Special refund rate claims must be tested against audited records and auditor certificates, not notional MRP values.

A claim for fixation of special rate of refund under Notification No. 56/2002-CE must be examined on the basis of audited financial records, actual sale value and supporting statutory auditor certification, rather than notional MRP value. The note states that rejection of such a claim is unsustainable where the authority does not deal with the auditor's figures, fails to rebut them with cogent material, or travels beyond the notice by introducing grounds not put to the assessee. On that reasoning, the certified value addition of 58.60% was treated as acceptable and the special rate was fixed accordingly.

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Issues: Whether the rejection of the assessee's claim for fixation of special rate of refund under Notification No. 56/2002-CE was sustainable, and whether the value addition was to be computed on the basis of the actual sale value supported by the statutory auditor's certificate.

Analysis: The claim was supported by an application, a detailed reply, and a statutory auditor's certificate based on the audited financial records. The rejection order was found to be inconsistent with the prior proposal that had tentatively worked out a lower value addition, and the final rejection went beyond the scope of notice, thereby offending natural justice. The order also failed to deal with the statutory auditor's certificate or to rebut the figures with cogent material. Under the notification, the special rate had to be worked out on the basis of financial records and actual sale value, excluding notional MRP value, and the assessee's certified calculation at 58.60% was found acceptable.

Conclusion: The rejection of the claim for special rate was unsustainable. The assessee was entitled to fixation of special rate of value addition at 58.60%, and the appeal succeeded.

Ratio Decidendi: A claim for special rate under an exemption notification cannot be rejected without dealing with the statutory auditor's certificate and the relevant financial calculations, and an authority cannot travel beyond the notice so as to reject the claim on grounds not put to the assessee.

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