2023 (3) TMI 833 - AT - Central Excise

Sale of goods through depot - Valuation - Refund of excess payment of duty (made on account of Discounts) - rejection of refund claim merely on the ground that the appellant have not opted for the provisional assessment - Removal of goods from factory on presumptive value - principle of unjust enrichment - HELD THAT - The appellant have made excess payment of duty on account of discount. The discount was given at the time of sale of the goods from the depot. There is no dispute about the nature and quantum of discount. The removal of goods from the factory is on presumptive value and the transaction value is finalized only at the time of sale of goods from the depot. Therefore, the discount given by the appellant at the time of sale of goods from the depot is legal and correct and the same shall not be includible in the assessable value. Accordingly, if there is any excess payment of duty in comparison with the value at which the goods were cleared from the factory and the same goods sold from the depot , the appellant is primafacie entitled for the refund. Non-opting for the provisional assessment - HELD THAT - Firstly the same was not made charge in the show cause notice therefore the order travels beyond the scope of show cause notice which is not permissible under the law as settled in various judgments cited by the appellant. Secondly, merely because the appellant has not opted for the provisional assessment the legal provision for valuation will not get altered. The duty is payable in accordance with the Section 4 of Central Excise Valuation Rules , 2000. In terms of Rule 7 the excise duty is payable at on the value at the time of sale of goods from depot after removal from the factory. Therefore, on the differential excise duty due to the difference between the clearance value from the factory and the sale value from the depot is refundable to the appellant. It is settled by the Hon ble High Court of Madhya Pradesh in the case of THE PRINCIPAL COMMISSIONER CGST AND CENTRAL EXCISE HEADQUARTERS BHOPAL VERSUS M/S GODREJ CONSUMER PRODUCTS LTD. 2019 (5) TMI 222 - MADHYA PRADESH HIGH COURT that merely because the appellant have not followed the provisional assessment, the methodology adopted for adjustment of excess payment of duty cannot be questioned. Therefore, even though the appellant have not opted for the provisional assessment , the admitted excess payment of duty has to be refunded to them. Principle of unjust enrichment - HELD THAT - The appellant have submitted the Chartered Accountant Certificate and JV Entries whereby it is established that the incidence of duty for which the refund was sought for has not been passed on. Thus, the appellant is prima facie entitled for the refund subject to verification of the documents - the impugned order set aside and matter remanded to the Adjudicating Authority for passing a fresh order - appeal allowed by way of remand.

Summary

Issues involved:
The issues involved in the judgment are the rejection of refund claim by lower authorities based on the appellant not opting for provisional assessment and the applicability of the principle of unjust enrichment in the case.

Issue 1: Rejection of Refund Claim based on Non-Opting for Provisional Assessment
The appellant, a manufacturer of lubricating oil, filed a refund claim for excess excise duty paid due to discounts passed on from depots. The claim was rejected by lower authorities citing non-opting for provisional assessment. The appellant argued that the rejection based on this ground was beyond the scope of the show cause notice. The Tribunal agreed, emphasizing that the duty is payable based on the value at the time of sale from depot, not affected by provisional assessment. The appellant was deemed entitled to the refund despite not opting for provisional assessment, as settled in various judgments.

Issue 2: Applicability of Principle of Unjust Enrichment
The appellant contended that the principle of unjust enrichment did not apply in their case, supported by a Chartered Accountant Certificate and JV entries showing no passing on of duty incidence. The Tribunal found the discount given at the time of sale from depot to be legal and correct, not to be included in assessable value. Citing precedents, the Tribunal held that the admitted excess duty payment must be refunded to the appellant, even without opting for provisional assessment.

Conclusion:
The Tribunal, after considering submissions from both sides, ruled in favor of the appellant. It found the appellant entitled to the refund, subject to document verification, and remanded the matter to the Adjudicating Authority for a fresh order. The appeal was allowed for remand to the Adjudicating Authority, with the decision pronounced on 17.03.2023.