2005 (8) TMI 236 - AT - Central Excise

Summary

Issues:
Refund claim rejection based on variation in conditions post-clearance.

Analysis:
The case involved a dispute regarding the rejection of a refund claim by the adjudicating authority and Commissioner (Appeals) after the appellant cleared sugar as levy sugar but paid duty applicable to free sale sugar due to a subsequent change in conditions. The appellant, engaged in sugar manufacturing, was directed to clear a specific quantity as levy sugar by the Sugar Directorate. Initially, the letter specified that the sugar was out of the free sale portion, leading the appellant to clear it at the levy sugar rate but pay duty as per free sale sugar. However, a later letter withdrew this condition. The Revenue contended that the duty should be paid as per the rate applicable to free sugar since the goods were assessed at clearance. The appellant argued that they cleared the sugar at the levy sugar rate, and the subsequent change in conditions should not affect the duty payment. The appellant produced a certificate showing that the customer paid duty at the levy sugar rate, indicating no unjust enrichment. The Tribunal held that the rejection of the refund claim based on price variation post-clearance was unsustainable. As the duty was not passed on to customers, the appellant was entitled to a refund of the excess duty paid.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant. The decision highlighted that the duty should be recovered as applicable to levy sugar since the appellant cleared the sugar at the levy sugar rate. The appellant's entitlement to a refund was established based on the non-passing of duty burden to customers, supported by the certificate from the customer. The judgment emphasized that the subsequent change in conditions should not impact duty payment after clearance, especially when the duty rate was appropriately applied during clearance.