2011 (7) TMI 414 - AT - Central Excise

Provisional assessment - Classification - Demanded differential duty - The period involved in this case is 2000-01 to 2003-04. The period involved upto 30.6.2001 is covered under Rule 9B of Central Excise Rules 1944 till they were replaced by Central Excise Rules 2001 w.e.f. 1.7.2001 - it follows that on finalization of assessment if the authority finds any amount of money having been paid in excess of the duty liability ascertained in the final assessment the excess amount so ascertained would become refundable to the assessee subject to the applicability of the principles of unjust enrichment and only after that the amount is adjustable - The appellant is at liberty to produce document in support of their contention that they have not passed on the incidence of duty to their customers - Decided in favour of the assessee by way of remand

Summary

Issues Involved:
Adjustment of payment of duty under Rule 9B of Central Excise Rules, 1944 and Rule 7 of Central Excise Rules, 2001/2002; Applicability of doctrine of unjust enrichment in the case of provisional assessment; Denial of adjustment of duty by lower adjudicating authority; Benefit extended in similar cases under Rule 9B; Refund of duty and principles of unjust enrichment; Burden of proof on the assessee; Remand of the case for reexamination.

Analysis:

Adjustment of Payment of Duty under Rule 9B and Rule 7:
The appellants filed appeals against the denial of adjustment of payment of duty by the lower adjudicating authority under Rule 9B of Central Excise Rules, 1944 and Rule 7 of Central Excise Rules, 2001/2002. The issue involved the supply of intermediate products to a sister concern for captive consumption, leading to provisional assessments. The lower authorities denied the adjustment of duty, prompting the appeals.

Applicability of Doctrine of Unjust Enrichment:
The appellant contended that the adjustment should be allowed for the period covered under Rule 9B, emphasizing that the duty incidence was not passed on due to supplying products to sister units. The respondent cited legal precedents, including a Supreme Court case and a Tribunal decision, to support the argument that the doctrine of unjust enrichment should be considered in such cases.

Refund of Duty and Principles of Unjust Enrichment:
The Tribunal referred to a Larger Bench decision highlighting that any excess duty paid should be refundable to the assessee, subject to the principle of unjust enrichment. The burden of proof regarding the non-passing of duty incidence lies with the assessee. The Tribunal emphasized the need to ascertain the refundable amount before making any adjustment, ensuring compliance with the principles of unjust enrichment.

Remand of the Case for Reexamination:
The Tribunal observed that the lower authorities did not assess the case from the perspective of unjust enrichment before denying the adjustment of duty payment. Consequently, the Tribunal decided to remand the case to the lower adjudicating authority. The remand aims to compute and allow benefits for the period covered under Rule 9B, determine any excess duty paid, assess refundability considering unjust enrichment, and subsequently ascertain the adjustable amount. The appellant was granted the opportunity to provide supporting documents and a fair hearing during the reexamination process.

In conclusion, the judgment addressed the issues of adjustment of duty payment under specific rules, the application of unjust enrichment principles, and the remand of the case for a thorough reexamination to ensure compliance with legal requirements and fairness in the assessment process.