2017 (6) TMI 212 - AT - Central Excise

Refund claim - appellant supplied the berths to various organs of the Railway as well as various state transport authorities, their invoice values were reduced by them after deducting the amount on account of liquidated damages - price variation clause - Held that - the issue in whether the amount deducted by the buyer on account of liquidated damage should be allowed as deduction on transaction value has been settled by this Tribunal in the case of Victory Electricals Ltd. 2013 (12) TMI 81 - CESTAT CHENNAI , where it was held that The value payable in a case where liquidated damages is applied would therefore be the consequent value and this would constitute the transaction value . - the appellant are entitled to refund on merits. The burden is on the appellant to produce necessary evidence that the incidence of duty has not been passed on by the appellant to any person - appeal allowed by way of remand.

Issues:
Refund claim under section 173S of the Central Excise Rules 1944 - Rejection of claim by Assistant Commissioner - Appeal to Commissioner (Appeals) - Issue of unjust enrichment - Examination of refund claim - Settlement of issue regarding deduction of liquidated damages on transaction value - Applicability of relevant legal precedents - Remand of the matter for fresh order.

Analysis:
The case involved a refund claim of &8377; 22,09,139/- filed by the appellants under section 173S of the Central Excise Rules 1944. The claim was based on the appellants' assertion that their invoice values were reduced by buyers after deducting amounts for liquidated damages, resulting in reduced receipts. The Assistant Commissioner rejected the claim, leading to an appeal to the Commissioner (Appeals), who upheld the decision. The appellants then filed an appeal challenging these rulings.

The appellant's advocate requested to proceed with the appeal based on written submissions, citing the larger bench decision of the Tribunal in a relevant case. The issue revolved around whether the amount deducted by buyers as liquidated damages should be allowed as a deduction on the transaction value. The learned Advocate for the appellants referenced legal precedents and judgments to support their claim, including the Tribunal's decision in a specific case.

Upon hearing the parties and examining the records, the Tribunal referred to its earlier decision in a case involving similar issues. The Tribunal clarified that post the amendment of relevant sections, the eventual value payable after factoring in liquidated damages would constitute the transaction value for levy of duty. The Tribunal also analyzed and distinguished other judgments cited by the learned AR, affirming the applicability of the Tribunal's earlier decision.

Considering the settled legal position, the Tribunal found the appellants entitled to a refund on merits. However, the issue of unjust enrichment was highlighted, emphasizing the appellant's burden to prove that the duty incidence was not passed on to any other party. Therefore, the matter was remanded back to the adjudicating authority for a fresh order, allowing the appellants a fair opportunity to present their defense and relevant evidence.

In conclusion, the appeal was disposed of by way of remand, with the Tribunal pronouncing its decision on 31.5.2017. The judgment addressed the key legal issues surrounding the refund claim, the deduction of liquidated damages on transaction value, the application of legal precedents, and the requirement to establish non-passing of duty incidence for unjust enrichment.

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