2026-VIL-726-CESTAT-CHE-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise – Refund of Differential Duty paid on notional and unrealised value basis supplementary invoices - Appellant sought to revise the price and issued supplementary invoice, discharging differential duty but the buyer refused to accept the revised price and declined payment of the differential amount - The appellant filed a refund claim on the ground that the enhanced price was never realized and therefore duty paid on such differential value is not legally payable – Whether the differential duty paid on supplementary invoices, arising from unilateral price revision, forms part of the assessable value under Section 4 of the CEA, 1944 when such price revision was not accepted and paid by the buyer - HELD - The differential duty paid by the appellant on the basis of supplementary invoices, arising out of unilateral price revision not accepted by the buyer, is not in accordance with the law and is refundable. The expression "price actually paid or payable" under Section 4 assumes significance and it must denote a legally enforceable obligation. In the absence of any contractual provision enabling upward price revision, the subsequent issuance of supplementary invoices remains a unilateral act on the part of the appellant without binding effect on the buyer. This reinforces the position that the revised price never attained the character of “price payable” under Section 4 - The supplementary invoice does not represent a valid transaction value. The duty paid on such notional and unrealized value cannot be sustained - The principle laid down in Commissioner of Central Excise v. Amul Industries Pvt. Ltd. is applicable that where efforts to realize enhanced consideration fail, the same cannot form part of assessable value. The retention of such duty by the Revenue would amount to collection of tax without authority of law - The differential duty paid by the appellant on the basis of supplementary invoices, arising out of unilateral price revision not accepted by the buyer, does not form part of the assessable value under Section 4 of the Central Excise Act, 1944 and is therefore it is refundable – The impugned order is set aside and the appeal is allowed - Unjust Enrichment - The contemporaneous evidence clearly establishes that the differential amount has not been realized by the appellant and that the incidence of duty has not been passed on to the buyer in any manner whatsoever. In the absence of any contrary material, it is held that the incidence of duty has not been passed on and the bar of unjust enrichment under Section 11B is not attracted. The doctrine of unjust enrichment as elaborately considered by the Hon'ble Supreme Court in CCE v. Allied Photographics India Ltd. requires the Department to establish based on evidence that the incidence of duty has been passed on, which is absent in the present case - The bar of unjust enrichment under Section 11B is not attracted.
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