2018 (3) TMI 1692 - AT - Central Excise

Recovery of refund allowed - allowability of discounts - Revenue held a view that the assessee-Appellants did not deliberately factor in the discounts extended by them to their buyers, thereby paying higher duty on such inflated value in order to claim undue refund as available under the said Notification - principles of natural justice - Held that - The impugned order proceeded more on inference and presumptions rather than on verification of documents and facts. The impugned order fell in error by arriving at the conclusion based on inference and presumptions only. When the discounts were based on post clearance arrangement and activities like damage of goods and other considerations, the same cannot be claimed as they do not fulfil the requirements of Section 4. The discounts should be pre-notified and clear at the time of clearances of goods. Appeal allowed - decided in favor of appellant.

Summary

Issues: Valuation of goods for duty calculation, eligibility of discounts for refund under Notification No. 56/2002-C.E.

In the present case, the assessee-appellants challenged the Order-in-Appeal passed by the Commissioner of Central Excise (Appeals), Chandigarh-II, regarding the valuation of goods cleared by them and the eligibility of discounts for refund under Notification No. 56/2002-C.E. The Revenue contended that the appellants did not factor in discounts extended to buyers, leading to higher duty payment for claiming undue refunds. The impugned order disallowed the refund claimed on the inflated value, emphasizing the need for deducting available discounts to arrive at the correct assessable value.

The Appellate Tribunal, after hearing both sides and examining the evidence, found that the impugned order relied more on inference and presumptions rather than concrete verification of facts. The Commissioner (Appeals) speculated on the possibility of inflated values without substantial evidence. It was noted that the discounts were not shown in invoices, not part of common practice, and not pre-notified to buyers before goods clearance. The Tribunal held that discounts based on post-clearance arrangements, such as damaged goods or other considerations, cannot be claimed unless pre-notified and clear at the time of goods clearance, as required by Section 4.

Based on the analysis and discussions, the Tribunal concluded that the impugned order was erroneous in relying solely on inference and presumptions. As the discounts were not pre-notified and did not meet the criteria under Section 4, the Tribunal set aside the impugned order and allowed the appeal filed by the assessee-appellants. Consequently, the appeal was allowed, and the impugned order was deemed to have no merits, leading to its reversal.