Cce-Bhopal vs M/S. Vindhya Teleink Ltd

[Arising out of order-in appeal no. 782-CE/BPL/2004 dated 17.11.2004 passed by Commissioner (Appeals-II), Customs and Central Excise, Bhopal]

1. Whether Press Reporter may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy of the order?

4. Whether order is to be circulated to the Department Authorities?

CCE-Bhopal Appellant

Vs.

M/s. Vindhya Teleink ltd. Respondent

Appearance: Shri M.S. Negi, DR for the appellant

Shri Harishankar, Senior Advocate, Shri Sunil and Ms. Privadeep, Advocates for the respondent.

Coram: Honble Shri Rakesh Kumar, Member (Technical)

Honble Shri S.K.Mohanty, Member (Judicial)

Final Order No. 51611/2015

Per: Rakesh Kumar

The facts leading to filing of this appeal by the Revenue are, in brief, as under:

1.1 The respondents are manufacturers of optical fibre cables for telecommunication. They cleared two drums of optical fibre cables under invoice no. 960 dated 25/11/2002 and the duty had been paid through PLA. However, at the time of loading, one drum fell down and the cables got damage as a result of which the goods were not cleared. In respect of the damaged cable, the appellant claimed insurance. Finally, the goods cleared comprising of two drums were cleared on 31/3/2003 under invoice no. 1815 on payment of duty. Since in respect of one drum the duty had been paid twice and the appellant had not claimed insurance, the appellant applied for refund duty of Rs. 2,702/- to the Assistant Commissioner, as it had been paid twice in respect of the same goods. In respect of the consignment of optical fibre cables cleared under invoice no. 1075 dated 11/12/2002, by mistake, higher rate was mentioned. The duty paid on the higher amount was Rs. 1,701/-. Since the appellant had received payment only of the lower amount, they applied for refund to the Assistant Commissioner of the excise duty of Rs. 1700/- paid by them. The appellant cleared a consignment of optical fibre cables to M/s. Bharti Touchtell under invoice no. 71 dated 25/4/2003. In the invoice, the price of the goods was mentioned as Rs. 1,36,500/- per K.M. and they paid duty on this basis. However, M/s. Bharti Touch Tell under their letter dated 22/7/2003 addressed to the respondent informed him that the correct rate should be Rs. 69,800/- per K.M. and in this regard, they referred to their latest rate contract. However, the purchase order against which the supply had been made mentioned the per K.M. rate as Rs. 1,36,500/-. The respondent received payment from M/s. Bharti Touch Tell only at the rate of 69,800 per K.M. Since, the duty had been paid on the higher price at the rate of 1,36,500/- per K.M., they submitted refund claim for refund of Rs. 1,48,253/- to the Assistant Commissioner.

1.2 During the period from October, 2002 to January, 2003, the appellant cleared certain consignments of optical fibre cables to M/s. Tata Tele Services. In this case, also the price at which the duty was paid was higher than the price which was actually received by the respondent and according to the respondent, during the period of supply, the rate of goods to be supplied had not been decided and hence, they had paid the duty on the basis of old rate contract and that the rates subsequently fixed were lower. Accordingly, the respondent submitted the refund claim of Rs. 87,479/- to the Assistant Commissioner.

1.3 All the above four refund claims had been submitted simultaneously under the covers of one refund application to the Assistant Commissioner.

1.4 The above refund claims were rejected by the Assistant Commissioner. However, on appeal being filed to Commissioner (appeals), the Assistant Commissioners order was reversed by the Commissioner of Central Excise (appeals).

1.5 Against this order of the Commissioner (appeals) this appeal has been filed by the Revenue.

1.6 The Revenue in these appeals mainly relies upon the Apex Courts judgment in the case of MRF Limited Vs. CCE Madras reported in 1997 (92) ELT 309 SC wherein it has been held that fluctuation in prices subsequent to the clearance of the goods does not affect the liability to excise duty and that reduction in price subsequent to the clearance of goods on payment duty for whatever reason is not to affect liability for payment of excise duty.

