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Issues: (i) Whether differential duty paid on supplementary invoices arising from a unilateral price revision not accepted by the buyer formed part of the assessable value under Section 4 of the Central Excise Act, 1944 and was refundable. (ii) Whether refund was barred by unjust enrichment under Section 11B of the Central Excise Act, 1944. (iii) Whether the refund claim was time-barred.
Issue (i): Whether differential duty paid on supplementary invoices arising from a unilateral price revision not accepted by the buyer formed part of the assessable value under Section 4 of the Central Excise Act, 1944 and was refundable.
Analysis: Section 4 adopts transaction value, namely the price actually paid or payable at the time and place of removal. The goods were cleared at the agreed price under the purchase orders, and there was no contractual basis for a unilateral enhancement. The revised price was never accepted by the buyer, did not create a legally enforceable obligation, and therefore never became payable in law. The supplementary invoice represented only a unilateral claim and could not alter the crystallized assessable value. The duty paid on such unrealized value was therefore not legally payable.
Conclusion: The differential duty did not form part of the assessable value and was refundable in favour of the assessee.
Issue (ii): Whether refund was barred by unjust enrichment under Section 11B of the Central Excise Act, 1944.
Analysis: The buyer's contemporaneous confirmation showed that the supplementary invoice was not accepted, the amount was not paid, no entry was made in the books, and no CENVAT credit was taken. There was no contrary material to show that the duty incidence had been passed on. The factual record thus rebutted unjust enrichment.
Conclusion: The bar of unjust enrichment did not apply and refund could not be denied on that ground.
Issue (iii): Whether the refund claim was time-barred.
Analysis: The relevant date was the date of payment of duty, and the refund application was filed within one year from that date. The claim was therefore within limitation.
Conclusion: The refund claim was not time-barred.
Final Conclusion: The order rejecting refund was unsustainable, the valuation could not be altered by an unaccepted unilateral price revision, and the assessee was entitled to refund with consequential relief.
Ratio Decidendi: Under Section 4, only the price actually paid or legally payable at the time of removal can constitute transaction value, and duty paid on an unaccepted unilateral enhancement that never became payable in law is refundable unless the incidence has been passed on.
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