2016 (9) TMI 1019 - AT - Central Excise

Refund claim - unjust enrichment - appellant applied for provisional assessment - collected the duty amount from the customers and have not submitted proper documentary evidence to prove that they have not passed on the incidence of duty to the customers - Held that - in the present case it is not disputed that all the three refund claims have arisen due to finalization of provisional assessment during the period from April 1998 to December 1998. The appellant submitted that when the assessments are provisional and such assessments are finalized in terms of Rule 9B of Central Excise Rules 1944 then the provisions of Section 11B are not applicable to such cases when the assessments are finalized. He further submitted that this issue is no more res integra and relied upon the judgment of the Hon ble Supreme Court of India in the case of CCE vs. Mafatlal Industries Ltd. 1996 (12) TMI 50 - SUPREME COURT OF INDIA . Therefore, in view of the same, the impugned order is set aside. - Decided in favour of appellant with consequential relief

Summary

Issues involved:
Whether the doctrine of unjust enrichment applies in refund claims arising from finalization of provisional assessments; Applicability of Section 11B in cases of finalized provisional assessments.

Analysis:
The appeal was against the Order-in-Appeal allowing the appeal but rejecting the refund claim filed by the appellant, a manufacturer of products under Chapter 9 of Central Excise Tariff Act, 1985. The appellant filed three refund claims in the Dharwad Divisional Office related to different periods. The claims were based on the excess central excise duty paid after actualization, supported by Chartered Accountant certificates. However, the authorities observed that the duty amount was collected from customers without proper evidence of non-passing of duty incidence. Show-cause notices were issued, and the appellant argued that the duty incidence was not passed on to customers, citing legal precedents. The lower authority rejected the refund application under Section 11B(2) of the Central Excise Act 1944, leading to the appeal before the Commissioner (Appeals).

The main issue was whether the doctrine of unjust enrichment applied in this case, considering subsequent Supreme Court and Tribunal decisions post the Bombay High Court ruling in a specific case. The appellant argued that when provisional assessments are finalized under Rule 9B of Central Excise Rules 1944, Section 11B does not apply. They relied on the Supreme Court's judgment in CCE vs. Mafatlal Industries Ltd. where it was mentioned that Section 11B does not govern recoveries or refunds resulting from provisional assessments finalized under Rule 9B. The appellant also cited other relevant decisions supporting their stance.

After considering the arguments and legal precedents, the Tribunal held in favor of the appellant, stating that the issue was squarely covered in their favor. The Tribunal found that the Bombay High Court decision was no longer applicable to the present case, thereby allowing the appeal and setting aside the impugned order with any consequential relief. The judgment highlighted the importance of legal interpretations and precedents in determining the applicability of Section 11B in cases of finalized provisional assessments.