2006 (5) TMI 28 - AT - Central Excise

Central Excise Assessable value - Price of standard quality product cannot be taken from sub-standard goods Refund claim of excess duty paid is allowable

Summary

Issues:
Refund claim rejection based on sub-standard goods supplied.

Analysis:
The appeal was filed against the order-in-appeal that upheld the rejection of a refund claim. The appellants supplied CI Brake Blocks to railways at a specified rate per piece. After inspection, it was discovered that the supplied brake blocks were sub-standard. Instead of returning the sub-standard goods, the railways accepted them at a reduced price. The appellant filed a refund claim for the excess duty paid, which was rejected on the grounds that the sale was affected at the factory gate at the higher price. The Tribunal noted that the contracted price was for a specific standard of goods, and if the quality did not meet that standard, the price would not be applicable. The reduction in price was due to the sub-standard quality, which was only discovered upon inspection by the railways. Citing a previous decision, the Tribunal held that in cases where prices were settled after the removal of goods, denial of refund could not be sustained. Therefore, the Tribunal allowed the appeal, setting aside the impugned order and granting the refund based on the precedent set in the Special Blasts Ltd. case.

In conclusion, the Tribunal found that the issue was squarely covered by the decision in the Special Blasts Ltd. case. Following the precedent and the circumstances of the case, the impugned order was set aside, and the appeal was allowed.