirement of duty payment based on the invoice price at the time of clearance.
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