2015 (8) TMI 443 - AT - Central Excise

Denial of refund claim - Adjudicating Authority rejected the refund claim holding that the value of goods under Section 4(1) of Central Excise Act 1944 has to be arrived at the time of delivery from place of removal - Held that - The goods were cleared on payment of duty at the price as per the said agreement. Subsequently, ex-factory price was decreased to ₹ 4,21,30,638/- as evident from the letter dtd 1.9.2007 of M/s TNEB. It is seen from the said letter that the appellants were requested to despatch the transformer to the sub-station site in co-ordination with the concerned Superintendent Engineer and carried out erection work. On perusal of the impugned order, I find that both the authorities below had not noticed that the price variation clause of the agreement. It is also clear from the letter dtd 1.9.2007 of M/s TNEB, where they requested the appellant to clear the transformer in the price of ₹ 4.21 crores and it would cover the earlier consignment against the same contract. Thus, there is no clarity in the facts of the case and both the authorities below failed to appreciate the facts in proper manner. It transpires from the record that there was an agreement between the parties before the clearance of the goods. But it is not clear from the records that the letter dtd 1.9.2007 of M/s TNEB of reduction of the price would be applicable for the present clearance of goods, I find force in the submission of the Learned Advocate that the findings of the Commissioner (Appeals) is beyond the scope of adjudication order. The Adjudicating Authority had rejected the refund claim on the ground that the appellant is not eligible the refund on merits. - impugned orders are set aside and remanded to the Adjudicating Authority to decide afresh after considering the above observations in accordance with the law - Decided in favour of assessee.

Summary

Issues:
Refund claim rejection based on price reduction post-clearance, eligibility for refund due to price variation clause in contract, application of unjust enrichment principle.

Analysis:
1. The case involved the appellants engaged in manufacturing Electrical Transformers under Chapter 85 of the Central Excise Tariff Act. They entered into a contract with Tamil Nadu Electricity Board (TNEB) for the supply of Transformers. The price was reduced post-clearance, leading to an excess payment of duty. The Adjudicating Authority rejected the refund claim, citing duty payment at the time of delivery and the principle of unjust enrichment.

2. The appellant contended that they are eligible for a refund as the price reduction was contractually agreed upon. The Commissioner (Appeals) upheld the rejection, emphasizing unjust enrichment. The appellant referred to relevant case laws supporting their claim and submitted CA's certificate, which was not considered by lower authorities.

3. The Revenue argued that non-provisional assessment under Section 9B made the appellant ineligible for a refund. They relied on statutory provisions indicating duty payment at the time of removal, unaffected by subsequent price reductions. Case laws and Tribunal decisions were cited in favor of the Revenue's stance.

4. The Tribunal noted the agreement between the parties, including a price variation clause. The goods were cleared based on this agreement, with subsequent price reduction post-clearance. The Tribunal found discrepancies in the lower authorities' failure to consider the price variation clause and the letter from TNEB requesting clearance at the reduced price.

5. Referring to the Tribunal's decision in a similar case, the Tribunal emphasized that refunds can be granted when goods were cleared under an agreement with a price variation clause. The Tribunal directed the Adjudicating Authority to re-examine the case considering the contractual terms, the principle of unjust enrichment, and relevant legal precedents.

6. The impugned orders were set aside, and the case was remanded to the Adjudicating Authority for a fresh decision. Proper opportunity of hearing was to be provided to the appellant before passing any new order.