Excise Duty Refund cannot be rejected merely by not opting for Provisional Assessment: CESTAT [Read Order]

The Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that an excise duty refund cannot be rejected merely by not opting for provisional assessment.

Savita Oil Technologies Ltd,the appellants are manufacturer of lubricating oil falling under Central Excise Tariff Heading 27101980 of the Central Excise Tariff Act, 1975 at its factorylocatedat Silvassa.  The appellant has variousdepotslocated in multiple locations in India. The Lubricating Oilis removedto its depot on paymentof Central Excisedutyfollowingthe provisions of Rule 7  of the Central Excise  Valuation  Rules, 2002.

Based on actual sales at the depot, comparablestatements were madefor computationof dutytween the valueadopted forclearanceof goods from thefactory and thevalue at which it was soldfrom the depot. It was found that the appellant has paid theexcessexcisedutyamount of Rs. 1,19,802/- which wasonaccount ofvarious discountspassed onfrom the depot and were knownto the appellants at the timeof removal of goods from thefactory. 

The appellantfiled therefund claimof the said amount which was rejected by the department on theground that the appellanthas not providedvarious documentssuch as a Chartered Accountant Certificate, Balance Sheet, Excise Invoice, Discount Policies, Refund on freesamples. The  Commissioner (Appeals) rejected the appeal on the ground thatthe appellanthavenotoptedfor provisional assessment and documents relating to a cash discount, a quantity discount, and co-relation of goods removedfrom the factoryand depot were not provided. 

It was submitted that Rule 7 of the Central Excise  Valuation  Rules, 2007 provided that thepriceof goods sold from the depotnearestto the time ofremovalof goodsfrom the factoryshall bethe assessablevalueof thegoods removed from thefactory.

The CESTAT observed that the removal ofgoods from the factoryison presumptivevalue and thetransactionvalueis finalizedonly at the time ofsale ofgoodsfrom the depot. Further viewed that the discountgiven by the appellant at the time ofsale ofgoodsfrom the depotis legal and correct and the sameshall not beincludiblein theassessablevalue. Further held that if there isany excesspayment of dutyin comparison with thevalue atwhich thegoods were clearedfrom the factoryand the samegoodssold from thedepot, the appellant is entitled to a refund.

A Coram comprised of Mr Ramesh Nair, Member (Judicial) and Mr Raju, Member (Technical) held thatmerelybecausethe appellant has notopted for theprovisional assessment thelegal provision for valuation will not get altered.  The duty is payable bySection 4 of Central Excise Valuation Rules, 2000. In terms of Rule 7, the exciseduty is payableat thevalue at the time of sale ofgoodsfrom the depotafter removal from thefactory.

The CESTAT set aside the impugned order and remand the matter to the Adjudicating Authority for passing a fresh order.

To Read the full text of the Order CLICK HERE

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