2018 (8) TMI 1214 - AT - Central Excise

Refund of excess duty paid - price variation clause - denial of refund on the ground that the price reduced at subsequent date is not required to be refunded by placing reliance in the case of MRF LTD. VERSUS COLLECTOR OF CENTRAL EXCISE, MADRAS 1997 (3) TMI 104 - SUPREME COURT OF INDIA . Held that - Wherever there was an upward revision in the price, the assessee has been paying differential duty and when there is a revision in price, he will be entitled to refund provided it is within the time limit prescribed under Sec.11B. If the assessee had opted for provisional assessment he could have claimed refund within one year from the finalization of provisional assessment but in this case he has claimed the refund within one year from the date of clearance of goods since the assessments were not provisional. Hon ble Supreme Court had held in the case of MRF Ltd 1997 (3) TMI 104 - SUPREME COURT OF INDIA that post clearance reduction in price does not evade the duty liability - It is found that this judgment was passed in the context of the valuation of goods under Section 4 of the Central Excise Act prior to 01.07.2000. During the relevant period, value was the normal price, i.e., price at which such goods were ordinarily sold in the course of whole sale trade at the time and place of clearance - the ratio of the judgement do not apply to the facts of present case. The ratio of the case of PTC Industries Ltd 2016 (8) TMI 200 - CESTAT NEW DELHI is squarely applicable to the present case, where it was held that where there is price variation clause and the prices have been reduced subsequent to clearance, refund is admissible. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Refund claims based on price variation clause in agreement.
2. Application of legal precedent regarding duty liability post-clearance.
3. Dispute over entitlement to refund due to price reduction post-clearance.
4. Provisional assessment and its impact on refund claims.
5. Interpretation of valuation rules under Central Excise Act pre and post-2000.

Analysis:
1. The appeals revolve around the refund claims filed by the appellant, manufacturers of concrete railway sleepers, due to price reduction post-clearance as per the agreement with Indian Railways, which includes a price variation clause based on indices like wholesale price index and consumer price index not known at the time of clearance.

2. The dispute hinges on the application of legal precedent set by the Hon'ble Supreme Court in the case of MRF Ltd, emphasizing that duty liability is fixed at the time of clearance based on the price indicated, irrespective of subsequent price fluctuations, and subsequent case laws following this principle.

3. The appellant contended that they have consistently paid differential duty upon price increases post-clearance and filed refund claims only in rare instances of price reduction, citing compliance with Sec.11B time limits and non-provisional assessments, while the department argued that post-clearance price fluctuations do not affect duty liability.

4. The debate over provisional assessment arises, with the appellant claiming they were not pressured by the department to opt for provisional assessment and that the absence of provisional assessment does not preclude them from claiming a refund, citing relevant case laws supporting their position.

5. The judgment delves into the evolution of valuation rules under the Central Excise Act, noting the shift from normal price to transaction price post-2000, emphasizing that under the new regime, each invoice stands as a transaction by itself, with duty payable based on the final price adjustment, allowing for refunds within Sec.11B time limits even without provisional assessment, as seen in the cases of PTC Industries Ltd and Oriental Explosives.

In conclusion, the Tribunal found in favor of the appellant, allowing the refund claims based on the price reduction post-clearance, highlighting the applicability of the changed valuation rules post-2000 and the entitlement to refunds within the prescribed time limits under Sec.11B, setting aside the impugned Order-in-Appeal and granting consequential relief to the appellant.