2000 (8) TMI 765 - AT - Central Excise

Summary

Issues Involved:
1. Rejection of refund claim of Rs. 3,39,89,043/-.
2. Rejection of refund claim of Rs. 26,44,503/- on special packing charges.
3. Application of unjust enrichment under Section 12C of the Central Excise Act.
4. Applicability of Sections 11A and 11B to provisional assessments under Rule 9B(5).

Detailed Analysis:

1. Rejection of Refund Claim of Rs. 3,39,89,043/-:
The appellants, engaged in manufacturing dyes and chemicals, paid excise duty under protest due to provisional approval of their price list seeking deductions under Section 4 of the Central Excise Act, 1944. The Assistant Commissioner initially accepted all deductions except those for 'quality discount' and 'special packing'. The Collector (Appeals) later allowed these deductions, prompting the appellants to seek a refund. However, the Assistant Commissioner sanctioned the refund but ordered it to be credited to the Consumer Welfare Fund (CWF) under Section 12C, citing that the duty incidence had been passed on to customers. The Commissioner (Appeals) upheld this decision. The Tribunal found that the appellants' refund claims, arising from adjustments under Rule 9B(5), were not governed by Sections 11A or 11B, thereby entitling the appellants to the refund without it being credited to the CWF.

2. Rejection of Refund Claim of Rs. 26,44,503/- on Special Packing Charges:
The appellants contended that the Assistant Commissioner could not reject the refund claim for special packing charges as it had already been approved by the Commissioner (Appeals). The Tribunal agreed, noting that the special packing was durable and returnable, and undertaken per contracts with buyers, reflected in the invoices. The Assistant Commissioner's later order could not contradict the earlier approval by the Commissioner (Appeals). Thus, the rejection of the refund claim for special packing charges was invalid.

3. Application of Unjust Enrichment under Section 12C of the Central Excise Act:
The Department argued that since the appellants included post-manufacture expenses in their assessable value and passed the duty on to consumers, refunding the amount would result in unjust enrichment. The Tribunal, however, held that the provisions of unjust enrichment under Section 12C were not applicable as the refund claims arose from adjustments under Rule 9B(5). The Tribunal emphasized that the Commissioner (Appeals) misinterpreted the Apex Court's judgment in Mafatlal Industries, which clarified that Sections 11A and 11B do not apply to provisional assessments unless the final order is appealed or questioned in higher forums.

4. Applicability of Sections 11A and 11B to Provisional Assessments under Rule 9B(5):
The Tribunal referred to the Apex Court's judgment in Mafatlal Industries, which stated that recoveries or refunds from provisional assessments under Rule 9B(5) are not governed by Sections 11A or 11B unless the final orders are appealed or questioned in higher forums. The Tribunal found no record of such appeals or writ petitions in this case, thereby confirming that the appellants' refund claims were not subject to Sections 11A or 11B. Consequently, the appellants were entitled to the refund, and the amount could not be credited to the Consumer Welfare Fund.

Conclusion:
The Tribunal allowed the appeal, granting the appellants the refund of Rs. 3,81,30,960/- with consequential benefits, and determined that the amount should be paid to the appellants instead of being credited to the Consumer Welfare Fund. The Tribunal emphasized that the provisions of unjust enrichment were not applicable in this case due to the nature of provisional assessments under Rule 9B(5).