2017 (1) TMI 798 - AT - Central Excise

Tribunal remands refund claim, grants refund and interest based on unjust enrichment doctrine

The Tribunal allowed the appeal by remanding the case back to the Original Authority for reconsideration of the refund claim for the period after ... Refund claim - discount - unjust enrichment - denial on the ground that the appellant has claimed discount retrospectively and therefore they were not eligible for said refund - Held that: - Hon'ble Supreme Court has held in the case of Purolator India Ltd. Versus Commissioner of Central Excise, Delhi-III [2015 (8) TMI 1014 - SUPREME COURT] that the transaction value should be known at the time of removal - in the instant case the duty incidence has been passed on to the customers, before 19/01/2004 and the discounted value shall be admissible only with effect from 19/01/2004 - we remand this case back to Original authority for the period subsequent to 19/01/2004. We also hold that the appellant will be entitled for refund & interest on the refund with effect from 19/01/2004 as admissible in the law - appeal allowed by way of remand. Issues:Claim for refund of Central Excise duty on High Speed Diesel (HSD) discounted for the period from 01/12/2003 to 28/02/2004. Applicability of discount agreement with M/s U.P. State Road Transport Corporation (UPSRTC). Doctrine of unjust enrichment. Interpretation of transaction value and discount deduction as per legal precedents.Analysis:The appeal filed by M/s Indian Oil Corporation Ltd. against the Order-in-Appeal dated 31/01/2006 was based on the claim for a refund of Central Excise duty on High Speed Diesel (HSD) discounted for a specific period. The appellant entered into an agreement with UPSRTC for a discount of Rs. 450 per KL on 19/01/2004, which was claimed as a refund. The Original Authority rejected the refund claim stating that the discount was claimed retrospectively, making the appellant ineligible for the refund.The Commissioner (Appeals) held that the refund was not hit by the doctrine of unjust enrichment but found the discount inadmissible, leading to the rejection of the appeal. The appellant argued that the agreement was effective retrospectively from 01/12/2003, making the discount applicable for the entire period. The appellant also provided a certificate from the purchaser certifying the actual amount paid on account of excise duty, along with a letter from UPSRTC supporting the claim.The Departmental Representative (D.R.) cited the Supreme Court case of Purolator India Ltd. v. Commissioner of Central Excise, Delhi-III, emphasizing that transaction value should be known at the time of removal, and any known discount should be considered for deduction from the sale price. The D.R. argued that since the agreement was entered into on 19/01/2004, the discount was inadmissible for the period before that date.The Tribunal, after considering the arguments, referred to the Supreme Court decision in Purolator India Ltd. v. Commissioner of Central Excise, Delhi-III, and held that duty incidence had been passed on to customers before 19/01/2004. Therefore, the discounted value would be admissible only from 19/01/2004 onwards. The case was remanded back to the Original Authority for the period after 19/01/2004, allowing the appellant a refund and interest from that date as per the law.In conclusion, the Tribunal allowed the appeal by way of remand, directing the Original Authority to reconsider the refund claim for the period subsequent to 19/01/2004, based on the principles of transaction value and discount deduction established in relevant legal precedents.