2012 (12) TMI 144 - AT - Central Excise

Adjustment of excess payment of duty against short-payment of duty upon finalisation of provisional assessments - Held that - Adjustment of the excess payment of duty against the short-payment of duty for the period covered by the same return is what is impliedly permitted - Such claim shall be considered on monthly basis. In other words the amount of duty paid in excess for a month covered by a return may be adjusted against the amount of duty short-paid (if any) for the same month. For such adjustment of duty burden of duty has to be borne by the assessee as per Doctrine Of Unjust Enrichment and not the Consumer. - Matter remanded back for fresh decision.

Issues Involved:
1. Adjustment of excess payment of duty against short-payment of duty.
2. Application of the principle of unjust enrichment.
3. Finalization of provisional assessments on a monthly basis.

Issue-wise Detailed Analysis:

1. Adjustment of Excess Payment of Duty Against Short-Payment of Duty:
The primary issue revolves around whether an assessee can adjust excess payment of duty against short-payment of duty upon finalization of provisional assessments. The larger Bench concluded that any excess amount identified upon final assessment could be adjusted towards any other duty liability of the assessee under the Excise Act, 1944, and Rules made thereunder, subject to the principle of unjust enrichment. This means that before granting such an adjustment, the authority must ascertain whether the excess amount is actually refundable to the assessee or liable to be credited to the Consumer Welfare Fund. The burden of proof lies on the assessee to demonstrate that the incidence of duty was borne by them and not passed on to the consumer.

2. Application of the Principle of Unjust Enrichment:
The principle of unjust enrichment was a significant factor in determining whether the refund of excess duty paid could be granted. The assessee argued that the duty burden was borne by them as per their agreement with CEAT, where any excess duty was adjusted through debit and credit notes. However, the Tribunal noted that the assessee had not provided sufficient evidence, such as copies of debit/credit notes or the agreement with CEAT, to substantiate their claim. The Tribunal emphasized that the bar of unjust enrichment must be surmounted before any adjustment or refund could be granted.

3. Finalization of Provisional Assessments on a Monthly Basis:
The Tribunal examined the provisions of Rule 7 (assessment), Rule 8 (manner of payment), and Rule 12 (filing of return) of the Central Excise Rules, 2002. It was determined that the final assessments are required to be made month-wise, and any adjustment of excess payment of duty against short-payment of duty must also be done on a monthly basis. The Tribunal found that the Assistant Commissioner's permission for provisional assessment of monthly returns for a financial year or longer period could not be a basis for claiming adjustment of excess payments against short-payments for the entire financial year. The Tribunal upheld the view that adjustments should be made within the period covered by each monthly return.

Conclusion:
The Tribunal set aside the impugned orders and remanded the case to the original authority for fresh consideration. The original authority was directed to consider the assessee's claim for adjustment of excess payment of duty against short-payment of duty on a monthly basis, ensuring compliance with the principle of unjust enrichment. The adjudicating authority was instructed to give the assessee reasonable opportunities to present evidence and be heard. The Tribunal did not express any view on whether the assessee's claim for refund was barred by unjust enrichment, leaving this issue open for de novo adjudication.

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