1994 (7) TMI 174 - AT - Central Excise

Summary

Issues:
Appeal against order-in-appeal regarding demand of duty and penalty upheld by Collector of Central Excise. Contention on Rule 173-I application, excess duty credit, unjust enrichment, and small scale industry exemption.

Analysis:
The appeal was filed against the order-in-appeal by the Collector of Central Excise, Bhubaneswar, challenging the decision that the demand of duty amounting to Rs. 8,87,836.98 did not stand to the extent of the amount paid in excess by the party. The penalty of Rs. 25,000.00 was upheld due to a debit balance in their Personal Ledger Account. The main issue raised was the interpretation of Rule 173-I of the Central Excise Rules, 1944, regarding the assessee's right to take excess duty as credit suo motu. The appellant argued that the excess duty paid by the assessee was not due to clerical error but a case of short levy, and Section 11B should have been followed for refund instead of taking credit. The appellant also contended that allowing credit for excess payment would render Section 11B redundant and lead to unjust enrichment by the assessee.

The Tribunal analyzed Rule 173-I and its application in the case, emphasizing that the proper officer assessed the duty due based on the approved classification list, allowing the assessee to take credit in their account current for the excess amount paid. The Tribunal noted that the rule does not restrict credit to clerical errors but encompasses any excess duty paid by the assessee. It was clarified that the assessment memorandum did not need to explicitly direct the assessee to take credit if the assessed duty was less than the amount paid. The Tribunal rejected the appellant's argument that Rule 173-I should be subordinate to Section 11B, stating that the rule operates within a specific scope and does not conflict with Section 11B.

Regarding the contention of unjust enrichment and small scale industry exemption, the Tribunal upheld the order-in-appeal, stating that the Collector had correctly applied the legal provisions. The Tribunal dismissed the appeal and upheld the order-in-appeal, affirming that the proper officer's assessment under Rule 173-I allowed the assessee to take credit for excess duty paid. The Cross Objection filed by the respondents seeking dismissal of the appeal was deemed infructuous as the appeal was already dismissed, and no additional relief was sought in the Cross Objection.