2019 (3) TMI 1486 - AT - Central Excise

Refund of excess duty paid - finalization of provisional assessment - unjust enrichment - Held that - Both sides have fairly admitted before us that all the sales invoices issued from depots and corresponding transfer invoices issued from the factory were not examined to ascertain whether the amount of duty shown in the depot invoice was higher in comparison to the factory gate invoices. The learned Advocate on sample basis demonstrated before us that in majority of the cases the excise duty shown in the depot invoice is higher in comparison to the factory gate invoice and on that basis the refund amount of ₹ 96,61,872/- cannot be said to hit the issue of unjust enrichment. Also, proper scrutiny has not been carried out by the adjudicating authority in examining the respective invoices along with other evidences to ascertain the fact whether the incidence of differential duty claimed as refund had been passed on to the customers or otherwise. The matter remanded to the adjudicating authority to consider the issue of unjust enrichment afresh, taking note of all the invoices issued from the factory and that of depot and other evidences on record and that would be produced by the appellant during the course of denovo proceeding - appeal allowed by way of remand.

Summary

Issues:
- Appeal against Order-in-Appeal No.SB/89-91/LTU/MUM/2010 dated 25/06/2010
- Provisional assessment under Rule 7 of the Central Excise Rules, 2002
- Refund claims rejected by adjudicating authority
- Issue of unjust enrichment

Analysis:

Issue 1: Appeal against Order-in-Appeal
The appeals were filed against Order-in-Appeal No.SB/89-91/LTU/MUM/2010 passed by the Commissioner of Central Excise & Service Tax, Large Tax Payer Unit, Mumbai. The appellant, a manufacturer of excisable goods, had cleared goods on payment of duty from the factory gate to their depot during the period in dispute. The appellant resorted to provisional assessment under Rule 7 of the Central Excise Rules, 2002. The jurisdictional Assistant Commissioner finalized the provisional assessment, stating the appellant was eligible for a refund claim. However, the refund claims were rejected by the adjudicating authority, leading to appeals before the Ld. Commissioner (Appeals) and subsequently to the present appeals.

Issue 2: Provisional Assessment
The appellant had resorted to provisional assessment under Rule 7 of the Central Excise Rules, 2002, as the transaction value of goods was not known at the time of clearance from the factory to the depot. After finalization by the Assistant Commissioner, refund claims were filed. The appeals revolved around the finalization of assessment and the eligibility for a refund claim based on the provisional assessment.

Issue 3: Refund Claims Rejection
The adjudicating authority rejected the refund claims after scrutiny, citing the issue of unjust enrichment. The appellant contended that the authorities erred in concluding that the duty claimed as refund had been passed on to customers. The appellant argued that a majority of cases showed higher excise duty in depot invoices compared to factory gate invoices, supporting their claim for a refund of a specific amount. The authorities were criticized for not examining all invoices to ascertain the passing on of duty to customers.

Issue 4: Unjust Enrichment
The issue of unjust enrichment was central to the case. Both sides acknowledged that all sales and transfer invoices were not thoroughly examined to determine if the duty claimed as a refund had been passed on to customers. The appellate tribunal found that proper scrutiny was lacking in assessing the unjust enrichment aspect. The matter was remanded to the adjudicating authority for a fresh examination, directing a comprehensive review of all invoices and evidence to determine the passing on of duty to customers.

In conclusion, the appeals were allowed by remanding the matter to the adjudicating authority for a detailed reconsideration, emphasizing the need for a thorough examination of invoices and evidence to address the issue of unjust enrichment effectively.