2024 (8) TMI 714 - AT - Central Excise

Adjustment of amount of excess payment of duty due to various reasons, at the time of the quantification of duty pursuant to finalisation of provisional assessment - HELD THAT - The learned Commissioner (Appeals) after analysing the provisions of Rule 9B of the Central Excise Rules, 1944 held that the factors which were not at the time of provisional assessment or while finalizing the assessment were not raised, cannot be considered while quantification of the demand. Consequently, the learned Commissioner (Appeals), dropped the excess amount relating to addition of packing and forwarding charges and value of software in arriving at the assessee value as proposed by the department. Applying the same principle he has also rejected the claim of the appellant that the excess amount of the duty, if any, paid due to various reasons, not raised at the time of finalisation of assessment under Rule 9B of Central Excise Rules, 1944, the Order of assessment being not challenged, cannot be raised at the quantification of demand. The learned Commissioner has confused between assessment and quantification. Once the provisional assessment is finalised taking note of the elements to be considered in determining the assessable value subsequent additions or alterations of certain elements of deduction or expenses relating to sale would be in contravention to the finalisation order of the assessment. However, in the present case, at the time of quantification of the demand, the appellant claimed certain corrections in the quantification amount by submitting that excess payment of duty due to error in billing, wrong quantity etc. which has nothing to do with the assessment for determination of assessable value of the goods. Therefore, the rejection of the claim of the appellant to adjust the excess duty paid during the assessment period at the time of quantification of demand cannot be sustained. Appeal allowed.

Summary

Issues:
1. Whether the appellant is entitled to adjust the amount of excess payment of duty at the time of quantification of duty pursuant to finalization of provisional assessment.

Detailed Analysis:
The appeal was filed against the Order-in-Appeal passed by the Commissioner of Central Excise (Appeals), Bangalore. The appellant, engaged in manufacturing telecommunication equipment, resorted to provisional assessment under Rule 9B of Central Excise Rules, 1944, as the final price of goods sold to the Department of Telecommunications, Government of India, could not be determined initially. The final assessment order was passed on 10.03.2003 after provisional assessment. The duty short paid by the appellant for the period 2001-2002 was quantified by the adjudicating authority, leading to a demand of Rs.14,09,55,430. The appellant challenged this order, particularly the demand related to excess payment of duty due to various reasons.

The appellant contended that the excess duty paid was due to wrong billing, short-supply, incorrect calculation of duty, etc., and they were entitled to adjust this amount at the time of quantification of duty. They cited relevant judgments in support of their claim. The appellant also argued that once assessments are provisional, they remain so for all purposes, relying on Supreme Court decisions. Additionally, they highlighted the distinction between duty paid under protest and duty paid under Rule 9B, emphasizing that the burden of excess differential duty was not passed on to buyers during the material period.

The Revenue, represented by the learned AR, supported the findings of the learned Commissioner (Appeals). After hearing both sides and examining the records, the Tribunal considered the main issue at hand - whether the appellant could adjust the excess duty paid at the time of quantification of duty following finalization of provisional assessment. The Tribunal noted that the assessment order was accepted by both parties, and the duty payable was quantified. However, the adjudicating authority had rejected the appellant's claim for adjustment of excess duty paid on account of various errors, stating that these issues were not raised at the time of finalization of assessment under Rule 9B.

The Tribunal observed that the learned Commissioner had erred in conflating assessment and quantification. It was clarified that corrections in the quantification amount, such as excess payment of duty due to billing errors, were separate from the assessment process. Therefore, the rejection of the appellant's claim to adjust the excess duty paid during the assessment period at the time of quantification of demand was deemed unsustainable. Consequently, the impugned order was modified, and the appeal was allowed.

This detailed analysis of the judgment highlights the procedural history, arguments presented by both parties, legal principles invoked, and the Tribunal's reasoning leading to the decision to allow the appeal based on the issue of adjusting excess duty payment during quantification post-provisional assessment finalization.