2016 (7) TMI 651 - AT - Central Excise

Refund claim - valuation - price escalation - Held that - As decided in assessee s own case refund can be granted to the assessee in a situation where the assessments were not made provisional but the price of excisable goods was reduced downward after clearance of the goods as per price variation clause which was in existence in the contract under which goods were being cleared and the buyers adjusted the amount, from the sale prices to be paid on the goods subsequently sold. As such, find that the issue stands decided in favour of the assessee on merits. On the unjust enrichment angle, we find that in the instances before us, the customers have refused the payment of the price escalation invoices raised by the appellants. From this, it is evident that the appellants have not recovered the duty incidence from their customers. - Decided in favour of assessee

Summary

Issues:
Appeal against rejection of refund claims under Section 11B of the Central Excise Act on the grounds of merit and unjust enrichment.

Detailed Analysis:
1. Merits of the Case:
The appeals involved manufacturers of Electric Transformers supplying goods to electricity boards under rate contracts with price variation clauses. The appellants raised invoices for price increases post-clearance, but customers did not pay the differential prices. The refund claims for differential duty paid under Section 11B were rejected by the Original Authority and upheld by the appellate authority. The rejection was based on the grounds that the appellants did not opt for provisional assessment as per Rule 7 of the Central Excise Rules, 2002. The authorities considered the assessments final, and subsequent price reductions did not entitle the appellants to duty refunds.

2. Legal Arguments:
The advocate for the appellant highlighted a previous decision by the Tribunal in the appellant's own case, where a similar issue was addressed. The Revenue argued that without provisional assessment, the appellants could not change the assessment since the sale proceeds were not released.

3. Precedent and Decision:
The Tribunal referred to a previous decision involving CCE, Ghaziabad Vs. Mahavir Cylinders, where it was held that refunds could be granted when assessments were not provisional, but the price of goods reduced post-clearance as per the contract's price variation clause. Since the buyers adjusted the amounts from subsequent sale prices, the refund was allowed. Based on this precedent, the Tribunal decided in favor of the appellants on the merits of the case.

4. Unjust Enrichment:
Regarding unjust enrichment, it was noted that customers had refused to pay the price escalation invoices, indicating that the duty incidence was not recovered by the appellants from their customers. This observation supported the conclusion that there was no unjust enrichment in this case.

5. Judgment:
In light of the above analysis, the Tribunal set aside the impugned orders and allowed the appeals with consequential relief to the appellants. The decision was based on the findings that the appellants were entitled to duty refunds based on the price reduction post-clearance and the absence of unjust enrichment due to non-recovery from customers.