1996 (10) TMI 298 - AT - Central Excise

Court modifies order for refund calculation, clarifies method for assessing duty element on freight charges

The court modified the Collector (Appeals) order in favor of the appellant, directing the correct method for calculating the refund amount by adding the ... Valuation Issues:- Appeal against the order passed by Collector (Appeals) setting aside three refund claims in part.- Method of calculating refund amount based on assessable value and duty element.Detailed Analysis:1. The appellant, engaged in manufacturing asbestos cement pipes and sheets, filed appeals against the order of the Assistant Collector allowing partial refund claims. The refund claims were related to erroneous inclusion of various charges in the assessable value for excise duty calculation. The Assistant Collector allowed refund of specific amounts related to freight charges but disallowed the balance amounts claimed. The Collector (Appeals) set aside the Assistant Collector's order and raised questions regarding the calculation of the refund amount based on assessable value.2. The main contention raised by the appellant's counsel was regarding the method suggested by the Collector (Appeals) for calculating the refund amount. The appellant did not dispute deducting the duty element but objected to adding the gross refund amount to the assessable value directly. The appellant proposed adding the gross refund amount to the normal price first and then calculating the assessable value and the net refund amount accordingly.3. Various tribunal decisions were cited to support different interpretations of whether the refund amount should be part of the wholesale price or the assessable value. The Supreme Court's decision in Metal Box India Ltd. case highlighted that additional consideration quantified in terms of money value should be added to the price for determining the normal price of the goods.4. Section 4 of the Central Excises Act, 1944, specifies the assessable value of excisable goods as the normal price subject to certain conditions. The effective excise duty element needs to be deducted from the wholesale price to determine the assessable value. The Assistant Collector's calculation of refund based on freight charges was questioned by the Collector (Appeals), who directed verification of transportation expenses and considered the refund amount as part of the assessable value.5. The judgment concluded that the duty element on deductible freight charges should be added to the wholesale price and not the assessable value. This approach ensures proper calculation of the assessable value and the actual refund amount. The order passed by the Collector (Appeals) was modified in favor of the appellant, allowing the appeals to the extent of directing the correct calculation method for the refund amount.6. The court found the Collector (Appeals) justified in setting aside the Assistant Collector's order due to identified defects and ordered a remand to verify the necessary aspects and determine the accurate refund amount based on the modified calculation method.7. In summary, the judgment clarified the proper method for calculating the refund amount by adding the duty element on deductible freight charges to the wholesale price before determining the assessable value. This decision favored the appellant and allowed the appeals to the extent of modifying the Collector (Appeals) order for a more accurate refund calculation.