2013 (6) TMI 119 - HC - Central Excise

Refund - non finalization of provisional assessment - held that - In the event of failure of final assessment within the time as above, the provisional assessment shall be deemed to be final assessment and in that case, application for refund will be entertained and examined and amount, if any, refundable shall be quantified immediately thereafter and this exercise must be completed within a week from the date of expiry of two months. - matter restored before adjudicating authority - This should be processed within fortnight after the final order of assessment or after expiry of two months from the date of receipt of this order whichever is later.

Summary

Issues:
1. Whether refund of duty payable in case of provisional assessment is permissible without final assessment order?
2. Whether the Tribunal's decision in favor of the respondent/assessee was legally justified?
3. Interpretation of Section 11B of the Central Excise Act in the context of refund claims.
4. Compliance with legal provisions regarding provisional assessment and refund procedures.

Analysis:

1. The appellant, an assessee manufacturing dutiable goods, paid duty based on provisional assessment due to exigency. Despite no final assessment order, the appellant sought refund, claiming overpayment due to price variations. The Assistant Commissioner neither finalized assessment nor granted refund, leading to rejection of the refund application. The Tribunal, citing Supreme Court precedents, favored the respondent/assessee's right to seek refund post-provisional assessment.

2. The appellant argued that Central Excise laws do not allow refund without a final assessment order, referencing Section 11B. The appellant highlighted an amendment under Rule 9B(5) and subsequent Supreme Court rulings, emphasizing the necessity of final assessment for refund claims post-provisional assessment. The respondent/assessee contended that the Tribunal merely set aside the rejection order without quantifying the refund amount, acknowledging the legal position but stressing entitlement to refund due to delayed final assessment.

3. The High Court acknowledged the legal developments post the Mafatlal case, emphasizing the proviso in Rule 9B(5) mandating final assessment for refund under Section 11B. The Court referenced the TVS Suzuki case, aligning with the requirement of final assessment before refund determination. Noting the absence of final assessment in the present case, the Court found the Tribunal's declaration premature due to the unaddressed proviso.

4. Consequently, the High Court modified the Tribunal's order, directing the assessing officer to conclude final assessment within two months, granting a week for refund quantification if the final assessment is delayed. The Court restored the respondent/assessee's refund application for processing post-final assessment, ensuring compliance with legal provisions regarding provisional assessment and refund procedures. The judgment aimed to uphold statutory requirements while facilitating the rightful refund claim process.