2014 (10) TMI 378 - AT - Central Excise

Denial of refund claim - short supply of goods - As the appellant failed to supply the specified quantity during a specified period, therefore, the payments were deducted by M/s. U.P. Power Corporation - appellant has not received full payment against the invoice raised for the clearance of the transformers - Held that - Clause of deduction of price was known prior to clearance of the goods. As appellant could not fulfill the terms of the agreement, therefore the buyer was entitled to deduct the amount from the invoice price. In these circumstances, whatever amount they have received less from the buyer, they are entitled to take refund of the duty component involved in the deducted amount. In these circumstances, relying on the decision of CCE vs. Victory Electricals Ltd. 2013 (12) TMI 81 - CESTAT CHENNAI , I hold that appellant are entitled for refund claim - Decided in favour of assessee.

Summary

Issues: Refund claim rejection based on deduction of payment for failure to supply specified quantity within specified period.

Analysis:
1. The appellant appealed against the rejection of their refund claim by the Commissioner (Appeals) due to the deduction of payment by M/s. U.P. Power Corporation for the appellant's failure to supply the specified quantity within the agreed period.

2. The appellant had a contract with M/s. U.P. Power Corporation to supply transformers at a particular quantity, period, and price. The contract allowed M/s. U.P. Power Corporation to deduct or pay less if the appellant failed to meet the specified terms. Consequently, M/s. U.P. Power Corporation deducted payments as the appellant did not fulfill the agreed terms, leading to the appellant filing a refund claim for the duty component of the deducted amount.

3. The refund claim was denied on the basis that the duty was already paid on the invoice price, which was considered the agreed price, and no further deduction was permissible. However, the tribunal considered that since the deduction clause was known before goods clearance and the appellant could not meet the agreement terms, they were entitled to a refund of the duty component for the deducted amount, citing the decision in CCE vs. Victory Electricals Ltd. 2013 (298) ELT 534 (Tri-LB).

4. The tribunal held in favor of the appellant, setting aside the impugned order and allowing the appeal with consequential relief. The decision emphasized that the appellant was entitled to the refund claim due to the deduction made by the buyer as per the agreement terms, despite having paid duty on the invoice price.

5. The judgment highlights the importance of contractual terms, known deductions, and the entitlement to refund claims in cases where payment deductions are made as per the agreed terms, providing relief to the appellant in this specific scenario.