2007 (12) TMI 188 - AT - Central Excise

Finalization of Provisional assessment - Commissioner (Appeals) allowed Revenues appeals and directed that the lower authority should quantify both demand and refund invoice-wise without netting off and deal both quantities separately held that entire monthly excess and short payment cannot be netted off to adjust excess payment against short payment - department s contention is correct and the Commissioner s order with regard to the correct procedure to be adopted is legal and proper

Summary

Issues:
1. Appeal against Order-in-Appeal No. 129/2005-C.E.
2. Finalization of provisional assessment for Cables supplied to DOT and MTNL.
3. Method of finalization of provisional assessment.
4. Adjustment of excess payment against short payment in provisional assessment.
5. Legal validity of the Commissioner (Appeals) order.

Analysis:

1. The appeals were filed against Order-in-Appeal No. 129/2005-C.E. dated 5-5-2005 passed by the Commissioner of Central Excise (Appeals), Mangalore. The Commissioner (Appeals) in the impugned order directed the lower authority to quantify demand and refund invoice-wise without netting off, which was challenged by the appellants.

2. The appellants, manufacturers of Cables, opted for provisional assessment for supplies to DOT and MTNL. The assessments were finalized by the Deputy Commissioner, and subsequent appeals were made against these orders. The Adjudicating Authority passed a de novo order based on the Orders-in-Appeal, leading to the Revenue appealing against the method of finalization of provisional assessment.

3. The Revenue contended that in provisional assessment, invoice-wise finalization is necessary to address excess or short payments. The Commissioner (Appeals) had allowed the Revenue's appeals and directed separate quantification of demand and refund without netting off, to prevent undue advantage to the appellants.

4. The issue of adjusting excess payment against short payment in provisional assessment was crucial. The Tribunal emphasized that for each invoice, it must be determined if duty paid is in excess or short. Excess payment entitles a refund if duty burden is not passed on, while short payment requires the party to make up the difference. Netting off monthly excess and short payments was deemed incorrect, supporting the Revenue's stance.

5. The legal validity of the Commissioner (Appeals) order was challenged by the appellants, arguing that the assessment under Orders-in-Original had been confirmed, making the impugned order illegal and void. However, the Tribunal upheld the Commissioner's order, stating that invoice-wise examination is necessary for correct assessment, and rejected the appeals, affirming the legality of the method directed by the Commissioner (Appeals).

In conclusion, the Tribunal dismissed the appeals, upholding the Commissioner (Appeals) order for invoice-wise quantification in finalizing provisional assessment to address excess and short payments accurately.