2003 (6) TMI 96 - AT - Central Excise

Summary

Issues Involved:
1. Classification of the product under the Central Excise Tariff Act, 1985.
2. Entitlement to refund of excise duty paid under protest.
3. Applicability of the doctrine of unjust enrichment.
4. Provisional assessment and its implications on refund claims.
5. Compliance with procedural requirements under Rule 173-I(2) of the Central Excise Rules, 1944.

Detailed Analysis:

1. Classification of the Product:
The initial issue revolved around the classification of the product under the Central Excise Tariff Act, 1985. The appellants initially classified their product under chapter sub-heading 3206.19, which was later reclassified by the department under chapter sub-heading 3402.90. The Assistant Commissioner initially approved the appellants' classification, but upon appeal by the department, the Collector of Central Excise (Appeals) reclassified the product. Subsequent show cause notices proposed further reclassifications under different sub-headings, leading to a series of legal proceedings.

2. Entitlement to Refund of Excise Duty:
The appellants sought a refund of Rs. 2,20,46,117.82 paid as excise duty under protest during the period from 7-8-87 to 31-5-93. They argued that since the assessments were provisional, the provisions of Section 11B were not applicable as per the Supreme Court's decision in the Mafatlal Industries case. However, the Commissioner found no evidence that the assessments were provisional and upheld the order of the lower authority, transferring the refund amount to the Consumer Welfare Fund under Section 11B(2) and Section 12B of the Central Excise Act.

3. Applicability of the Doctrine of Unjust Enrichment:
The Commissioner upheld the doctrine of unjust enrichment, stating that the appellants had not substantiated that the duty burden had not been passed on to the customers. Despite the appellants' argument and submission of an affidavit and Chartered Accountant Certificate, the Commissioner concluded that the incidence of duty had been passed on to the customers, as evidenced by the price lists. The Supreme Court's decision in the Mafatlal case was cited, emphasizing that there is no automatic right to a refund if the incidence of duty has been passed on to others.

4. Provisional Assessment and its Implications on Refund Claims:
The appellants claimed that the assessments were provisional, which would entitle them to a refund without the bar of unjust enrichment. However, the Tribunal found no evidence of provisional assessments and noted that the removals were made under Rule 173F and assessed under Rule 173-I, which does not create a liability or entitlement to a refund but mandates crediting any excess duty paid into the account-current.

5. Compliance with Procedural Requirements under Rule 173-I(2):
The Tribunal highlighted the procedural requirements under Rule 173-I(2), which mandates that any excess duty should be credited to the account-current upon receipt of the assessment order. The Tribunal found that this procedure was not followed, and therefore, the claim for a cash refund was not justified. The Tribunal concluded that the provisions of Section 11B were not applicable, and the specific rule under Rule 173-I(2) should have been applied.

Conclusion:
The Tribunal set aside the orders of the lower authorities, stating that the refund claim should be processed under Rule 173-I(2) of the Central Excise Rules, 1944, rather than Section 11B of the Central Excise Act. The matter was remanded back to the original authority with directions to follow the prescribed procedure under Rule 173-I(2). The appeal was disposed of accordingly.