2002 (11) TMI 188 - AT - Central Excise

Contract price reduction clause for goods supplied over extended period-refund allowed despite no provisional assessment under s. 11B

The dominant issue was whether a refund claim could be denied on the ground that the price reduction was a post-sale reduction and that provisional ... Claim for refund - Price variation clause - HELD THAT:- The stand taken by the Revenue that it is a case of post sale reduction of price is not correct. Price reduction in respect of quantity of cable delivered during the extended period has been specifically agreed upon between the parties under the terms of the agreement. Therefore, it has to be taken that as and when such goods were cleared the price was only the reduced price eligible under the terms of the agreement. We are not able to appreciate the stand taken by the Revenue that the assessee's application for refund has to be denied since he did not seek provisional assessment. The fact that the assessee did not seek provisional assessment will not take away its right under Section 11B of the Central Excise Act. In the result, we set aside the order impugned and allow the appeal. Issues involved: Appeal against denial of refund of excise duty based on post-sale price reduction.Summary:Issue 1: Claim for refund of excise duty on reduced priceThe appellant appealed against the Commissioner (Appeals) order rejecting its claim for refund of Rs. 2,08,695, contending that they paid excise duty on a higher amount than the price received from DOT. The Departmental Representative argued that duty is not payable on reduced price post-clearance. However, the agreement between the parties allowed for price fluctuation, specifically stating that any reduction in price beyond the original scheduled delivery date would be passed on to the purchaser.Issue 2: Entitlement to refund and provisional assessmentThe Tribunal disagreed with the Revenue's stance that the assessee's refund application should be denied for not seeking provisional assessment. It clarified that the lack of provisional assessment does not negate the right to claim refund under Section 11B of the Central Excise Act. Therefore, the Tribunal set aside the impugned order and allowed the appeal for refund of excise duty based on the agreed reduced price.This judgment highlights the importance of contractual terms in determining excise duty liabilities and the entitlement to refunds, emphasizing that post-sale price reductions agreed upon by parties must be considered in duty calculations, irrespective of provisional assessment requests.