2018 (10) TMI 697 - AT - Central Excise

Refund claim/adjustment of excess paid duty against short paid - finalization of provisional assessment - whether the appellants are eligible for adjusting the excess paid duty towards the short paid as well as whether they are eligible for refund of the excess amount after such adjustment? Held that - In Toyota Kirloskar Auto Parts 2011 (10) TMI 201 - KARNATAKA HIGH COURT the Hon ble High Court of Karnataka had occasion to analyse the issue and has held that such adjustment is permissible. Since the issue stands settled in favor of the appellant the order directing to credit the sanctioned refund to the Consumer Welfare Fund is not in accordance in law and requires to be set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility for adjusting excess paid duty towards short paid duty and refund of excess amount.
2. Application of the test of unjust enrichment in the adjustment process.

Analysis:
1. The case involved the appellants engaged in the manufacture of tyres, tubes, and flaps, seeking provisional assessment under Rule 7 of Central Excise Rules 2002 for specific periods. The provisional assessment was finalized with short paid duty and excess paid duty determined. The issue arose when the excess paid duty was ordered to be credited to the Consumer Welfare Fund due to the burden of duty passing on to another. The appellant contended that duty short paid and duty excess paid can be adjusted against each other based on legal precedents like the decision of the Hon'ble High Court of Karnataka in a specific case. The Tribunal had also previously ruled in favor of such adjustment in the appellant's own case, emphasizing that the test of unjust enrichment is not applicable for this purpose.

2. The argument put forth by the appellant's counsel was supported by legal references and established principles. The contention was that the excess amount should not be credited to the Consumer Welfare Fund as it did not pass the test of unjust enrichment. The appellant relied on judicial decisions to support their stance, highlighting the importance of adjusting excess paid duty towards short paid duty without the need for unjust enrichment assessment. On the other hand, the respondent argued that the appellant had issued invoices even for the excess amount paid, indicating the burden of duty had been transferred to others, justifying the rejection of the refund by the authorities.

3. The Tribunal analyzed the issue of adjusting excess paid duty towards short paid duty and the eligibility for a refund in light of legal precedents and the specific case law cited by the appellant. Referring to the decision of the Hon'ble High Court of Karnataka and previous Tribunal rulings, the Tribunal concluded that the adjustment of excess paid duty towards short paid duty was permissible. The Tribunal emphasized that the test of unjust enrichment was not a prerequisite for such adjustment, as settled by previous judgments. Consequently, the Tribunal set aside the order directing the credit of the sanctioned refund to the Consumer Welfare Fund, allowing the appeal with appropriate consequential relief as per the law.

In conclusion, the Tribunal's judgment favored the appellant, allowing for the adjustment of excess paid duty towards short paid duty without the application of the test of unjust enrichment, based on established legal principles and precedents cited during the proceedings.