2017 (11) TMI 333 - AT - Central Excise

Refund claim - price variation clause - supplementary invoice - denial on the ground that value of supplementary invoice is part and parcel of assessable value and should be included in the assessable value, therefore duty was correctly payable - Held that - value which is paid or payable at the time of removal of the goods was the price which was charged in the main invoice. The supplementary invoice was raised subsequently for the price variations. The said price was not chargeable at the time of the clearance of the goods. Moreover, the customer has refused to accept that supplementary invoice and returned the same back to the respondent. Accordingly, firstly this amount was not payable at the time of clearance and subsequently also the same was not paid by the customer therefore excise duty paid in respect of supplementary is payment of excess duty which is correctly refundable to the respondent. Similar issue decided in the case of CCE Rajkot Versus M/s. Amul Industries Pvt. Ltd. & Others 2011 (3) TMI 586 - CESTAT, AHEMDABAD , where it was held that if the payment of supplementary invoice was not made by the customers because duty has not chargeable, refund of the same is admissible under Section 11B. Refund allowed - Appeal dismissed - decided against Revenue.

Summary

Issues:
Refund claim under Section 11B - Assessable value of supplementary invoice - Duty paid on supplementary invoice - Customer refusal of supplementary invoice - Appeal by Revenue against Commissioner(Appeals) decision.

Analysis:
The respondent, engaged in manufacturing excisable goods, raised a supplementary invoice due to a rate revision for a customer, which the customer rejected, leading to a refund claim of ?9,57,696 under Section 11B. The adjudicating authority rejected the refund, stating the supplementary invoice value is part of the assessable value, hence duty was correctly paid. The Commissioner(Appeals) allowed the appeal, leading to the Revenue's appeal.

The Revenue argued that the total value in both main and supplementary invoices should be the assessable value, unaffected by customer refusal of the supplementary invoice. On the other hand, the respondent contended that since the customer rejected the price revision in the supplementary invoice and did not pay, the assessable value should remain as per the main invoice, leading to an excess duty payment eligible for refund.

The Tribunal found that duty is payable on the value at the time of goods removal, which was the main invoice value. As the customer did not pay for the supplementary invoice, the duty paid on it was an excess payment refundable to the respondent. The Tribunal cited a similar case involving Amul Industries Pvt Ltd to support this reasoning.

The Commissioner(Appeals) rejected the Revenue's argument, citing a judgment from the Madras High Court regarding refund admissibility when the customer did not pay the central excise duty on supplementary invoices. Since the customer rejected the price revision and did not pay the difference, the duty on the price escalation was not payable. The Tribunal upheld this decision, stating that if the customer did not pay the supplementary invoice due to non-chargeability of duty, a refund under Section 11B is permissible. The Tribunal affirmed the Commissioner(Appeals) decision and dismissed the Revenue's appeal.