ORDER 1. M/s. HPL Socomac Private Limited, Gurgaon, are engaged in the manufacture of electronic meters falling under Chapter heading 9028.00 of the First Schedule to the Central Excise Tariff Act, 1985. By an order dated 9.12.2003 passed by the Deputy Commissioner, their refund claim amounting to Rs. 21,24,920/- has been rejected Under Section 11-B of the Central Excise Act. The Appellant received a purchase order dated 31.10.2001 from M/s. Dakshin Haryana Bijli Vitran Nigam Limited, Hissar (in short "DHBVNL") for supply of 65,000 single phase (5-20 Amp.) electronic meters @ Rs. 1,120/- per meter on FOR basis. The price was inclusive of taxes, freight and insurance charges. Under condition No. 6 of the purchase order, the full quantity of 65,000 electronic meters was required to be supplied upto 31.3.2002. The Appellant supplied 30,000 electronic meters upto 31.3.2002 @ Rs. 1,120/- per meter. The balance quantity of 35,000 meters was supplied between 8.5.2002 and 28.5.2002. 2. Prior to the supply of the said meters, M/s. DHBVNL sent a letter dated 11.4.2002 asking the Appellant to agree to furnish an undertaking to accept the lowest rates to be finalized as per the new rate contract under tender Enquiry No. QD 121 or by levying a penalty of up to 5% on account of delay in delivery of the material as per the purchase order, whichever happens to be lower. This novation of the price contained in the purchase order was accepted by the Appellant vide a letter dated 15.4.2002, by which the Appellant gave the necessary undertaking. 3. By a letter dated 17.10.2002, M/s. DHBVNL informed the Appellant that the meter rate as per the new rate contract had been decided at Rs. 600/- FOR and, therefore, this being lower than 5% of Rs. 700/- per meter, which would have been the penal amount on account of delay, the said rate of Rs. 600/- per meter was fixed against delivery of the aforesaid meters. 4. The Commissioner (Appeals) by his order dated 18.6.2004 held that as per Section 4 of the Central Excise Act, where the duty of excise is chargeable on any excisable goods with reference to their value, then on the date of removal of such goods from the factory premises such value will be the transaction value. 4. The Commissioner (Appeals) by his order dated 18.6.2004 held that as per Section 4 of the Central Excise Act, where the duty of excise is chargeable on any excisable goods with reference to their value, then on the date of removal of such goods from the factory premises such value will be the transaction value. He held that the goods had been removed in May, 2002 and that a reduction in price had been agreed to between the parties only in October, 2002. Hence, the said reduced price cannot be treated as transaction value at the time and place of removal of the goods. He, therefore, upheld the order in original rejecting the refund claim filed by the Appellant. 5. The CESTAT by the impugned order dated 4.2.2005 confirmed the order of the Commissioner (Appeals) stating: We have perused the records and heard both the sides. It is noted that the original assessment and payment of the duty took place at the contracted price. The change in the amount paid is on account of imposition of penalty for delayed period. The penalty is separate from the price of the goods. There is no provision in the excise law for allowing deduction of penalty from the sale price for the purpose of assessable value. In these circumstances of the case, we do not find any merit in the appeal and the same is rejected. 6. Shri Lakshmikumaran, learned Counsel for the Appellant argued before us that the order of CESTAT is without application of mind as there was no penalty involved on the facts of the present case. Further, the appellate order of the Commissioner (Appeals) was also wrong because it did not refer to the price novation between the parties agreed upon on 15.4.2005 which was before the goods had been removed from the factory premises in May, 2002. 7. Shri A.K. Sanghi, learned senior advocate appearing on behalf of the revenue argued that in principle the Commissioner (Appeals) was correct and that any subsequent variation of price between the parties after removal of goods from the factory premises cannot possibly be the transaction value Under Section 4 of the Central Excise Act. 8. We have heard learned Counsel for the parties. It is clear that by their letter dated 15.4.2005 the original purchase order dated 31.10.2001 was novated insofar as price was concerned. 8. We have heard learned Counsel for the parties. It is clear that by their letter dated 15.4.2005 the original purchase order dated 31.10.2001 was novated insofar as price was concerned. The novation turned out to be that a price of Rs. 600/- per meter had been charged. Rs. 600/- per meter being less than 5% of Rs. 700/- per meter if the penal rate of 5% was to be applied therefore became the price without reference to any penal rate. This price had been fixed before removal from the factory premises in May, 2002. The Commissioner (Appeals) order dated 18.6.2004 though correct in principle is wrong on facts as he does not refer to the letter dated 15.4.2005 of the Appellant at all. The CESTAT is wrong in turn because on facts there was no imposition of penalty for the delayed period. 9. In the aforesaid premises, the impugned order of CESTAT and the Commissioner (Appeals) are set aside. 10. Since duty has been paid on the basis of the original price in the purchase order, the difference between the said rate and the reduced rate of Rs. 600/- per meter for 35000 meters which came to Rs. 21,24,920/- would have to be repaid to the Appellant. This amount had been claimed by the Appellant on 20.11.2002 and had been turned down by the impugned orders. The said amount will now as a consequence of the setting aside of these orders be ordered to be repaid to the Appellant together with interest at 9% per annum from November, 2002 till the date of payment. 11. Payment be made within three months from the date on which this order is communicated to the Commissioner of Central Excise Range-III, Gurgaon. The appeal is allowed in the aforesaid terms.