2. Heard both the sides.

3. Shri M.S. Negi, ld. DR, assailed the impugned order by reiterating the grounds of appeal and pleaded that as regards the refund claim of Rs. 26,702/-, the respondent should have followed the procedure prescribed under Rule 16 of Central Excise Rules, i.e., they should have taken back the goods for repair/re-conditioning on taking the CENVAT Credit of the duty paid and later on should have cleared the goods on payment of duty; that as regards the refund claim of Rs. 1071/- in respect of the goods cleared under invoice 1075 dated 11/12/2002 while the excise invoice mentioned supply rate for the goods as Rs. 47,500/- per k.m. the commercial invoice mentioned the correct rate of Rs. 46,500/- and as such the duty has been paid on higher price; that as regards the refund claim for the amount of Rs. 1,48,253/- in respect of the goods cleared under invoice no. 71 dated 25/4/2003 and the refund claim of amount 87,489/- in respect of the goods cleared to M/s. Tata Tele Services during period from October, 2002 to January, 2003 under invoice, in these cases, the rates have been revised after the clearance of the goods and hence, in terms of the Apex Courts Judgment in the case of MRF Limited Vs. CCE Madras (Supra) and the judgment of Honble Punjab & Haryana High Court in the case of Mauria Udyog Ltd. Vs. Commissioner of Central Excise reported in 2008 (2011) STR 319 P&H and also the Tribunals judgment in the case of Indian Explosive Limited Vs. CCE Hyderabad reported in 2012 (284) 259 (Tri-Bang), the refund claim would not be admissible.

4. Shri M.S. Negi accordingly pleaded that except for the refund claim of Rs. 1701/- in respect of the goods cleared under invoice no. 1075 dated 11/2/2002, the remaining refund has been wrongly allowed by the Commissioner (appeals).

5. Shri Harishankar, Senior Advocate, the learned Counsel for the respondent, pleaded that so far as the refund claim of Rs. 2702/- is concerned, initially the goods packed in two drums had been cleared under invoice no. 960 dated 25/11/2002 on payment of duty, that though the duty in respect of the goods had been paid, during the course of loading in the factory, one drum fell down and the optical fibre cable packed in it were damaged as a result of which the consignments were not cleared; that the appellant have taken reimbursement of the value including duty of the damaged goods in respect of one drum which had got damage and in respect of 2nd drum which was not damaged, no reimbursement from insurance company has been claimed; that the consignment of two drums was subsequently cleared under invoice no. 1815 dated 31/3/2003 on payment of duty and as such the duty in respect of the second drum was paid again, that from these facts it is clear that in respect of the 2nd drum duty has been paid twice and no reimbursement of duty paid on earlier occasion had been claimed from the insurance company; that Rule 16 of the Central Excise Rule, 2002 is not applicable as the goods had been damaged in the course of the loading in the factory; that in view of this, refund claim has been wrongly rejected by Assistant the Commissioner and as such there is not infirmity of mistake in the Commissioner (appeals) order allowing this refund claim; that as regards the refund claim for amount of Rs. 1,48,253/- in respect of the goods cleared under invoice no. 71 dated 25/4/2003, though the invoice as well as the purchase order mention the rate for the goods as Rs. 1,36,500/- per K.M., this rate mentioned was incorrect, as these goods had been supplied to M/s. Bharti Touch Tell and in terms of the rate contract with M/s. Bharti Touch Tell these goods were to be supplied at the rate of 69800/- per k.m.; that immediately after supply the customer- M/s. Bharti Touch Tell under their letter dated 22/7/2003 addressed to the respondent informed them that as per the rate contract, the rate should be 69,800/- and it is at this rate only the respondent have received payment from M/s. Bharti Touch Tell; that this is not the case for revision of rate after clearance as the correct rate for the goods was Rs. 69,800/- per K.M. and only due to mistake wrong rate of Rs. 1,36,500/- per K.M. had been mentioned in the purchase order and the invoice and hence, Apex Courts judgment in the case of MRF Limited Vs. CCE Madras (Supra) would not be applicable; that as regards the refund claim of Rs. 87,479/- in respect of the supply to M/s. Tata Tele Services under their invoices during period from October, 2001 to January, 2003, during this period, the rate at which the goods were to be supplied had not been decided as a result of which the invoice had been raised at the rates mentioned in the earlier purchase order and the duty had been paid on that basis; that subsequently when the rates were finalized and the finalized rates were lower than the rate at which the invoices had been raised and the duty had been paid, this is also not the case of revision of rate after clearance of the goods, as at the time of clearance, the rate at which the goods were to be supplied had not even been fixed and the same was fixed after the completion of the supply and during period of supply the duty had been paid at the rate applicable to the previous purchase orders.

6. He, therefore, pleaded that there is no infirmity in the impugned order.

7. We have considered the submissions from both the sides and perused the records.

8. As regards, the refund claim of Rs. 1701 in respect of the invoice no. 1075 dated 11/12/2002, there is no dispute that while the commercial invoice mentioned the correct rate of 46,500/- the Central Excise Duty invoice mentioned the higher rate of 47,500/- on which duty was paid. It is clear that this is due to clerical mistake and hence, in our view there is no infirmity in the Commissioner (appeals) order permitting refund of Rs. 1701 in respect of this invoice, as the Respondent received payment on the basis of t he commercial invoice.

