2008 (12) TMI 197 - AT - Central Excise

Refund of Excess Duty Revision in price - CIL fixes the prices of the goods supplied by the respondents normally during October-November every year. On finalization of the prices CIL makes additional payments or recovers additional amounts - The respondents returned the excess amount received to CIL through credit notes and claimed refund of excess duty paid to the extent of Rs. 1, 09, 730/-. held that - The tentative price adopted at the time of clearance of the goods will not be the transaction value applicable for assessment of clearances. As the relevant assessable value gets finalized in such cases after the clearances on payment of duty payments made following settlement between the assessee and its customers cannot be held to be post-clearance adjustments of the assessable value or the duty due refund is allowed - revision of prices governing clearances of excisable goods under a contract containing price variation clause does not involve unjust enrichment.

Summary

Issues:
- Unjust enrichment in sanctioning the refund of excess duty paid by the respondents.
- Consistency of the impugned orders with legal precedents regarding unjust enrichment.

Analysis:
1. Unjust Enrichment: The appeals were filed by the Revenue challenging Orders-in-Appeal passed by the Commissioner (Appeals) regarding the refund of excess duty paid by the respondents to M/s. Coal India Ltd. (CIL) for supplies made during 2001-02 and 2002-03 under contracts with price variation clauses. The respondents returned the excess amounts received to CIL and claimed a refund of the excess duty paid. The original authority initiated proceedings to recover the refund on the ground of unjust enrichment. However, the Commissioner (Appeals) found that no unjust enrichment was involved in the refund granted. The Commissioner relied on a Tribunal decision stating that refunds on account of retrospective price reductions under contracts with price variation clauses do not lead to unjust enrichment.

2. Consistency with Legal Precedents: The Revenue contended that the impugned orders were inconsistent with the decisions in Sangam Processors (Bhilwara) Ltd. and S. Kumar's Ltd., which held that refunds of excess duty could not be granted if passed on to customers due to unjust enrichment. The Tribunal considered various legal arguments and precedents presented by both sides. The respondents cited multiple Tribunal decisions supporting the non-applicability of unjust enrichment in cases where excess duty was refunded after price adjustments under contracts with price variation clauses.

3. Judgment: After careful consideration, the Tribunal found that the cases of Sangam Processors (Bhilwara) Ltd. and S. Kumar's Ltd. were distinguishable from the present situation. The Tribunal clarified that in cases of contracts with price variation clauses, the assessable value gets finalized later, and refunds are based on the final prices settled after supply of goods, not post-sale price reductions. The Tribunal upheld the impugned orders, stating that claims for refund due to retrospective price revisions under such contracts do not lead to unjust enrichment. Citing various judicial authorities, the Tribunal dismissed the Revenue's appeals, affirming the legality of the refund granted to the respondents.

Therefore, the Tribunal sustained the impugned orders, dismissing the Revenue's appeals and upholding the refund of excess duty paid by the respondents under the contracts with price variation clauses.