Case: Collector of Central Excise, Madras Vs. MRF Ltd

1. This appeal by the assessee is directed against the judgment and order of the Customs, Excise and Gold (Control) Appellate Tribunal, South Regional Bench at Madras dated 24-9-1986 whereby the assessees claim for refund of excise duty on the differential between the price on the date of removal and the reduced price at which the tyres were sold on the direction of the Government, was rejected. The assessee contends that their price list was approved on 14-5-1983 but subsequent thereto on account of consumer resistance, the Ministry of Commerce, Government of India, directed them, pursuant to the decision taken at the meeting with tyre manufacturers, to roll back the prices to pre-14-5-1983 level and it is on account of this roll back of prices that there came about a differential in the price on the basis of which the assessee claimed refund of excise duty to that extent. The Tribunal came to the conclusion that under Rule 9-A and Rule 173-C(2)(vi) of the Central Excise Rules, the duty was chargeable on the excisable goods at the rate and on the price prevailing on the date of actual removal as shown by the assessee and the subsequent reduction in the price even at the behest of the Government could not create a right in favour of the assessee to refund of excise duty on the differential in the price. The Tribunal also came to the conclusion that the subsequent reduction in the price for whatever reason was totally irrelevant so far as the liability to pay excise duty was concerned and, therefore, the claim could not be entertained. On this broad premises, the claim of the assessee for refund came to be rejected and hence the assessee is before us by way of an appeal2. We have heard the learned counsel for the assessee. Once the assessee has cleared the goods on the classification and price indicated by him at the time of the removal of the goods from the factory gate, the assessee becomes liable to payment of duty on that date and time and subsequent reduction in prices for whatever reason cannot be a matter of concern to the Central Excise Department insofar as the liability to payment of excise duty was concerned. This is the view which was taken by the Tribunal in the case of Indo Hacks Ltd. v. CCE[(Trib)] and it seems to us that the Tribunals view that the duty is chargeable at the rate and price when the commodity is cleared at the factory gate and not on the price reduced at a subsequent date is unexceptionable. Besides as rightly observed by the Tribunal the subsequent fluctuation in the prices of the commodity can have no relevance whatsoever so far as the liability to pay excise duty is concerned. That being so, even if we assume that the roll back in the price of tyres manufactured by the appellant Company was occasioned on account of the directive issued by the Central Government, that by itself, without anything more, would not entitle the appellant to claim a refund on the price differential unless it is shown that there was some agreement in this behalf with the Government and the latter and agreed to refund the excise duty to the extent of the reduced price.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 0

Reasoning from the judgment:
0[ds]2. We have heard the learned counsel for the assessee. Once the assessee has cleared the goods on the classification and price indicated by him at the time of the removal of the goods from the factory gate, the assessee becomes liable to payment of duty on that date and time and subsequent reduction in prices for whatever reason cannot be a matter of concern to the Central Excise Department insofar as the liability to payment of excise duty was concerned. This is the view which was taken by the Tribunal in the case of Indo Hacks Ltd. v. CCE[(Trib)] and it seems to us that the Tribunals view that the duty is chargeable at the rate and price when the commodity is cleared at the factory gate and not on the price reduced at a subsequent date is unexceptionable. Besides as rightly observed by the Tribunal the subsequent fluctuation in the prices of the commodity can have no relevance whatsoever so far as the liability to pay excise duty is concerned. That being so, even if we assume that the roll back in the price of tyres manufactured by the appellant Company was occasioned on account of the directive issued by the Central Government, that by itself, without anything more, would not entitle the appellant to claim a refund on the price differential unless it is shown that there was some agreement in this behalf with the Government and the latter and agreed to refund the excise duty to the extent of the reduced price.