2015 (4) TMI 33 - AT - Central Excise

Denial of refund claim - refund claim was rejected by the adjudicating authority on the ground that the act of raising an objection by the departmental authorities, payment of duty alongwith interest by the appellant at the instance of such objection, is complete transaction in itself and cannot be reversed by claiming the refund of the amount so paid - Held that - If the scrap is retained by the job worker and sale of the same will affect the conversion charges towards job work, the same should be included in the assessable value of the job work goods. We agree with the submission made by Ld. A.R. that though the Ld Commissioner (Appeals) heavily relied on judgment of 2007 (1) TMI 19 - CESTAT, MUMBAI (sic) Mahindra Ugine Steel Co. Ltd. but subsequently said Tribunal judgment was set aside and matter was remanded back to the Tribunal. The impugned order of the Ld. Commissioner, based on the judgment which does not exist presently, cannot be sustained. - total sum of both these element will form the total consideration received by the respondent towards job work. Therefore the sale value of scrap is includible in the assessable value of job work goods. Therefore, differential excise duty and interest thereupon paid by the respondent is correct and legal and the question of refund of said amount does not arise. - Decided in favor of Revenue.

Summary

Issues:
Valuation of job work goods including scrap value for excise duty calculation and refund claim rejection based on payment made without protest.

Analysis:
The appeal addressed the issue of valuation of job work goods concerning the inclusion of the scrap value for excise duty calculation. The case involved the respondent paying excise duty on the scrap generated during job work, which was sold by them. The Revenue contended that the extra consideration received by the respondent from the sale of scrap should attract excise duty, and thus, the duty paid was correct and legal. The respondent, on the other hand, argued that the valuation was done in accordance with established principles and cited various judgments to support their stance. The Tribunal examined the submissions and concluded that the realized value of scrap should be added to the assessable value of job work goods, as it constituted an additional consideration received by the respondent. The Tribunal emphasized that the method of costing should consider all elements of consideration, including job work charges and scrap sale proceeds. Referring to relevant case law, the Tribunal highlighted that if the scrap affected the conversion charges for job work, it should be included in the assessable value. Therefore, the Tribunal set aside the Commissioner's order and allowed the Revenue's appeal.

The second issue revolved around the rejection of the refund claim by the adjudicating authority. The respondent had initially paid the excise duty and interest without protest based on the department's objection. However, upon realizing that they were not obligated to pay duty on the scrap value, they filed a refund claim. The adjudicating authority rejected the claim, stating that the payment made without protest constituted a complete transaction and could not be reversed. The respondent contended that the duty paid on the scrap value, which had already suffered excise duty upon sale, should not be levied twice. The Tribunal examined the legal position and concluded that the payment made by the respondent was correct and legal, considering the overall consideration received for job work. Therefore, the Tribunal held that the question of a refund did not arise, and the order of the Commissioner allowing the refund was set aside.