2018 (9) TMI 814 - AT - Central Excise

Assessment - provisional or not? - post manufacturing expenses claimed as abatement - Whether the assessment which was kept provisional during the relevant period should be treated as provisional for the limited period of determining the post manufacturing expenses claimed as abatement by the assessee or it should be treated as provisional for all purposes? - Held that - It is well settled, that assessment which is provisional is provisional for all purposes and all issues can be decided at the time of finalizing the assessment. There is no provision in the Central Excise Act for limited provisional assessment in respect of each aspect of calculation of the assessable value. Unjust enrichment - Provisional assessment - Whether the question of unjust enrichment would apply in the case of provisional assessment for the period prior to introduction amendment of Section 11B of the Act? - Held that - The constitutional Bench of Apex Court in the case of Mafatlal Industries Ltd., 1996 (12) TMI 50 - SUPREME COURT OF INDIA it was held that the bar of unjust enrichment would not apply to refunds arising on finalization of provisional assessment for the period prior to the introduction of the concept of unjust enrichment in Section 11B - the assessee herein is entitled to refund as consequence of finalization of provisional assessment. Whether an amount of ₹ 25 lakhs which is claimed by the assessee made during the interim period should also be considered the collected amount of duty during the period of provisional assessment? - Held that - There cannot be any dispute at all amounts paid before finalizing the assessment. Accordingly, the amount must be taken into consideration. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Finalization of price lists for goods manufactured on job work basis.
2. Provisional assessment and applicability of unjust enrichment.
3. Consideration of ad-hoc payments made during provisional assessment period.

Analysis:

Issue 1: Finalization of price lists for goods manufactured on job work basis
The appeal was filed by the Revenue against the Order-in-Appeal finalizing the price lists for cigarettes manufactured on job work basis. The Original Authority finalized the price lists based on the judgment of the Hon'ble Supreme Court in a relevant case. The Revenue contended that the provisional assessment was limited to duty liability on post manufacturing expenses, and the Order-in-Original went beyond the show cause notice. The Commissioner (Appeals) rejected the Revenue's appeal, stating that the price lists were effectively revised after a significant period, which was impermissible. The assessee claimed that the price lists were finalized correctly, and unjust enrichment did not apply during the relevant period. The issue revolved around whether the assessment, kept provisional during the relevant period, should be treated as provisional for limited purposes or all aspects.

Issue 2: Provisional assessment and applicability of unjust enrichment
The second issue addressed whether the concept of unjust enrichment applied in the case of provisional assessment conducted before the introduction of Section 11B amendment of the Central Excise Act. The goods were cleared prior to the introduction of unjust enrichment, but assessments were finalized post this amendment. Citing the Mafatlal Industries Ltd. case, it was established that unjust enrichment did not apply to refunds on finalization of provisional assessments pre-amendment. Therefore, the assessee was entitled to a refund consequent to finalization of the provisional assessment.

Issue 3: Consideration of ad-hoc payments made during the provisional assessment period
The third issue involved the consideration of an amount claimed as a refund by the assessee, pertaining to ad-hoc payments made during the provisional assessment period. The Tribunal ruled that all amounts paid before finalizing the assessment should be taken into account. The Revenue's appeal was rejected, and the cross objections filed by the respondent were converted into an appeal, allowing the inapplicability of unjust enrichment. The amount of ?25 lakhs deposited by the assessee during the interim period was also considered in calculating the refund due to the assessee upon finalization of the assessment.