2006 (12) TMI 428 - AT - Central Excise

Summary

Issues Involved:
1. Applicability of Section 11B(2) and the proviso to refunds arising from finalization of provisional assessments under Rule 9B.
2. Compliance with earlier appellate orders regarding refund claims.
3. Doctrine of unjust enrichment in the context of provisional assessments.

Issue-wise Detailed Analysis:

1. Applicability of Section 11B(2) and the proviso to refunds arising from finalization of provisional assessments under Rule 9B:

The appeal primarily contests the direction of the Commissioner (Appeals) to decide the refund claim in terms of Section 11B(2) of the Central Excise Act, 1944, arguing that this provision is inapplicable where provisional assessment is finalized under Rule 9B. The appellant cited several Supreme Court decisions, including Mafatlal Industries Ltd. v. Union of India, which unequivocally stated that "any recoveries or refunds consequent upon the adjustment under sub-rule (5) of Rule 9B will not be governed by Section 11A or Section 11B." This principle was further supported by decisions in Commissioner of Central Excise, Calcutta v. Suntrack Electronics (P) Ltd., Commissioner of Central Excise, Mumbai-II v. Allied Photographics India Ltd., Sinkhai Synthetics & Chemicals Pvt. Ltd. v. CCE Aurangabad, and others, all reinforcing that Section 11B does not apply to refunds following the finalization of provisional assessments under Rule 9B.

2. Compliance with earlier appellate orders regarding refund claims:

The appellant does not challenge the part of the order directing compliance with the earlier appellate order dated 22-5-2001, which required the adjudicating authority to finalize the assessment based on deductions of "installation and training charges" from the assessable value. The appellant had submitted the necessary details to the concerned officer and filed a fresh refund claim. However, the Assistant Commissioner rejected the claim due to non-submission of the claim in the proper format and lack of original duty-paying documents, which the appellant attributed to a fire accident in the factory.

3. Doctrine of unjust enrichment in the context of provisional assessments:

The Department argued that sub-section (3) of Section 11B, which overrides any contrary provisions, including Rule 9B, mandates that refunds must be processed as per Section 11B(2). The Department cited the Supreme Court decision in Sahakari Khand Udyog Mandal Ltd. v. Commissioner of Central Excise & Customs, which invoked the doctrine of unjust enrichment irrespective of Section 11B's applicability. However, the Tribunal noted that the Supreme Court in Allied Photographics' case and the affirming order in Oriental Exports v. Commissioner had clearly established that the bar of unjust enrichment does not apply to refunds consequent to the finalization of provisional assessments under Rule 9B(5).

Conclusion:

The Tribunal concluded that the portion of the impugned order directing the adjudicating authority to consider the refund claim in light of Section 11B(2) is set aside. The adjudicating authority is directed to act according to the other directions contained in the orders of the Commissioner (Appeals). The appeal is accordingly allowed, emphasizing that the Supreme Court's decisions have definitively settled the issue, leaving no room for the revenue to rely on sub-section (3) of Section 11B in this context.