2024 (4) TMI 1139 - AT - Central Excise

Recovery of wrongly availed CENVAT Credit - time limitation - doctrine of unjust enrichment - HELD THAT - The relevant part of the final order passed by the Tribunal while remanding the matter has already been reproduced in para 6 of this order. It can be seen that the Tribunal set aside the order passed by Commissioner (Appeals) and the matter was remanded for de novo adjudication. This means that the finalization which has happened on 18/03/1996 has been completely set aside and has become non-est. The order of finalisation dt. 18.03.1996 becomes an order having no force of law. The department did not file any appeal against such order of remand passed by Tribunal. Thus order of setting aside the finalisation of assessment dt. 18.03.1996 and remand has attained finality. When an appellate court invalidates the verdict of an adjudicating court, the said order of adjudicating authority is annulled. In other words, it is to be ignored for all purposes - In the present case, the appellant started paying duty as determined by the finalization order dt. 18.03.1996 and intimated the department that they do not accept the order and are paying duty provisionally. In the present case, even after receiving the letters issued by appellant informing the department that they intend to continue under provisional assessment the department has not passed any order rejecting the said request. Pertinently, there was already an earlier order for provisional assessment passed under Rule 9B. It is not a situation where there is no order passed under Rule 9B at all. In the present case, though the appellant has issued invoices, the duty element is not mentioned in these invoices. This means the duty is not collected from the buyer. The invoices are therefore more in the nature of a delivery challan. The description and price of goods has been indicated in the invoices. It is difficult to understand the procedure for issue of such invoices. Though it was well within the knowledge of the department, there has been no dispute raised by the department as to issuance of these invoices. The invoices placed clearly show that the appellant has not collected the duty from their customers. The appellant has paid duty from their PLA account. It can be seen that after, the amendment the refund of any excess duty paid under provisional assessment is subject to subsection (2) of Section 11B of the Act ibid. In the case of Titan Industries Ltd. Vs. CCE, Chennai 2009 (3) TMI 149 - CESTAT, CHENNAI the question considered was whether the principle of unjust enrichment is to be examined in a claim made for refund of duty paid under provisional assessment. It was held by the Tribunal that in consequential refund arising out of finalisation of provisional assessment the doctrine of unjust enrichment under Section 11B is not applicable for the period prior to 25.6.1999. In the present case the period of refund claim is from 16.12.1994 to 20.2.1996 and the assessment was finalized on 13.7.1999. Applying the ratio of these decisions, the principle of unjust enrichment is not applicable. The assessment for the period 01.04.1996 to 12.05.1999 is provisional, and that the finalization has happened only on 13.07.1999. The duty having been paid under protest and the appellant having filed the refund claim on 04.11.1999 within a period of 6 months, the refund claim is not hit by limitation. From the documents furnished by appellant it is established that the duty is borne by them and not passed on to another - the refund claim being for the period prior to 25.06.1999, the issue of unjust enrichment is not applicable to the provisional assessment under Rule 9B. The appellant is therefore eligible for refund. The amount of Rs. 2,05,00,400/- having been paid by appellant during investigation, which is in the nature of a deposit, the issue of limitation or unjust enrichment is not applicable. The view taken by refund sanctioning authority as noticed above is correct. From the foregoing, it is found that the appellant is eligible for refund. The impugned order is set aside - appeal allowed.

Summary

Issues Involved:
1. Provisional Assessment
2. Limitation for Refund Claims
3. Doctrine of Unjust Enrichment
4. Refund of Duty Paid During Investigation

Detailed Analysis:

1. Provisional Assessment:

The appellant, engaged in manufacturing cotton fabrics, filed for provisional assessment under Rule 9B of Central Excise Rules, 1944. The Assistant Commissioner initially approved provisional assessment, which was later finalized on 18.03.1996, holding the process as 'manufacture' and demanding duty. The appellant contested this, and the Tribunal remanded the case for de novo adjudication. The de novo order dated 13.07.1999 held that the process did not amount to 'manufacture', thus no duty was payable. The appellant argued that the period from 16.12.1994 to 13.07.1999 should be treated as provisional assessment due to ongoing litigation and non-response from the department to their letters requesting continued provisional assessment. The Tribunal agreed, stating that the finalization of assessment occurred only on 13.07.1999, thus the duty paid during this period was provisional.

2. Limitation for Refund Claims:

The refund claims were filed on 04.11.1999 for the period from 01.04.1996 to 12.05.1999. The department argued that the claims were time-barred as the finalization date was 18.03.1996. The Tribunal, however, held that the relevant date for finalization was 13.07.1999, and thus the refund claims filed within six months from this date were within the limitation period. The Tribunal emphasized that the remand order nullified the earlier finalization, restoring the status quo ante.

3. Doctrine of Unjust Enrichment:

The appellant contended that the principle of unjust enrichment was not applicable to provisional assessments for the period before 25.06.1999. The Tribunal agreed, citing that Rule 9B did not incorporate Section 11B regarding unjust enrichment until the amendment on 25.06.1999. Additionally, the appellant provided evidence that they had not passed on the duty to customers, as the prices remained consistent before and after paying the duty, and the invoices did not indicate duty charges. Therefore, the Tribunal concluded that the refund claims were not hit by unjust enrichment.

4. Refund of Duty Paid During Investigation:

The appellant paid Rs. 2,05,00,400/- during the investigation, which was later refunded based on the de novo order and a High Court directive. The department’s appeal against this refund was dismissed, as the amount paid during the investigation was deemed a deposit, not subject to the time limit or unjust enrichment principles under Section 11B. The Tribunal upheld the refund, noting that no recovery notice had been issued.

Conclusion:

The Tribunal set aside the orders of the Commissioner (Appeals) and allowed the appeals, granting the appellant refunds with consequential reliefs. The Tribunal affirmed that the assessments were provisional until 13.07.1999, the refund claims were timely, and the doctrine of unjust enrichment did not apply to the provisional assessments for the period in question. The refund of the amount paid during the investigation was also upheld.