2015 (10) TMI 1035 - AT - Central Excise

Denial of refund claim - Adjustment of excess payment of duty against short payment - Whether duty paid in excess in respect of certain clearances made during a material period is adjustable against short payment of duty in respect of other clearances of that period on finalisation of provisional assessment and resultant excess if any arises upon such adjustment is refundable to the assessee without crossing bar of unjust enrichment being applicable - Held that - there is no warrant in law to deal with the consequence of each clearance on case to case basis to determine shortage and excess of payment of duty and consequence thereof. The ultimate duty liability of a relevant period is to be determined in final assessment taking into consideration entire clearance of that period in aggregate and if there arises excess payment of duty upon such finalization of making due adjustment, that shall be refundable. - all the appeals on the point of adjustability of excess payment of duty against shortage of duty paid is allowed and excess duty paid is refundable without bar of unjust enrichment applicable. Second claim of the appellant that sales return are not dutiable being goods returned back by buyers is justified. Appellant does not incur liability when cleared goods come back to his custody within the knowledge of excise authority. Revenue has no finding to show that the sales returns were made by the arrangement of the parties to cause prejudice to the interest of Revenue. In commercial parlance, sales return are common where the buyer do not approve quality of goods, objects to the price charged or conditions of purchase order violated varied and similar other reasons. Therefore, directing payment of duty on sales returns shall be contrary to Commercial Parlance theory. - Decided in favour of assessee.

Summary

Issues involved:
Adjustability of excess duty paid against short payment, inclusion of post-clearance freight in assessable value, liability of excise duty on sales returns, mathematical errors in computation of assessable value.

Adjustability of excess duty paid against short payment:
The main issue in this judgment revolves around whether duty paid in excess during a provisional assessment period can be adjusted against short payment of duty on other clearances of the same period. The appellant argues that excess duty paid is refundable without unjust enrichment being applicable. The Revenue contends that each clearance's duty payment is decisive, and any excess duty refund must meet the test of unjust enrichment. The judgment refers to the Hon'ble High Court of Karnataka's ruling and concludes that excess duty paid is refundable without unjust enrichment, considering the final assessment's aggregate duty liability for the relevant period.

Inclusion of post-clearance freight in assessable value:
The appellant disputes the inclusion of post-clearance freight in the assessable value, arguing that such costs are not incurred for clearance purposes. The Revenue disagrees, but the judgment rules in favor of the appellant, stating that there is no evidence attributing the cost to goods clearance, especially post-clearance.

Liability of excise duty on sales returns:
Another issue raised is whether goods returned by buyers are liable to excise duty. The appellant asserts that sales returns are not dutiable as they are returned goods and not liable for duty. The judgment supports the appellant's argument, emphasizing that sales returns are common in commercial transactions and should not attract duty unless there is evidence of prejudicing the Revenue's interest.

Mathematical errors in computation of assessable value:
The appellant highlights mathematical errors in the computation of assessable value, attributing them to a misconception regarding sale prices being cum-duty. The Revenue argues that there is a finding in adjudication supporting their stance. The judgment directs the Adjudicating authority to reexamine the issue based on invoices and the appellant's defense, subject to the adjustability of excess duty against short payment, emphasizing the refund of any excess amount without unjust enrichment.

This judgment clarifies the principles governing the adjustment of duty payments, the inclusion of costs in assessable value, the liability of excise duty on sales returns, and the rectification of mathematical errors in computation. It upholds the appellant's position on the adjustability of excess duty, exclusion of post-clearance freight from assessable value, non-liability of excise duty on sales returns, and mandates a reevaluation of mathematical errors.