2018 (1) TMI 476 - AT - Central Excise

Refund claim of excess duty paid - unjust enrichment - Held that - When there is price variation clause, the actual price of goods cannot be ascertained at the time of clearance and in a case where the actual price comes out to be higher than the value on which goods has been cleared then, the Revenue asked for duty on the extra value of the goods. Therefore, on the principle of equity, if any excess duty has been paid by appellant, the Revenue is required to refund to the assessee the excess duty. The reasoning given by the learned Commissioner (Appeals) are set aside as it has not been disputed by the Revenue that the excess duty has not been paid by the buyer, therefore, the appellant has passed the bar of unjust enrichment. The appellant is entitled for refund claim as they have not recovered the said price alongwith duty from the buyers of the goods - appeal allowed.

Summary

Issues:
- Appeal against rejection of refund claim based on price variation clause
- Entitlement for refund claim due to decrease in final price of goods
- Application of unjust enrichment principle in the case

Analysis:
1. Appeal against rejection of refund claim based on price variation clause:
The appellant appealed against the rejection of their refund claim, which was based on a price variation clause in their contract for manufacturing and supplying aluminium conductors to electricity departments. The appellant paid duty at the time of clearance of goods, determined by a formula based on actual costs and other factors. The appellant sought a refund as the final price of the goods had decreased, leading to an excess amount collected from them under the price variation clause. The buyer did not pay the excess amount, and no excess duty was paid by the buyer. The refund claim was rejected on the grounds that duty was paid at the time of clearance, and thus, the question of unjust enrichment did not arise.

2. Entitlement for refund claim due to decrease in final price of goods:
The consultant for the appellant argued that they were entitled to a refund because they had not recovered the excess amount collected under the price variation clause from the buyers of the goods. The appellant contended that when prices increased, they paid duty along with interest, but in cases where prices decreased, they should be entitled to a refund. The consultant cited relevant case laws to support this argument, emphasizing the appellant's right to a refund in such circumstances.

3. Application of unjust enrichment principle in the case:
The Tribunal found that the facts were undisputed regarding the price variation clause and the duty paid by the appellant at the time of clearance of goods. The Tribunal disagreed with the findings of the impugned order, stating that the appellant should be refunded the excess duty paid due to the price variation clause. The Tribunal held that the Revenue should refund the excess duty paid by the appellant, as the buyer had not paid the excess amount shown in the invoices at the time of clearance of goods. The Tribunal set aside the impugned order, allowing the appeal and granting consequential relief to the appellant.

In conclusion, the Tribunal allowed the appeal, holding that the appellant was entitled to a refund claim as they had not recovered the excess amount along with duty from the buyers of the goods. The Tribunal set aside the impugned order and granted consequential relief to the appellant in light of the price decrease and the application of the unjust enrichment principle in the case.