2016 (5) TMI 1118 - AT - Central Excise

Refund claim - excess duty paid - procedure of provisional assessment not followed - Unjust enrichment - Held that - the appellant admittedly filed the refund claim within one year. It is also not in dispute that the goods were supplied to the appellant s own unit, therefore the valuation provision of Rule 8 of the Central Excise Valuation Rules, 2000 applies. According to which, the price at the time of clearance of the goods is always provisional price. The final price can be ascertained only on the basis of CAS4, which can be prepared only after completion of the financial year and on availability of the actual data of various overheads, till that time whatever price on which the clearances are made is on estimation basis. In this process, if there is any shortfall in the duty, the same is required to be paid on finalization of valuation on the basis of CAS4. Similarly, if there is an excess payment over and above the final price on the basis of CAS4, the same shall be refunded to the appellant. I am therefore of the view that merely because the appellant have not followed the procedure of provisional assessment, the price at which the duty was paid at the time of clearance cannot be treated as final assessment. Therefore, for this reason refund of excess paid duty cannot be denied by relying on the various judgments. As regards unjust enrichment, it is found that the assessee was under bonafide belief that their stand that since the recipient unit has not availed the Cenvat Credit, the incidence of duty has not been passed on therefore they have not produced any other evidence on this fact. I accept the request of the appellant that the factual aspect on non-passing of incidence of duty should be verified. Therefore the matter is remanded back to the adjudicating authority with a direction that the appellant may be given an opportunity to present their case along with documentary evidence to prove that incidence of excess duty paid has not been passed to any other person. - Appeal disposed of by way of remand

Summary

Issues involved:
1. Refund claim rejection based on non-following of provisional assessment procedure.
2. Refund claim rejection based on unjust enrichment.

Issue 1: Refund claim rejection based on non-following of provisional assessment procedure:
The appellant supplied Polyester Tops to their own unit, seeking a refund of excess excise duty paid from April 2009 to June 2009. The refund claim was rejected by the adjudicating authority for not following the provisional assessment procedure. The appellant argued that under Rule 8 of Central Excise Valuation Rules, 2000, the final value can only be determined based on CAS4, which cannot be ascertained at the time of clearance. The appellant filed the refund claim within one year, and the valuation of goods between units of the same entity is provisional until finalization based on CAS4. The Tribunal found that the absence of provisional assessment does not make the duty payment final, and excess duty paid should be refunded. Citing relevant judgments, the Tribunal upheld the appellant's claim for refund without following the provisional assessment procedure.

Issue 2: Refund claim rejection based on unjust enrichment:
The appellant contended that unjust enrichment did not apply as the recipient unit did not take Cenvat Credit, indicating the duty incidence was not passed on. The Revenue argued that the appellant failed to provide evidence on unjust enrichment. The Tribunal noted that the appellant genuinely believed the duty incidence was not passed on due to the recipient unit not availing Cenvat Credit. Relying on precedents, the Tribunal emphasized that the absence of Cenvat Credit uptake does not automatically prove non-passing of duty incidence. The matter was remanded to verify if the excess duty paid was passed on, granting the appellant an opportunity to present evidence. The Tribunal directed the adjudicating authority to assess whether the duty incidence was passed on to any other party, thereby addressing the issue of unjust enrichment.

This detailed analysis of the judgment highlights the key arguments, legal principles, and decisions made by the Tribunal concerning the rejection of the refund claim based on the issues of non-following of provisional assessment procedure and unjust enrichment.