2024 (1) TMI 717 - AT - Central Excise

Refund claim - excess duty paid due to price variation clause in the contract for supply of goods - HELD THAT - At the time of the clearance of the goods, price of the goods is fixed on the basis of earlier data given in the IEEMA formula but the price is finally decided on the basis of the current IEEMA formula which is only known at the later stage. Therefore, there is always possibility of variation in prices as compared to the price applied at the time of clearance of goods. The appellant after obtaining the actual price based on IEEMA formula worked out the difference. In case of lower price, for the excess paid duty they claimed refund and in case of higher price they pay differential duty. As per this fact the transaction value shall be actual price which is determined subsequently on the basis of the actual data based on the IEEMA formula of the relevant period of clearance. Accordingly, the appellant is prima facie entitled for the refund of excess paid duty. On the basis of the reply dated 19.07.2010 submitted before the adjudicating authority and various other records clearly establish that the appellant have submitted all the documents for the processing of the refund, Commissioner (Appeals) has ignored and not considered - the matter needs to be reconsidered only for purpose of verification of documents for processing the appellant s refund claim. The appeals are allowed by way of remand to the Adjudicating Authority for passing a fresh order preferably within a period of two months from the date of this order.

Summary

Issues involved: Whether excess duty paid due to price variation clause in the contract for supply of goods is liable to be refunded to the appellant or not.

Summary:

Issue 1: Provisional assessment and submission of necessary documents
The appellant claimed excess duty refund due to a price variation clause in the contract for supplying goods. The Adjudicating Authority rejected the claim stating that the appellant did not opt for provisional assessment and did not submit necessary documents. The appellant argued that the rejection solely based on not opting for provisional assessment was incorrect. They contended that all required documents, such as the contract, supply order, and chartered accountant certificate, were submitted but not considered by the Authority. Citing relevant judgments, the appellant emphasized that the lack of provisional assessment should not bar the refund claim.

Issue 2: Price variation clause and entitlement for refund
Upon review, it was found that the contract had a price variation clause, leading to price adjustments based on the actual data from the IEEMA formula. The appellant calculated the difference in duty payments due to price fluctuations and claimed a refund for excess payments. The Tribunal observed that the duty should be based on the actual price determined later, not the initial price at clearance. Disagreeing with the Authority and Commissioner's view on provisional assessment, the Tribunal held that the appellant was entitled to the refund regardless of opting for provisional assessment. The Tribunal emphasized that duty paid on a higher price should be refunded, as per various cited judgments.

Issue 3: Consideration of documents for refund processing
The Tribunal noted that the appellant had submitted all necessary documents for the refund claim, which were overlooked by the Commissioner (Appeals). It was concluded that the documents were sufficient for processing the refund, and the matter needed reconsideration solely for document verification purposes.

In conclusion, the impugned order was set aside, and the appeals were allowed for remand to the Adjudicating Authority for a fresh decision within two months. The Tribunal stressed that the appellant should be given a fair hearing and the opportunity to submit any additional information.