2017 (7) TMI 126 - AT - Central Excise

Refund of excess paid duty - denial on the ground that the appellant should have adopted the provisional assessment in terms of Rule 7. In failure to opt for the provisional assessment whatever duty was paid at the time of clearance is the correct duty and the same cannot be claimed as refund - unjust enrichment - Held that - since the appellants have cleared the goods to their sister concern, it does not involve sale, therefore the question of passing of either the value of goods or the duty paid thereon does not arise. Therefore firstly no incidence of any duty was passed on to their sister concern - The contention of the revenue that since the duty was based on sale value of their sister concern is absolutely incorrect for the reason that there is no sale to the sister concern. There is no question of passing of any element either value or duty to the sister concern. Moreover, the recipient unit being in Roorki availing the area based exemption also do not claim the cenvat credit. In view of this fact, the excess paid duty is refundable to the appellants - appeal allowed by way of refund.

Issues:
1. Valuation of goods under Rule 8 of Central Excise Valuation Rules, 2000 based on CAS4
2. Rejection of refund claim due to failure to opt for provisional assessment under Rule 7
3. Appellants' appeal against rejection of refund
4. Aspect of unjust enrichment
5. Remand proceedings and previous Tribunal orders

Issue 1: Valuation of goods under Rule 8 of Central Excise Valuation Rules, 2000 based on CAS4
The appellants cleared goods through their unit in Roorki, Uttarakhand, leading to valuation under Rule 8 based on CAS4. Duty was paid on provisional value as final CAS4 value was unavailable during clearance. After finalizing CAS4, excess payment of duty led to a refund claim of ?1,55,711, rejected by the adjudicating authority citing failure to opt for provisional assessment under Rule 7. The Commissioner (Appeals) upheld the rejection, prompting the appeal.

Issue 2: Rejection of refund claim due to failure to opt for provisional assessment under Rule 7
The rejection of the refund claim was based on the argument that duty paid during clearance, without opting for provisional assessment, is final and cannot be claimed as a refund. However, the Tribunal noted that in cases of valuation under Rule 8, duty paid at clearance is provisional due to unavailability of final value. The duty paid may be higher or lower, necessitating refund or additional payment. The excess duty paid, in this case, was deemed refundable.

Issue 3: Appellants' appeal against rejection of refund
The Tribunal disagreed with the revenue's contention that duty was based on the sale value to a sister concern, emphasizing no sale occurred to the sister concern, negating the passing of value or duty. The Roorki unit's exemption and non-claim of cenvat credit further supported the refund eligibility. The Tribunal found the excess duty paid refundable, reduced to ?1,02,155, as per final CAS4 certificate.

Issue 4: Aspect of unjust enrichment
The revenue raised the issue of unjust enrichment due to the lack of evidence on the costing of subsequently sold goods by the Roorki unit. However, the Tribunal determined that unjust enrichment did not apply as no duty incidence was passed to the sister concern, and the excess duty was shown as receivables in the balance sheet, justifying the refund.

Issue 5: Remand proceedings and previous Tribunal orders
The Tribunal highlighted the previous remand proceedings where the refund was sanctioned, indicating settled issues. The impugned order was set aside, remanding the matter for reconsideration in light of previous Tribunal orders.

This comprehensive analysis of the judgment addresses the valuation of goods, rejection of refund claim, unjust enrichment concerns, and the impact of previous Tribunal decisions on the matter.

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