2018 (8) TMI 1661 - AT - Central Excise

Refund of excess excise duty paid - price variation clause - rejection of the refund claim on the ground that the appellants did not opt for provisional assessment even though they were aware of the price variation clause in the agreement - Held that - Similar issue was considered by Tribunal in the case of PTC Industries Ltd. 2016 (8) TMI 200 - CESTAT NEW DELHI where it was held that If there is a subsequent reduction in price based on price variation clause in rate contract the assessment has to be considered as provisional. Non observance of procedure under Rule 7 of Central Excise Rules 2004 will not render the assessment as final assessment and refund can be granted in such a situation - refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim for excess excise duty due to price variation clause in agreement; Eligibility for refund without opting for provisional assessment.

Analysis:
The case involved a refund claim by the appellants for excess excise duty paid amounting to ?17,45,850 due to a price variation clause in the agreement with the buyer. The appellants, engaged in manufacturing Transformers, supplied four units to a buyer subject to a Price Variation Clause in the Purchase Order. The buyer subsequently revised prices downward due to delayed supplies, leading to the appellants filing a refund claim for the excess duty paid. The authorities denied the refund, stating the appellants did not opt for provisional assessment. The appellant argued that they were unaware of the price revision at the time of clearance and relied on a decision supporting their claim. The respondent, however, opposed the refund, claiming the decision did not apply to the case.

The Tribunal considered the issue of refund eligibility without opting for provisional assessment. Referring to a similar case, the Tribunal highlighted the concept of provisional assessment in cases of subsequent price reduction due to a price variation clause. Various decisions were cited, emphasizing that non-observance of the procedure under Central Excise Rules does not render the assessment final. The Tribunal discussed the principle of unjust enrichment and cited cases where refund was granted when excess duty was refunded to the customer. The Tribunal distinguished a Supreme Court decision where no contract existed and ruled in favor of the appellant, allowing the refund claim. The Tribunal set aside the impugned order, holding the appellants eligible for a refund based on the price revision clause in the agreement.

In conclusion, the Tribunal allowed the appeal, stating that the rejection of the refund was unjustified. Citing previous decisions and the principle of provisional assessment in cases of price variation clauses, the Tribunal held that the appellants were entitled to the refund of excess excise duty paid. The impugned order was set aside, and the appeal was allowed with consequential relief, if any.