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Refund - Unjust enrichment - Downward revision of price of g

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Court :
IN THE CESTAT, SOUTH ZONAL BENCH, CHENNAI

Brief :
Refund - Unjust enrichment - Downward revision of price of goods with retrospective effect as per agreement between parties - Appellants returned differential price as well as differential duty by way of issuing credit notes to buyer - No infirmity in impugned order allowing refund claim in respect of excess duty paid at the time of original clearance of goods - Section 11B of Central Excise Act, 1944. [para 2]

Citation :
2008 (232) E.L.T. 306 (Tri. - Chennai) IN THE CESTAT, SOUTH ZONAL BENCH, CHENNAI Shri P.G. Chacko, Member (J) COMMISSIONER OF C. EX., MANGALORE Versus KELTECH ENERGIES LTD.

2008 (232) E.L.T. 306 (Tri. - Chennai) IN THE CESTAT, SOUTH ZONAL BENCH, CHENNAI Shri P.G. Chacko, Member (J) COMMISSIONER OF C. EX., MANGALORE Versus KELTECH ENERGIES LTD. Final Order Nos. 653 and 654/2008, dated 4-7-2008 in Appeal Nos. E/135 and 136/2005 Refund - Unjust enrichment - Downward revision of price of goods with retrospective effect as per agreement between parties - Appellants returned differential price as well as differential duty by way of issuing credit notes to buyer - No infirmity in impugned order allowing refund claim in respect of excess duty paid at the time of original clearance of goods - Section 11B of Central Excise Act, 1944. [para 2] Appeals dismissed CASES CITED Indian Aluminium Cables Ltd. v. Collector — 1997 (95) E.L.T. 386 (Tribunal) — Referred [Para 2] Keltch Energies Ltd. v. Commissioner — 2006 (196) E.L.T. 282 (Tribunal) = 2007 (8) S.T.R. 434 (Tribunal) — Referred [Para 2] REPRESENTED BY : Shri N.J. Kumaresh, SDR, for the Appellant. Shri A.S. Monappa, Advocate, for the Respondent. [Order]. - The respondents had supplied their products to two customers during the period from April to July 2001 on payment of duty on the assessable value determined on the basis of a certain price agreed between the appellants and the buyers under agreements valid for a previous period. It appears, long-drawn negotiations were going on between the appellants and their buyers for revision of price under intimation to the Department. When agreement was reached for a lower price, retrospective effect was given to it and consequently, for the aforesaid period, the appellants became liable to repay the differential price along with differential duty to the buyers. They did this by way of credit notes. Subsequently, they filed refund claim with the Department for the excess duty paid by them at the time of original clearance of the goods. These refund claims were rejected by the original authority but allowed by the first appellate authority. Hence the present appeal of the Revenue. 2. After hearing both sides and considering their submissions, I note that the appellant objects to the refund on the ground of unjust enrichment. It is submitted that, once the goods were cleared on payment of appropriate duty, refund of such duty cannot be claimed after issuing credit notes to the buyer. The lower appellate authority has relied on the Tribunal’s decision in Indian Aluminium Cables Ltd. v. Collector - 1997 (95) E.L.T. 386 (Tribunal), wherein it had been held that, if price was revised upwards or downwards in terms of price escalation clause in the contract between the assessee, and his buyer, the Department or the assessee, as the case may be, was not precluded from demanding the differential duty or seeking its refund, as the case may be. The same view has been taken by the Tribunal’s South Zonal Bench (Bangalore) in F.No. 266/2005 dated 3-2-2006 in Appeal No. E/227/2003 [2006 (196) E.L.T. 282 (Tribunal) = 2007 (8) S.T.R. 434 (Tribunal)]. The view taken by the West Zonal Bench (Mumbai) of the Tribunal in the same party’s case was also to the same effect. The appeal filed by the Department against the decision of West Zonal Bench was dismissed by the Bombay High Court as per judgment dated 31-8-2007 in Appeal Nos. 3, 14 and 21/2007. In the impugned order, the learned Commissioner (Appeals) has rendered correct decision on the issue. 3. In the result both the appeals of the Revenue are dismissed. (Dictated and pronounced in open court)
 

Arbind Aggarwal
on 25 January 2009
Published in Excise
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