2022 (3) TMI 691 - AT - Central Excise

Refund of Excise Duty - unjust enrichment - price reduction clause - rejection of refund claim on the ground that goods were sold for delivery at the time and place of removal at factory gate and therefore transaction value would be applicable on which excise duty has been paid by the appellant - admissibility of refund claim filed on discount given to the dealer - HELD THAT - The facts of the case are not in dispute that after reduction of the rate of duty vide Notification no. 58/2008-CE dated 7.12.2008 wherein rate of duty on the car were reduced from 24% to 20% and consequent to that stock lying as on date with dealers reduced the price and issued credit note and refund the difference along with duty by way of cheques. The only controversy is that whether the subsequent reduction in the price by the appellant and refund thereof proportionate duty attributable to reduced prices is refundable or not. As issue is squarely covered by the decision of PRAG INDUSTRIES (INDIA) PVT. LTD. VERSUS COMMR. OF C. EX. S.T., LUCKNOW 2019 (4) TMI 1835 - CESTAT ALLAHABAD , therefore, as payments were made in accordance with the reduced price subsequently paid by the appellant, in that circumstances the appellant is entitled to claim refund of the excess duty paid by them. In such circumstances, there is no requirement for opting provisional assessment or as the appellant was not aware that subsequent reduction of duty by notification number 58/2008 dated 7.12.2008. As it is on record that excess duty and differential excess amount received by the appellant has been refunded to the dealers by way of cheque, in these circumstances, it is not a case of unjust enrichment. The appellant is entitled for refund claim - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection based on transaction value and applicability of excise duty.

Detailed Analysis:
The appellant, engaged in manufacturing motor cars and parts, had a refund claim rejected based on the grounds that goods were sold for delivery at the time and place of removal at the factory gate, and the transaction value at that time should apply for excise duty calculation. The appellant passed on reduced excise duty benefits to dealers through credit notes and cheques, leading to a retrospective reduction in prices for vehicles in stock as of a specific date. The refund claim was challenged through a show cause notice, citing inapplicability under the Central Excise Act, 1944. The appellant argued that the transaction value should be the actual reduced price charged to dealers after adjusting credit notes, supported by legal precedents like Purolator India Ltd. v CCE Delhi-III and other relevant cases.

The appellant contended that provisional assessment was not applicable as they were unaware of the subsequent reduction in duty rates. The Authorized Representative supported the impugned order, emphasizing that no provisional assessment was sought, and duty was paid based on the rates applicable at the time of goods clearance. The Tribunal examined the case in light of a similar precedent involving Prag Industries Pvt. Ltd., where a refund claim was allowed due to a subsequent reduction in prices accepted by the appellant. The Tribunal concluded that as payments were made in accordance with the reduced prices, the appellant was entitled to claim a refund of excess duty paid, without the need for provisional assessment or prior knowledge of duty rate reductions.

The Tribunal found that the appellant's actions in refunding excess amounts to dealers through cheques indicated no unjust enrichment, aligning with the decision in Prag Industries Pvt. Ltd. Consequently, the impugned order rejecting the refund claim was set aside, and the appeal was allowed, granting the appellant the entitlement to the refund claim. The judgment was pronounced in the open court on 11.3.2022.