2014 (9) TMI 614 - HC - Central Excise

Court Upholds Assessment Basis for Duty Refund in Cotton Yarn Case

COMMISSIONER OF C. EX., COIMBATORE Versus VISHNULAKSHMI MILLS (P) LTD.

The court ruled against the assessee, a manufacturer of Cotton Yarn, in a dispute over the assessment basis for duty refund. The Assessing Officer's ... Valuation - sale from depot - Whether the Tribunal is correct in holding that the lower sale price for goods cleared at Depot on subsequent day will constitute the basis for assessment? - Refund - whether the assessee is entitled to refund of excess duty remitted by them on the basis of the prevailing price on the same day or the subsequent day or on the later date - Held that:- it is the duty of the assessee to ascertain the price prevailing on the factory as well as in the depot and to quote prevailing lower price beneficial to the assessee and as the choice is given to the assessee, the price quoted by the assessee shall be the final price and shall be the price for assessment. The case relied on by the Tribunal in the present case in the impugned order is one such case, wherein, the price adopted by the assessee therein was the price prevailing in the depot on the same day in which, the goods are cleared from the factory. However, the Tribunal had erroneously proceeded on the basis that the price based on which, benefit claimed is the prevailing price at the depot on the date of which goods are cleared from the factory. In fact, the price quoted by the assessee is the price at the related date than the date on which the goods are cleared. Following decision of Camphor & Allied Products Ltd. v. Commissioner of Central Excise, Lucknow, reported in [2000 (8) TMI 466 - CEGAT, NEW DELHI] - Decided in favour of Revenue. Issues:1. Interpretation of assessment basis - factory price vs. depot price for duty refund.Analysis:The case revolves around the dispute regarding the correct basis for assessment and duty refund by the assessee, a manufacturer of Cotton Yarn, CBY, and NCSY. The assessee cleared goods from the factory premises to various depots, declaring a higher price than the depot selling price. The Assessing Officer rejected the refund claim, stating that the assessee should have declared the depot price on the clearance date from the factory. The First Appellate Authority and CESTAT upheld this decision, emphasizing that the declared factory price should be final. However, CESTAT allowed the refund, citing a similar precedent and requiring proof of no unjust enrichment.The core issue is whether the assessee is entitled to a refund based on the prevailing depot price on the same or subsequent day of clearance. The Assessing Officer's findings indicated that the refund claim was based on depot prices after the factory clearance dates. The court highlighted that the assessee should have determined both factory and depot prices and chosen the lower one for assessment. The decision referenced a previous case to support this principle, emphasizing the importance of quoting the prevailing lower price for assessment.The court found that CESTAT erred in adopting rates contrary to the actual facts of the case. The judgment emphasized that the depot price used for the refund claim should align with the clearance date from the factory, not subsequent dates. By setting aside CESTAT's decision, the court confirmed the original assessment order, denying the refund claim. The ruling clarified the necessity for accurate price determination and adherence to relevant precedents in duty refund cases, ensuring consistency and fairness in assessments.