2014 (7) TMI 353 - AT - Central Excise

Refund claim - Adjustment of differential duty in refund sanctioned - Held that - In terms of Rule 7 of the Central Excise Rules, 2002 the provisional assessment was finalized and the differential duty had to be paid and for the excess payment of duty, the assessee is required to file a refund application. In the present case, it is seen that the adjudicating authority after examining the provisions of Section 11B of the Act had sanctioned the refund amount, which was adjusted against demand of differential duty arising out of finalization of provisional assessment. Section 11 of the Central Excise Act provides recovery of some dues to Government. In the present case, there is no dispute that the differential duty short paid is recoverable from the appellant and, therefore, the adjudicating authority has rightly adjusted the sanctioned refund amount from the differential duty in terms of Section 11 of the Act - adjudicating authority rightly adjusted the refund claim against the demand of differential duty - Following decision of Excel Rubber Ltd. Vs Commissioner of Central Excise, Hyderabad reported in 2011 (3) TMI 527 - CESTAT, NEW DELHI (LB) - Decided against assessee.

Summary

Issues involved:
Adjustment of excess duty payment against differential duty, Finalization of provisional assessment, Refund claim under Section 11B and 11D of Central Excise Act, 1944, Double adjustment of refund amount, Applicability of Section 11 of the Central Excise Act, 1944, Decision based on the Larger Bench ruling in Excel Rubber Ltd. case.

Analysis:

1. Adjustment of excess duty payment against differential duty:
The appellants, engaged in manufacturing Fertilizer, Sulphuric Acid, and Pesticides, cleared goods based on provisional assessment. The Assistant Commissioner finalized the provisional assessment, leading to a differential duty payment of Rs. 9,40,570 and a refund claim of Rs. 33,17,299 under Section 11B and 11D of the Central Excise Act, 1944. A show-cause notice proposed to restrict the refund claim to Rs. 4,78,269 due to duty collection from buyers. The adjudicating authority sanctioned a refund of Rs. 4,78,269, adjusting it against the differential duty, a decision upheld by the Commissioner (Appeals).

2. Finalization of provisional assessment and refund claim under Section 11B and 11D:
The main contention was that the excess duty payment determined through finalization of provisional assessment should not be adjusted again. The appellant argued against the double adjustment of the refund amount. However, the adjudicating authority, following Section 11B of the Act, adjusted the refund against the differential duty, citing the Excel Rubber Ltd. case ruling.

3. Applicability of Section 11 of the Central Excise Act, 1944:
The adjudicating authority adjusted the refund against the demand of differential duty in compliance with Section 11 of the Act. The judgment referred to the Excel Rubber Ltd. case, emphasizing that excess amounts can be adjusted against duty liabilities, subject to the principle of unjust enrichment and consumer benefit fund considerations.

4. Decision based on the Larger Bench ruling in Excel Rubber Ltd. case:
The Tribunal, citing the Excel Rubber Ltd. case ruling, affirmed the authority's right to adjust the refund claim against the differential duty. The judgment highlighted the importance of ascertaining refundability and unjust enrichment before making adjustments. Consequently, the appeals by the appellants were rejected, upholding the adjudicating authority's decision.

In conclusion, the judgment addressed the issues of adjustment of excess duty payment, finalization of provisional assessment, refund claims under relevant sections, applicability of Section 11, and relied on the Excel Rubber Ltd. case ruling to support the decision.