2018 (2) TMI 1105 - AT - Central Excise

Refund claim - trade discount - price variation clause - Held that - the trade discount was not known to prior to the clearance and thus at the time of clearance, the assessable value can only be ascertained on the basis of trade discount which was known to the buyer - Variation on the transaction value on a subsequent date cannot result in re-determination of assessable value - refund cannot be allowed - appeal dismissed - decided against appellant.

Summary

Issues:
Appeal against denial of refund of Central Excise duty based on trade discounts given to oil marketing companies, unjust enrichment, issuance of credit notes, re-valuation of assessable value, and provisional assessment.

Analysis:
The appellant, engaged in supplying gas to oil marketing companies, sought a refund of Central Excise duty paid due to a revision in trade discounts given. The appellant's argument was based on the issuance of credit notes for the differential amount of trade discount, indicating that they did not recover the amount from buyers. However, the Revenue pointed out discrepancies, including the adjustment of credit note amounts in subsequent invoices by buyers and the non-co-relatability of credit notes to specific consignments. The Revenue emphasized that only trade discounts known at the time of clearance are admissible deductions, and variations post-clearance cannot warrant re-assessment without provisional assessment, citing relevant case laws.

The Tribunal noted the differences between the appellant's case and a precedent involving a consumer of gas, where credit notes were relevant for unjust enrichment discharge. In this case, with oil marketing companies passing on the excise burden to consumers directly, credit notes had no value for unjust enrichment discharge. Referring to a Tribunal decision, it was established that issuing credit notes after determining assessable value and paying duty does not absolve unjust enrichment. Additionally, as the trade discount was unknown at clearance, the assessable value could only be based on the known discount to buyers, precluding re-determination post-transaction. The Tribunal concluded that without certainty at clearance, provisional assessment should have been adopted, leading to the dismissal of the appeal and denial of the refund.

In conclusion, the judgment highlights the importance of clarity in trade discounts at clearance, the relevance of credit notes for unjust enrichment discharge, and the necessity of provisional assessment for uncertain transaction values. The decision underscores the specific circumstances of the case, the legal principles governing refund claims, and the application of relevant case laws to determine the admissibility of refunds in Central Excise matters.