2020 (4) TMI 338 - AT - Central Excise

Refund of Excess Excise Duty - principles of unjust enrichment - refund granted but the same is directed to be credited to the consumer welfare fund as per amended Section 11B(2) read with Section 12C of Central Excise Act 1944 - finalisation of provisional assessment - whether the principles of unjust enrichment to the provisional assessment in the year 1995 would be applicable on finalisation of assessment in 2008? - HELD THAT - This issue has been resolved by the Hon ble Bombay High Court in CEAT Ltd case 2018 (5) TMI 605 - BOMBAY HIGH COURT where it was held that The proviso to Rule 9B(5) would be made applicable only with effect from 25.06.1999 and therefore the principle of unjust enrichment cannot be made applicable to the refunds arising out of finalization of the provisional assessments pertaining to the period prior to 25.06.1999 even if the assessments are finalized after 25.06.1999. It is not in dispute that the provisional assessment was directed in the year 1995 and relevant documents for finalisation of claim have been submitted in the year 1996. The department finalised the assessment only in the year 2008 - the principles of unjust enrichment would not be applicable to the refund filed consequent to finalisation of provisional assessment initiated in the year 1995. Appeal dismissed - decided against Revenue.

Summary

Issues:
- Application of the doctrine of unjust enrichment to provisional assessment
- Interpretation of relevant legal provisions and amendments
- Entitlement to refund on finalization of provisional assessment

Analysis:

1. Application of the doctrine of unjust enrichment to provisional assessment:
The case involved a Public Sector undertaking engaged in manufacturing goods under Chapter 89 of the Central Excise Tariff Act 1985. The respondent requested provisional assessment of goods, which was allowed in 1995. Subsequently, the final assessment was completed in 2008, leading to a dispute over the refund of excess duty paid. The main issue was whether the doctrine of unjust enrichment applied to the finalization of the provisional assessment initiated in 1995. The appellant contended that the doctrine applied due to a specific notification issued in 2001, while the respondent argued that the principles of unjust enrichment were not applicable to assessments made before the relevant amendment.

2. Interpretation of relevant legal provisions and amendments:
The appellant relied on the amendment to Rule 9B of the Central Excise Act 1944, specifically pointing out Notification No. 30/2001 CE(NT) dated 26.01.2001. They argued that the doctrine of unjust enrichment should be applied based on this amendment. On the other hand, the respondent emphasized that the relevant documents for finalization of the assessment were submitted in 1996, before the amendment that introduced the provisions of unjust enrichment to provisional assessments. The respondent cited various judgments to support their argument, highlighting that the principles of unjust enrichment should not be retroactively applied to assessments made prior to the amendment.

3. Entitlement to refund on finalization of provisional assessment:
The Tribunal analyzed the legal position and referred to the judgment of the Hon’ble Bombay High Court in a similar case involving CEAT Ltd. The Tribunal observed that the entitlement to refund and finalization of provisional assessment under Rule 9B of the Central Excise Rules, 1944 is independent of the provisions of refund under Section 11B of the Central Excise Act, 1944. The Tribunal concluded that the doctrine of unjust enrichment would not be attracted to assessments finalized after 1999 if the provisional assessment was initiated before that date. Therefore, in the present case, the Tribunal upheld the order allowing the refund, stating that the principles of unjust enrichment were not applicable to the refund filed after the finalization of the provisional assessment initiated in 1995.

In conclusion, the Tribunal dismissed the Revenue’s appeal, upholding the order that allowed the refund to the respondent, as the principles of unjust enrichment were deemed inapplicable to the case based on the timing of the provisional assessment and finalization of the assessment.