2004 (9) TMI 543 - AT - Central Excise

Summary

Issues:
Application of principles of unjust enrichment on provisional assessments under Rule 9B.

Analysis:
The case involved the question of whether the principles of unjust enrichment could be applied to provisional assessments under Rule 9B that had not been finalized. The appellants had been purchasing duty-paid jumbo rolls of polyester film since 1980, which were processed by slitting and packing at their premises without paying excise duty between 1980 and 1988. A show cause notice in 1988 alleged that this process amounted to manufacture, leading to the appellants paying duty under protest and executing B-13 bonds with security. However, in 1991, the Collector of Central Excise set aside the show cause notice, determining that the process did not constitute manufacture. The appellants then filed a refund claim for the duty paid under protest. The Assistant Commissioner, in 1995, granted a partial refund and rejected the rest on the grounds of unjust enrichment, crediting the amount to the Consumer Welfare Fund.

The Tribunal noted that the principles of unjust enrichment do not typically apply to provisional assessments, citing the Mafatlal Industries Ltd. v. UOI case. As the assessments in this case had remained provisional, with no finalization after the Collector's order, the show cause notice of 1995 was solely for rejecting the refund based on unjust enrichment, not for finalizing assessments. The Assistant Commissioner should have first finalized the assessments in line with the Collector's order on "Manufacture." Had this been done, the refund would have been granted without being subject to Section 11B. The Tribunal emphasized that delays in processing refund applications do not defeat the appellants' rights. Therefore, the Assistant Commissioner's failure to finalize the assessments and refund amounts claimed by the appellants was deemed incorrect.

Consequently, the Tribunal remanded the case to the Assistant Commissioner to consider the affidavit provided by the appellants and any other relevant material to quantify the refund amounts due, along with interest as per the law, and instructed the payment of the same. The appeal was allowed on these terms.