recent case law
This query is : Resolved
29 July 2010
. ECE Industries Ltd Vs. CCE 2009
The Agreement which contained price variation clause, the assessee upon
upward revision of prices, paying higher duty and on lowering of price, the
assessee is seeking refund as per Agreement and assessment shall be treated
as provisional. Refunds arising out of down revision of prices after clearance of
price, principle of unjust enrichment shall not apply.
my qs is that the above agreement has benn entered b/w manufacturer& buyer.
Q2 mer has collected duty from both ends i.e. from customer as well as he is opting for refund. why DOUE not apply?
The Agreement which contained price variation clause, the assessee upon
upward revision of prices, paying higher duty and on lowering of price, the
assessee is seeking refund as per Agreement and assessment shall be treated
as provisional. Refunds arising out of down revision of prices after clearance of
price, principle of unjust enrichment shall not apply.
my qs is that the above agreement has benn entered b/w manufacturer& buyer.
Q2 mer has collected duty from both ends i.e. from customer as well as he is opting for refund. why DOUE not apply?
20 July 2025
Great question! The case of ECE Industries Ltd vs. CCE (2009) deals with price variation clauses in agreements and how excise duty refunds are handled when prices are later revised downward.
Background:
The manufacturer (assessee) had an agreement with the buyer containing a price variation clause.
When prices went up, the assessee paid higher duty accordingly.
When prices came down, the assessee claimed a refund of excess duty paid earlier.
The question was whether unjust enrichment applies, i.e., can the manufacturer collect duty from the buyer and still claim a refund from the government?
Why Unjust Enrichment Does NOT Apply Here:
Price Variation Clause = Provisional Assessment:
The agreement itself provides for price revisions.
The duty paid initially was based on the provisional price.
The final duty liability can only be fixed once price revisions are finalized.
So, this situation is considered a provisional assessment.
Manufacturer’s Duty Payment is Provisional:
The manufacturer paid duty on the initial price and collected that from the buyer.
When the price was revised down, the duty payable also reduces.
The manufacturer is entitled to refund the excess duty paid.
This is a legitimate adjustment, not a case of unjust enrichment, because the original duty payment was provisional.
Double Duty Collection is Not Actually Happening:
The manufacturer only collects duty once from the buyer, based on the current price.
When price is lowered, the manufacturer claims refund from the government to match the reduced duty.
The net effect is that duty collected from buyer equals duty finally payable to government.
Summary:
Unjust enrichment does not apply because the payment of duty was provisional.
Price revision clauses make the assessment provisional, allowing refunds on downward price revision.
The manufacturer is not getting double benefit because the refund only adjusts for excess duty paid earlier.
Background:
The manufacturer (assessee) had an agreement with the buyer containing a price variation clause.
When prices went up, the assessee paid higher duty accordingly.
When prices came down, the assessee claimed a refund of excess duty paid earlier.
The question was whether unjust enrichment applies, i.e., can the manufacturer collect duty from the buyer and still claim a refund from the government?
Why Unjust Enrichment Does NOT Apply Here:
Price Variation Clause = Provisional Assessment:
The agreement itself provides for price revisions.
The duty paid initially was based on the provisional price.
The final duty liability can only be fixed once price revisions are finalized.
So, this situation is considered a provisional assessment.
Manufacturer’s Duty Payment is Provisional:
The manufacturer paid duty on the initial price and collected that from the buyer.
When the price was revised down, the duty payable also reduces.
The manufacturer is entitled to refund the excess duty paid.
This is a legitimate adjustment, not a case of unjust enrichment, because the original duty payment was provisional.
Double Duty Collection is Not Actually Happening:
The manufacturer only collects duty once from the buyer, based on the current price.
When price is lowered, the manufacturer claims refund from the government to match the reduced duty.
The net effect is that duty collected from buyer equals duty finally payable to government.
Summary:
Unjust enrichment does not apply because the payment of duty was provisional.
Price revision clauses make the assessment provisional, allowing refunds on downward price revision.
The manufacturer is not getting double benefit because the refund only adjusts for excess duty paid earlier.
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