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2019 (5) TMI 222 - HC - Central ExciseProvisional assessment - Adjustment of excess paid duty with the short paid duty - Rule 8 of Central Excise Rules, 2002 - Rule 7 of Central Excise Rules, 2002 - principle of unjust-enrichment - period in question from 2007-2008 to 2013-2014 - HELD THAT - The principle of Provisional Assessment as contained in Rule 7 of the Rules 2002 are being ushered in to find fault with the methodology the assessee had adopted for adjustment of excess payment of duty with the duty short paid in some months within same year, which in the present case, will not be attracted because the assessment has been final. The decisions relied by the appellant in MAHINDRA UGINE STEEL CO. LTD., VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE 2011 (2) TMI 599 - CESTAT, MUMBAI are of no assistance, because in these cases there was no evidence on record that the incidence of duty is not passed. In the present case it is an inter unit transfer of SSFA Noodles. Appeal dismissed - decided against appellant.
Issues Involved:
1. Adjustment of duty liability against excess-paid duty. 2. Applicability of Provisional Assessment under Rule 7 of Central Excise Rules, 2002. 3. Evidence requirement for proving non-passing of duty burden. 4. Applicability of the principle of unjust enrichment. Issue-wise Detailed Analysis: 1. Adjustment of Duty Liability Against Excess-Paid Duty: The primary issue revolves around whether the Tribunal erred in allowing the adjustment of duty liability against the duty excess-paid in one month with the duty short-paid in other months. The Tribunal concluded that the valuation was done correctly as per Cost Accounting Standard-4 (CAS-4) and that the appellant had paid duty on a monthly basis based on the cost of the previous month. The Tribunal found that the adjudicating authority's stance against such adjustment was untenable, referencing previous decisions in similar cases (Essar Steel India Ltd. and Jindal Steel & Power Ltd.). The Tribunal directed the adjudicating authority to verify the appellant's claim of having already paid the short-paid duty after adjusting the excess and to recover only the differential, if any, after such adjustment. 2. Applicability of Provisional Assessment under Rule 7 of Central Excise Rules, 2002: The appellant did not opt for Provisional Assessment under Rule 7, which was a point of contention. The Tribunal noted that while the duty liability should be discharged at the time of removal of goods, the appellant did not follow costing to arrive at a deemed transaction value for each clearance. Instead, the appellant worked out the costing for periods of several months and paid duty accordingly. The Tribunal held that even though there was no provisional assessment, the duty determination on inter-unit transfers was made on an annual costing basis. Therefore, the duty already paid during the year should be adjusted against the overall duty liability. 3. Evidence Requirement for Proving Non-Passing of Duty Burden: The department argued that the appellant did not produce evidence to prove they had not passed on the duty burden to others. The Tribunal, however, found this argument irrelevant in the context of inter-unit transfers. The Tribunal emphasized that the duty liability was determined on an annual CAS-4 basis, and the duty already paid during the period should be adjusted accordingly. The Tribunal also noted that the principle of unjust enrichment did not apply in this situation, as the case did not involve a refund but an adjustment of duty already paid. 4. Applicability of the Principle of Unjust Enrichment: The Tribunal ruled that the principle of unjust enrichment was not applicable in this case. The Tribunal explained that the duty liability was determined based on annual costing, and the duty already paid during the year should be adjusted against the overall duty liability. The Tribunal dismissed the department's argument that the duty paid in excess in certain months, availed as credit by the sister unit, could not be adjusted towards short payment. The Tribunal found that the demand arose based on annual costing, and the duty already discharged should be considered for arriving at the overall short payment. Conclusion: The High Court dismissed the department's appeal, concluding that the substantial questions of law proposed did not arise in the given facts of the case. The Court upheld the Tribunal's decision, allowing the adjustment of duty liability against the duty excess-paid in one month with the duty short-paid in other months, and directed the adjudicating authority to verify the appellant's claim and recover only the differential, if any, after such adjustment. The Court found that the principle of Provisional Assessment under Rule 7 was not applicable, and the principle of unjust enrichment did not apply in this case.
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