2006 (8) TMI 382 - AT - Central Excise

Summary

Issues:
Appeal against Order-in-Appeal directing refund claim for excess duty paid during provisional assessment.

Analysis:
1. The appeal was filed by the Revenue against the Order-in-Appeal dated 17-5-2004, which set aside the Order-in-Original directing the respondents to file a refund claim regarding the excess duty paid by them during the period of April 2001 to March 2002.

2. The respondent, a manufacturer of man-made fabrics and woolen fabrics, applied for provisional assessment of goods cleared from their factory during the said period. The Dy. Commissioner of Central Excise confirmed the demand for short payment of duty and acknowledged the excess duty paid by the respondent. The Dy. Commissioner directed the respondent to file a refund claim instead of adjusting the excess amount paid. The respondent appealed to the Commissioner (Appeals), who upheld the demand for short payment but allowed the adjustment of the excess paid amount to the short paid amount, deviating from the original directive of filing a refund claim.

3. The Revenue contended that the Commissioner (Appeals) should have directed the respondent to file a refund claim instead of allowing the adjustment of excess paid duty, as the provisions of Rule 7 do not explicitly provide for such adjustment.

4. The respondent's advocate argued that whether a refund claim is allowed or adjustment against excess duty paid is permitted, the net result remains the same. The excess amount, if refunded, could have been used to offset the short paid amount during the provisional assessment.

5. Upon considering the submissions and reviewing the records, it was found that clearances made during the provisional assessment period had both short payment and excess payment of duty. The excess payment by the respondent was less than the short payment. Therefore, the adjudicating authority could have adjusted the entire excess amount against the short paid amount.

6. The Commissioner (Appeals) in his order highlighted the similarity between Rule 9(B) and Rule 7, emphasizing that the adjudicating authority should have adjusted the excess duty paid by the respondent against the duty recoverable from them, especially since there was no dispute regarding the excess duty payment during the provisional assessments.

7. The judgment concluded that the Commissioner (Appeals) correctly interpreted the intention of the law in the case of provisional assessment. Consequently, the appeal by the department was dismissed, and the cross-objections filed by the respondent were disposed of as not being pressed.