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2023 (6) TMI 61 - AT - Central ExciseDenial of adjustment of excess payment against the alleged short payment of duty - denial on the ground that the appellant had passed on the excess amount of duty as CENVAT Credit to M/s. BPCL through Central Excise cenvatable invoices issued under Rule 11 of the Central Excise Rules, 2002 - Rule 7 of the Central Excise Rules, 2002 - HELD THAT - On a conjoint reading of Rule 7 of the Central Excise Rules, 2002 along with the Instructions given in Chapter 3 of the C.B.E.C. s Excise Manual for Supplementary Instructions issued under Rule 31 of the Central Excise Rules, it is clear that finalization of provisional assessment is required to be done on monthly basis. Finalization of provisional assessment means finalization of an issue or ground and thereafter, finalization of each E.R.-1. It is to be noted that in the scheme of Central Excise, returns are filed on monthly or quarterly basis and assessments are made on monthly or quarterly basis. Therefore, the provisional assessments have to be finalized for every month separately and it is for this reason that Rule 7(4) refers to the month for which the assessment is finalized. As assessment is to be finalized for each and every month separately, the words used in Rule 7(4) are for the month as the differential duty is to be paid for every month. The original adjudicating authority after considering the details as to the clearances made by M/s. BHEL to M/s. BPCL, Kochi, have finalized the provisional assessments on the basis of the clearances made in each month, i.e., as per the E.R.-1 returns filed, and arrived at the shortfall of duty for the period from January 2008 to August 2008 and from June 2009 to July 2010 and the excess payment of duty for the period from September 2009 to May 2009 - In doing so, as above, he has adhered to the instructions given in the C.B.E.C. s Excise Manual for Supplementary Instructions as well as the provisions of Rule 7 of the Central Excise Rules, 2002. For the shortfall, he raised a demand of Rs.10,92,739/- whereas in the case of excess payment to the tune of Rs.11,87,283/-, the original adjudicating authority has ordered for credit into the Consumer Welfare Fund as there is a finding that duty of excise paid to M/s. BHEL had been passed on to M/s. BPCL, Kochi. There is a categorical finding in the adjudication order that the duty burden has been borne not by M/s. BHEL, but by M/s. BPCL, the consignee of the goods. The refund of the excess payment was not sanctioned for the reason that the duty burden has been passed on to M/s. BPCL attracting the provisions of Rule 7(6) - Not only that, M/s. BPCL had availed CENVAT Credit of the excess payment of duty on the basis of Central Excise cenvatable invoices issued under Rule 11 of the Central Excise Rules, 2002. As such, we do not find any error in the order passed by the lower adjudicating authority. The appellant s reliance on the decision of the Hon ble High Court of Karnataka at Bangalore in the case of M/s. Toyota Kirloskar Auto Parts Pvt. Ltd. 2011 (10) TMI 201 - KARNATAKA HIGH COURT is not applicable to the facts of this case as the issue involved therein was relating to finalization of provisional assessments of related party transactions on the basis of CAS-4 prices. The issue involved in the above case was the demand of interest and the facts are, as such, distinguishable. There are no infirmity in the orders of the lower authorities and accordingly, the appeal is dismissed.
Issues Involved:
1. Whether the Revenue's stand in not adjusting the excess payment against the alleged short payment of duty is correct. 2. Interpretation and application of Rule 7 of the Central Excise Rules, 2002. Summary: Issue 1: Adjustment of Excess Payment Against Short Payment of Duty The appellant, a manufacturer of boiler components, supplied these to various power projects under provisional assessment of duty as per Rule 7(1) of the Central Excise Rules, 2002. The Deputy Commissioner allotted a provisional assessment number based on a provisional value of Rs. 265/KG. Upon finalizing the provisional assessment, the Adjudicating Authority found a short payment of Rs. 10,92,739/- and excess payment of Rs. 11,87,283/-. The excess amount was credited to the Consumer Welfare Fund as the duty burden had been passed on to M/s. BPCL, who availed CENVAT Credit. The appellant's request for adjustment against short payment was denied. Issue 2: Interpretation and Application of Rule 7 of the Central Excise Rules, 2002 The appellant argued that the entire contract should be assessed as a single contract rather than on a month-wise basis and that excess payments should be refunded under Rule 7(5). The First Appellate Authority upheld the Adjudicating Authority's order, referencing paragraph 2.6 of Part-IV in Chapter 3 of the C.B.E.C.'s Excise Manual for Supplementary Instructions, which mandates monthly finalization of provisional assessments. The Tribunal noted that Rule 7 requires finalization of provisional assessments on a monthly basis. The original adjudicating authority adhered to this by finalizing assessments based on monthly E.R.-1 returns, identifying shortfalls and excess payments accordingly. The Tribunal found that the duty burden had been borne by M/s. BPCL, thus justifying the crediting of excess payment to the Consumer Welfare Fund under Rule 7(6). The appellant's reliance on the Karnataka High Court's decision in M/s. Toyota Kirloskar Auto Parts Pvt. Ltd. was deemed inapplicable as the facts were distinguishable. Conclusion: The Tribunal found no infirmity in the orders of the lower authorities and dismissed the appeal, upholding the monthly finalization of provisional assessments and the crediting of excess payments to the Consumer Welfare Fund.
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