9. As regards, the refund claim of Rs. 26,702/- in respect of the goods cleared under invoice no. 1815 dated 31/3/2003, there is no dispute that earlier the consignment of two drums of optical fibre cable was to be cleared under invoice no. 960 dated 25/11/2002 and before clearance, the duty had also been paid. There is no dispute that before clearance of the goods and during the process of loading, one of the drums fell down as a result of which its content got damaged and as a result of this the consignment itself was not despatched and the same was dispatched subsequently under the invoice no. 1815 dated 31/3/2003. There is also no dispute at the time of clearance of the goods under invoice no. 1815 dated 31/3/2003 the duty had been paid once again. From this, it is clear that in respect of the second drum for which the appellant had not claimed any reimbursement from the insurance company the duty had been paid twice. In our view, the provision of Rule 16 of the Central Excise Rule, are not applicable as the goods had been damaged when the same were being loaded in the factory. In view of this, we hold that there is no infirmity in the Commissioner (appeals) order sanctioning the refund of Rs. 26,702/-.

10. As regards, the refund claim of Rs. 1,48,253/- in respect of the goods cleared under invoice no. 71 dated 25/4/2003, while the invoice issued to M/s. Bharti Touch Tell and the purchase order placed by M/s. Bharti Touch Tell mention the rate as Rs. 1,36,500/- per K.M., a letter dated 22/7/2003 of M/s. Bharti Touch Tell addressed to respondent mentions that the correct rate should be 69,800/- as per the rate contract. There is no dispute that the respondent have received payment only at the rate of 69,800/- per K.M.. According to the ld. Counsel for the respondent, the correct rate for the goods supplied under invoice no. 71 dated 25/4/2003 was Rs. 69,800/- and that the purchase order wrongly mentions the rate as Rs. 1,36,500/-. If in terms of the respondents rate contract with M/s. Bharti Touch Tell, optical fibre cables were to be supplied by them at the rate of 69,800/- per K.M. and it only due to clerical mistake wrong rate Rs. 1,36,500/- was mentioned in the purchase order and invoice, this would not be the case of revision of the case after clearance of the goods and Apex Courts Judgment in the case of MRF Limited Vs. CCE Madras (supra) would not apply. If as per the respondents rate contract with M/s. Bharti Touch Tell, the goods were to be supplied at the rate of Rs. 1,36,500/- and it is only subsequently after supply of the goods, the rates were reduced after negotiations to Rs. 69,800/-, and this would be a case of revision of the rates subsequent to the clearance and in terms of the Apex Courts Judgment in the case of MRF Limited Vs. CCE-Madras, the refund of duty would not be admissible. But since the rate contract of the respondent with M/s. Bharti Touch Tell is not available in the records, this fact has to be ascertained by the lower authorities for which the same has to be remanded.

11. As regards, the refund claim of Rs. 57,479/- in respect of the supply to M/s. Tata Tele Services for period from October, 2001 to January, 2003, the departments contention is that this is also the case of revision of rates after clearance of the goods. However, the appellants contention is that during the period of supply, the rate at which the goods were to be supplied had not been decided, as a result of which the respondent had raised invoices and paid duty on the basis of the rate mentioned in the earlier purchase order and that the rate for the goods supplied during the period of dispute to M/s. Tata Tele Services was decided only subsequently after the goods had been supplied. If the respondents contention that during the period of supply to M/s. Tata Tele Services, the rate for the goods had not been fixed and the same was fixed only subsequently is correct they would be eligible for the refund as the duty had been paid at a higher price and judgment of MRF Limited Vs. CCE Madras would not be applicable. But if prior to the period of supply, the rate at which the goods were to be supplied had been decided and the same was reduced only subsequently, the judgment of Apex Court in the case of MRF Limited Vs. CCE Madras would be applicable and the respondent would not have eligible for refund. For ascertaining this factual position, the matter has to be remanded.

12. In view of the above discussion, while the Commissioner (appeals)s order in respect of the refund claims of Rs. 26,702/- and 1701/- is upheld his order in respect of the refund claims of Rs. 1,48,253 and 87,479/- is set aside and the matter is remanded to the original adjudicating authority for de-novo adjudication strictly in terms of our directions and the observations in this order.

13. The Revenues appeal is partly allowed.

(Rakesh Kumar) (S.K. Mohanty)

Member (Technical) Member (Judicial)

Ritu