2018 (9) TMI 639 - AT - Central Excise

Valuation - admissibility of deduction of liquidated damages from the assessable value - Held that - The issue is settled in the case of COMMISSIONER OF CUSTOMS & CENTRAL EXCISE VERSUS VICTORY ELECTRICALS LTD 2013 (12) TMI 81 - CESTAT CHENNAI , where it was held that liquidated damages are admissible deductions from the assessable value in terms of Section 4 of Central Excise Act, 1944 - appeal allowed. Refund of excise duty paid - denial on the ground of failure of appellant to produce the credit notes by which the said liquidated damages were transferred to the buyer - Held that - If the credit notes are indeed on account of liquidated damages, the deduction of the same shall be allowed - matter remanded to the original adjudicating authority to examine the above issue as well as the issue of unjust-enrichment and limitation. Appeal allowed in part and part matter on remand.

Summary

Issues:
- Denial of refund claim
- Admissibility of liquidated damages as deduction from assessable value
- Unjust enrichment
- Limitation period for refund claim
- Failure to produce credit notes for liquidated damages

Analysis:

The appeal was filed against the denial of a refund claim by M/s. Transformers and Rectifiers (India) Limited. The appellant argued that liquidated damages should be considered as admissible deductions from the assessable value, citing a decision by the Larger Bench of the Tribunal in a previous case. The appellant also mentioned that the denial of the refund was based on grounds of unjust enrichment, limitation, and failure to produce credit notes showing the transfer of liquidated damages to the buyers.

The appellant offered to produce the credit notes and other necessary documents before the original adjudicating authority. The Tribunal noted that the issue of deducting liquidated damages from the assessable value had been settled in favor of the appellant in a previous case. However, the admissibility of the refund was contingent on the appellant providing evidence that the credit notes were specifically for liquidated damages.

As a result, the Tribunal set aside the impugned order and remanded the matter to the original adjudicating authority. The authority was instructed to reexamine the issue of deducting liquidated damages from the assessable value, as well as the issues of unjust enrichment and limitation. The authority would need to assess the credit notes and other documents provided by the appellant to support their claim.

Ultimately, the appeal was partly allowed, confirming that liquidated damages could be excluded from the assessable value. However, the remaining issues were referred back to the original adjudicating authority for further examination and a fresh decision.

This detailed analysis of the judgment highlights the key arguments, decisions, and instructions given by the Tribunal in response to the issues raised in the appeal.