By TIOL News Service

MUMBAI, JAN 10, 2013: M/s. Videocon are manufacturers of Colour TVs and sell the same from their sales depots situated at various places. The assessee had filed price declarations under Rule 173C of the CER, 1944, declaring therein the assessable value of the goods cleared to its various depots from where the goods were sold to the dealers. At the time of finalization of its account for the year 1996-97,it was noticed that the assessee had claimed less deduction on account of the discounts passed on its dealers, whereas it had actually passed on higher amount of discounts than those declared in the declarations filed with the department. Hence a revised price declaration was filed by the assessee on 17/06/97 claiming higher discounts retrospectively, i.e. with effect from October 1996 onwards.

Consequently, the assessee filed 9 refund claims. The refund claims for the period October to December 96 were rejected as time barred by the refund sanctioning authority, the lower appellate authority and the Tribunal as also by the Bombay High Court of Bombay and hence is not a matter for consideration in the present appeal. As regards the refund claim for the period January 97 to June 97, the adjudicating authority held that an amount of Rs. 12,12,613/- was time barred and the balance amount of Rs. 1,07,98,905/- was rejected on the ground of unjust enrichment. On appeal, the lower appellate authority held that refund claim to the extent of Rs.1,07,98,905/- is not hit either by time bar or unjust enrichment clause.

So, both, the Revenue and the assessee are before the CESTAT.

At the outset, the Bench noted -

"…On going through the records, we find that there are several contradictions in the stand taken and the arguments advanced on behalf of M/s. Videocon. It is the contention of the appellant that there was a communication gap between the factory and the sales depot about the quantum of discounts given on the goods sold from the depot. It has been submitted that the assessee gave higher discounts at the depot than what was declared in the price declaration and these discounts were known to the buyers in advance through trade circulars issued. If trade circulars were issued by the appellant with regard to admissible discounts, how can there be a communication gap between the factory and the depot resulting in declaration of lower discounts in the price declaration filed with the department? If permissible discounts were already known, where was the need to allow a lower discount at the time of sale of goods from the depot and subsequently pass on the differential discounts through credit notes? There are no satisfactory answers to any of these questions."

The Bench further observed -

"6.3 From these grounds adduced in the appeal memorandum, it is clear that the price initially declared to the department was the price prevalent at the depot at the time of removal of goods from the factory. This is further supported by the fact that this was the price at which the goods were sold to the dealers form the depot. Otherwise, there was no need to issue credit notes subsequent to the sale of the goods. It is an admitted position that the appellant allowed higher discounts in view of the cut throat competition in the colour TV market. If there was cut throat competition due to which the prices had to be reduced, how can it be known in advance so as to be communicated to the buyers in advance? The very fact that the reduction in price was passed on to the buyers subsequent to the sale through credit notes itself is a clear pointer to the fact such price reduction was not known in advance. No trade circulars communicating reduction in prices has been submitted by the appellant before this Tribunal nor copies of such circulars claimed to have been issued by the appellant is available on records. The only fact verifiable from the records is that the appellant had filed a price declaration at the time of removal of the goods from the factory indicating the prevailing price for the goods for sale at the depots. After a lapse of more than 9 months, the appellant filed a revised price list dated 17-6-97 revising the prices retrospectively from October 96 onwards. Thus the entire argument of the appellant that higher discounts allowed at the depot subsequent to the sale of the goods were known in advance is only an afterthought to claim ineligible refund and we hold accordingly."

After adverting to the provisions of rule 173C the Bench observed that declaration of correct price under the rule was not an empty formality but a statutory requirement to be conformed and complied with by every assessee. Moreover, it was not the case of the appellant that they had opted for provisional assessment under rule 9B of the CER. The CESTAT also held that it is a settled position in law that revision of price list/declaration can be effective only prospectively. It was also observed that subsequent issue of credit notes for passing on relief of duty burden would not help in overcoming the bar of unjust enrichment. The decisions cited by the appellant were also distinguished by observing that it was a settled position in law that the ratio of any decision must be understood in the background of the facts of that case and a case is only an authority for what it actually decides and not what logically follows from it and a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision.

Holding that the subsequent reduction in prices by passing on higher discounts to the customers after the clearances of the goods could not alter the excise duty liability, the Bench allowed the appeal of the Revenue and rejected the refund claim filed by the assessee.

In passing: Also see - (2011-TIOL-325-CESTAT-MUM).

(See 2014-TIOL-50-CESTAT-MUM)