Customs, Excise and Gold Tribunal - Delhi
Carbide Chemicals Co. vs Collector Of Central Excise on 24 August, 1994
Equivalent citations: 1994(73)ELT898(TRI-DEL)
ORDER K.S. Venkataramani, Member (T)
1. This is an appeal directed against the order dated 23-5-1983 passed by the Collector of Central Excise (Appeals), Bombay. The facts, briefly, are that during the period 4-12-1979 to 16-12-1979, appellants paid duty on LDPE produced from Raw Naptha @ 40% ad valorem instead of 27% ad valorem as was payable according to Notification No. 302/79. Hence, they claimed refund of excess duty paid and the same was sanctioned by the Assistant Collector. Subsequently, however, it was noticed that the appellants, during the above-mentioned period, recovered duty from their customers @ 40% ad valorem and not @ 27 ad valorem. Therefore, the Assistant Collector contended that the amount of refund sanctioned forms part of assessable value of the goods and duty is required to be paid on the same. Therefore, a demand for Rs. 3,26,974.37 was issued to the appellants and Assistant Collector confirmed the same. The Collector (Appeals) in the impugned order confirmed the order of the Assistant Collector.
2. Shri R. Swaminathan, ld. Consultant appearing for the appellants referred to the work-sheet submitted by them to say that from the work-sheet given, it will be amply to demonstrate that the appellants in fact had legitimately claimed refund of duty in excess only after re-calculating their assessable value.
3. We have heard Smt. C.G. Lal, ld. S.D.R. who reiterated the reasoning contained in the order of the Collector (Appeals) and the Assistant Collector.
4. Submissions made by both the sides have been carefully considered. The calculation sheet to explain their stand submitted by the appellants, herein, would appear to clarify the factual detail in this appeal. It is as follows :
The Cum Duty price at which goods were sold by paying and recovering 40% duty was Rs. 100 71.43 + 28.57 duty Since the correct rate of duty payable is only 27% refund is available.
Since duty @ 40% has been collected even after giving refund, the Cum Duty price should remain at Rs. 100 78.74 + 21.26 duty In the normal case, if the 40% duty was not charged and recovered, the refund would be 40% - less 27% = 13% of the existing assessable value. Rs. 28.57 - Rs. 19.29 = Rs. 9.28 refund However, in view of applying 4(4)(d)(ii) and giving reduction of only the duty actually payable @ 27% and
considering the refund of the difference Rs. 28.57 - Rs. 21.26 = Rs. 7.31 between 40% and 27% the refund Rs. 7.31 instead of Rs. 9.28 amount is reduced. ------------------------------- Refund claimed was only Rs. 7.31 and not Rs. 9.28. This can be achieved by two methods of calculations :
(i) Straight method i.e. Cum duty price x 100 = 100 x 100 = 78.54 100 + reduced rate 100 + 27 Duty payable @ 27% is therefore Rs. 21.26 Refundable is therefore Rs. 7.31 i.e. (28.57 - 21.26)
(ii) Circuitous method:
Cum duty price Rs. 100 with 40% Duty = Rs. 100 x 100 =Rs. 71.43 ad valorem Rs. 100 + 40 Duty Rs. 71.43 x 40 = Rs. 28.57 Duty @ 27% on ad valorem Rs. 71.43 x 27 = Rs. 19.29 Refund amount is therefore Rs. 9.28 (28.57 = Rs. 19.29)
Since the refund amount of Rs. 9.28 is retained/already recovered, it is to be considered as additional consideration and dealt with in accordance with Rule 5 of Valuation Rules. It is therefore to be considered as cum-duty-price.
Therefore the additional Rs. 9.29 x 27 = Rs. 1.97 duty on this amount 100 + 27 would be The amount of refund would therefore be reduced by this additional duty of Rs. 1.97. The net refund would be Rs. 9.28 - Rs. 1.97 = Rs. 7.31 These are alternative methods.
The department wants to adopt the second method after the first method has already been adopted. Hence the demand is incorrect.
5. From the above calculation, it is seen that in the case of Cum duty price and in a situation where the manufacturers bear the excise duty, the above position will obtain, and in such a situation, adding the refund granted to the manufacturer to the assessable value will not arise. In this view of the matter, the appeal is allowed.