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2019 (6) TMI 180 - AT - Central ExciseRefund claim - duty paid under protest - whether Chambal Fertilizers have to discharge duty liability on the ‘MRP’ fixed by the Government for Urea for the period March, 2011 to October, 2012 and November, 2012 to April, 2013 or it should discharge duty liability on the ‘transaction value’ which is the difference arrived at by deducting the commission of the dealer from the MRP? HELD THAT:- The Central Government regulates the price at which Urea is sold and as the policy of the Government is to provide fertilizers to farmers at an affordable price for sustained agricultural growth, the MRP fixed by the Government is lesser than the cost of production. The Government, therefore, reimburses the value between the cost of production and the notified price in the form of a subsidy. Urea is sold to the farmers through a network of dealers. The dealers pay an amount to the Appellant after deducting their commission from the MRP fixed by the Government. Chambal Fertilizers has been discharging its Service Tax liability on the amount arrived at after deducting the commission of the dealer from the MRP. The case of the Department is that Chambal Fertilizers should discharge its Service Tax liability on the MRP fixed by the Government and not on the value it sells Urea to the dealers. Thus, what is required to be examined is whether the Chambal Fertilizers should pay Service Tax on the transaction value as contemplated under section 4 of the Act or on MRP as contemplated under section 4A of the Act. It is not in dispute that Urea was sold by Chambal Fertilizers at a price arrived at after deducting the commission of the dealer from the MRP. It would be this price on which Urea was actually sold to the dealer. This would, therefore, be the transaction value under section 4 of the Act on which value Chambal Fertilizers would be liable to pay Excise Duty. M/s. Chambal Fertilizers was required to pay Excise Duty only on ‘Transaction Value’ and not on ‘MRP’. Such being the position, the refund claim filed by M/s Chambal Fertilizers could not have been rejected. This refund claim is, therefore, required to be examined afresh after considering the issue of unjust enrichment which was not considered by the Assistant Commissioner for the reason that the amount of Excise Duty was found to be correctly deposited. The matter needs to be remitted to the Assistant Commissioner for passing a fresh order on the refund claim after examining whether there has been unjust enrichment - appeal allowed by way of remand.
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