2018 (11) TMI 905 - AT - Central Excise

Refund claim - acceptability of a debit note issued long after the goods were cleared on payment of duty for re-determination of the assessable value - Held that - It has been brought on record that the appellant and the recipient of the goods had intended an alteration of the specification of the product; it is inconceivable that such alteration would not result in alteration of price and, the demonstrated oversight, should not stand in the way of acknowledging the existence of a lover transaction value. Accordingly, the discharge of duty liability in excess of ₹ 2,32,377.30 is held to have been established. This amount is eligible to be refunded in consequence of claim under section 11B of Central Excise Act, 1944. It is only when the first buyer trained in those goods, or even uses those goods for the manufacture of further excisable goods, that the question of the lag between the charging of duty at the time of clearance and the disclaiming of such duty becomes relevant to ascertainment of having born the incidence of duty. Such is not the case in the present dispute - the test of unjust enrichment is overcome. Appeal allowed - decided in favor of appellant.

Issues:
Challenge against rejection of claim for refund of duty component in debit note issued for signage supplied to Mumbai International Airport Ltd in 2008.

Analysis:
1. The appellant, M/s Evergreen Engineering Co Pvt Ltd, challenged the rejection of their claim for refund of duty component in a debit note issued for signage supplied to Mumbai International Airport Ltd in 2008. The dispute arose from a work order issued by the airport for signage with specific dimensions and unit price. Despite subsequent amendments to the dimensions, the unit price remained unchanged. The appellant supplied the signage, but due to a belated realization, the unit price was reduced, leading to the issuance of a debit note and subsequent claim for refund.

2. The central issue revolved around the assessable value of the goods supplied by the appellant. The central excise authorities contended that the value of the goods, as denominated in the original work order, should determine the assessable value, irrespective of subsequent modifications post-supply. The rejection of the claim was based on the perceived carelessness of the appellant and the recipient, which was deemed irrelevant to the claim for refund.

3. The Tribunal noted that the dimensions of the signage supplied were undisputed. However, the appellant argued that the alteration in dimensions should impact the unit price, leading to the downward revision. The appellant relied on the existence of the debit note as evidence of consideration received for the supplied goods, citing common business practices. The authorities, on the other hand, relied on legal precedents to support their position that subsequent credit/debit notes do not alter the value assessed at the time of clearance.

4. The Tribunal analyzed the legal precedents cited by both parties, emphasizing the importance of the value agreed upon at the time of clearance. Despite the oversight in altering the specifications without adjusting the price, the Tribunal recognized the existence of a lower transaction value, leading to the conclusion that the duty liability in excess was established, warranting a refund under section 11B of the Central Excise Act, 1944.

5. The issue of "unjust enrichment" was also addressed concerning the refund eligibility. The Tribunal clarified the sequence of events leading to the refund and examined the concept of unjust enrichment in the context of duty recovery. The Tribunal concluded that the duty incidence had been borne by the appellant, overcoming the unjust enrichment test.

6. In light of the findings, the Tribunal set aside the impugned order and allowed the appeal, granting consequential relief to the appellant.

Judgment:
The Appellate Tribunal CESTAT Mumbai ruled in favor of M/s Evergreen Engineering Co Pvt Ltd, allowing their appeal against the rejection of the claim for refund of the duty component in the debit note issued for signage supplied to Mumbai International Airport Ltd in 2008. The Tribunal held that the assessable value should reflect the agreed transaction value at the time of clearance, even in cases of subsequent modifications. The Tribunal also determined that the appellant had not unjustly enriched themselves, thereby qualifying for the refund under section 11B of the Central Excise Act, 1944. The impugned order was set aside, and the appeal was allowed with consequential relief granted to the appellant.

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