By TIOL News Services

MUMBAI, AUG 27, 2014: THE appellant manufactured and cleared transformers to M/s. U.P. Power Corporation Ltd. on payment of duty.

In terms of the agreement the appellant was required to supply a particular quantity during a particular period at a particular price. But there was a clause in the agreement that if the appellant failed to supply the particular quantity during a particular period, the buyer shall have a right to deduct or required to pay lesser amount as per the agreed price.

As the appellant failed to supply the specified quantity during a specified period, therefore, the payments were deducted by M/s. U.P. Power Corporation.

Consequently, since the appellant had not received full payment against the invoice raised for the clearance of the transformers, they filed a refund claim of the duty component involved in the less amount received from M/s. U.P. Power Corporation.

The lower authorities rejected the claim on the premise that since the appellant had paid duty on the invoice price the same is to be taken as agreed price and no deduction shall be allowed thereafter.

Against the said order, the appellant is before the CESTAT.

The Bench observed that in view of the Larger Bench decision in Victory Electricals Ltd. 2013-TIOL-1794-CESTAT-MAD whatever amount the appellant had received less from the buyer they are entitled to take refund of the duty component involved in the deducted amount. Inasmuch as the appellants are entitled for refund claim.

The order of the lower appellate authority was set aside and the appeal was allowed with consequential relief.

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(See 2014-TIOL-1605-CESTAT-MUM)