As a relief to Renault Nissan Automotive India, the Chennai bench of the Customs Excise & service tax appellate tribunal(CESTAT) ruled that refund claim cannot be rejected for not opting provisional assessment.
M/s. Renault Nissan Automotive India Private Limited, the appellant engaged in manufacture of Excisable goods viz., Motor Cars and their parts falling under Chapter Heading 8703 of Central Excise Tariff Act, 1985. The appellant is availing CENVAT credit of duty paid on inputs, capital goods and Service Tax paid on input services. They clear their goods to M/s. Renault India Private Limited (RIPL) and M/s. Nissan Motors India Private Limited (NMIPL) both being related persons to the appellant.
The appellant filed a refund claim for Rs.8,11,83,347/- for the period from February, 2015 to July, 2015 citing that in majority of the cases (clearances) the assessable value was higher than the NMIPL/RIPL price and claimed that this had resulted in higher amount of excise duty payment by the appellant.
After verification of the invoices and connected records, the Department viewed that the appellant is not eligible for the refund-claim. Show Cause Notices were issued to the appellant proposing to reject the refund-claims. After due process of law, the original authority rejected the refund- claims. On appeal, the Commissioner (Appeals) upheld the rejection of refund claims.
Shri Rajaram R. appeared and submitted that the appellant sold cars manufactured by them to their related parties (traders). The Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 was adverted to by the Consultant to explain the valuation adopted by them. Rule 10 read with Rule 9 of Central Excise Valuation Rules, 2000 is applicable when excisable goods are manufactured and sold through a related party. The said rule states that the normal transaction value at which the goods are sold by the related person at the time of removal to an unrelated buyer is the value for the purpose of payment of excise duty.
The Department has erroneously called for comparative documents in regard to sales made by the dealers to the ultimate customers. The appellant has produced documents to evidence the higher amount of duty paid by them in regard to the clearances made by them to the related party i.e., NMIPL/RIPL as well as the invoices raised by the related parties to the dealers.
The details of the sale prices by the appellant to the related parties and the subsequent sale by such related parties to various unrelated dealers were furnished to the Department vide letter dated 13.05.2016. The impugned order rejecting the refund-claim alleging that the appellant has not produced the details of sale price to end customers is without any legal basis.
The other reason for rejecting the refund-claim is that the appellant has not opted for provisional assessment. It was submitted that the appellant had requested the Department for provisional assessment in regard to the clearances of the goods.
The price at which the dealers have sold the cars to the end users is of no consequence for considering whether higher amount of duty has been paid. The excess payment of duty has happened while making the clearances by the appellant to the related parties / dealers (NMIPL/RIPL).
The appellant has furnished certificate issued by Chartered Accountant to submit that the incidence of duty has been borne by them and that it is shown as ‘Receivables’ in the balance sheet.
A two-member bench comprising Ms Sulekha Beevi C S, Member (Judicial) and Mr Vasa Seshagiri Rao, member (technical) observed that the authorities below have not analysed the issue in the correct legal prospective for which the matter requires to be remanded to the adjudicating authority.
The CESTAT set aside the impugned order and the matter is remanded to the adjudicating authority who shall consider the observations of this order and process the refund-claim denovo.
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