2016 (9) TMI 1054 - AT - Central Excise

Refund claim - out of the refund of approximately ₹ 91.99 lakhs,Commissioner (Appeals) allowed the refund claim of ₹ 75 lakhs - goods were assessed provisionally - duty paid under protest - unjust enrichment has not been properly satisfied by the appellant-assessee - Held that - this has no merits inasmuch that there is no dispute that the clearances affected by the appellant-assessee had been under provisional assessment as per Rule 9B of the erstwhile Central Excise Rules, 1944. Under the said Rule, an assessee can seek provisional assessment and on finalization, either excess duty paid by him has to be refunded or short payment has to be paid by him to the Government. The factor of satisfying that unjust enrichment does not arise on the finalization of the provisional assessment was brought into Rule 9B in the year 1999. It is undisputed that the refund claims were filed by the appellant in 1991. The law is now settled that the provisions of Rule 9B before the amendment of bringing the question of unjust enrichment cannot be applied for rejecting the refund claims arising out of provisional assessment. On this ground, we hold that the Revenue s appeal is devoid of merits and is rejected. Reversal of Modvat credit - inputs used in manufacture as intermediate products were exempted from payment of duty - Held that - the appellant-assessee had used this credit for discharging the duty liability on the intermediate products which were held subsequently as non-excisable/ non-dutiable but further consumed in manufacture of final product chopped strand mat which is excisable. Therefore, having paid the duty and provisional assessment being finalized in their favour, we hold that the impugned order to the extent challenged by the appellant-assessee is liable to be set aside. - Decided against the Revenue

Summary

Issues:
- Dispute over excisability of a product manufactured during a specific period
- Provisional assessment and refund claims filed by the appellant
- Unjust enrichment and application of Section 11B
- Revenue's appeal against sanctioning of refund claim
- Appellant's appeal regarding reversal of cenvat credit

Analysis:
The case involved a dispute regarding the excisability of a product manufactured by the appellant during a specified period. The appellant filed refund claims after being directed to pay duty "under protest." The lower authorities settled the excisability of the product in favor of the appellant, who subsequently filed refund claims for the amounts paid. The Assistant Commissioner credited the refunded amount to the Consumer Welfare Fund due to concerns of unjust enrichment. The first appellate authority allowed a partial refund and ordered the reversal of modvat credit. The Revenue challenged the sanctioning of the refund claim, while the appellant contested the reversal of cenvat credit.

The Revenue argued that the appellant wrongly claimed provisional assessment and failed to satisfy the unjust enrichment requirement. They cited relevant provisions and court decisions to support their position. The appellant, on the other hand, maintained that the assessment of the intermediate product was provisional, evidenced by the classification-cum-price list and correspondence with lower authorities. They argued that the law was settled on this issue and unjust enrichment should not apply retroactively.

The Tribunal found that the Revenue's appeal lacked merit as the clearances were under provisional assessment as per Rule 9B, and the question of unjust enrichment did not arise before the 1999 amendment. Therefore, the Revenue's appeal was rejected. Regarding the appellant's appeal, the Tribunal held that the reversal of cenvat credit was unwarranted since the intermediate products, though initially considered non-excisable, were later used in the manufacture of an excisable final product. Thus, the impugned order was set aside in favor of the appellant.

In conclusion, the Revenue's appeal was dismissed, and the appellant's appeal was allowed, with the Tribunal ruling in favor of the appellant on the issue of cenvat credit reversal.