2016 (12) TMI 1041 - AT - Central Excise

Unjust enrichment - Whether the duty paid in excess or short paid can be adjusted suo motto by the appellant? - Held that - Larger Bench in the case of Excel Rubber Ltd. Vs. Commr. of Central Excise, Hyderabad 2011 (3) TMI 527 - CESTAT, NEW DELHI (LB) has held that even in case of provisional assessment leading to refund, an assessee will be required to file refund claim to justify that unjust enrichment is not attracted, assessee has to approach Central Excise authorities with refund application and proof in support of the claim that excess amount has not been recovered from the customers - thus, appellant was not entitled to suo motto adjust the excess/short payment of duties. Time bar - Held that - the Ld. Advocate appearing on behalf of the appellant argued that in a letter dated 8/8/2007 written to the department appellant has clearly brought to the notice of the Department that adjustment of duty as a result of escalation/de escalation of price of their final products was intimated. On careful perusal of this letter it is observed that only the excess duty required to be paid by the appellant as a result of escalation was intimated to the department after payment. There is no mention in this letter as to how much excess duty was paid and how much less duty paid by the appellant was adjusted. The said intimation will not help the case of the appellant and it is held that extended period and penalty are invokable in these proceeding against appellant. Appeal dismissed - decided against assessee.

Summary

Issues:
1. Whether the appellant can make suo motto adjustments of duty excess paid/short paid.
2. Whether the show cause notice is barred by limitation.

Analysis:
1. The appellant argued that they are manufacturing sleepers based on approved rates by Railways, with final prices subject to escalation/reduction at the time of clearance. They claimed to have made adjustments for excess or less payment of duty following legal precedents allowing such adjustments. The first appellate authority acknowledged this but held the show cause notice was not time-barred. The appellant contended that a letter dated 8/8/2007 informed the Central Excise Superintendent about the duty adjustments due to price fluctuations, limiting any demand to within a year. The Revenue, however, cited case laws opposing suo motto duty adjustments and argued that the appellant had suppressed facts, justifying the extended period for the notice and the penalty imposed.

2. The Tribunal noted a demand of ?1,29,218/- confirmed against the appellant for June 2007, alongside interest and a penalty. The appellant claimed legal admissibility for suo motto duty adjustments during the relevant period, citing supportive case laws. The Revenue referenced cases where such adjustments would lead to unjust enrichment, emphasizing the need for a refund claim to avoid this. The Tribunal found that the appellant's reliance on older case laws was not applicable, as recent judgments required formal refund applications to prevent unjust enrichment. Regarding the time bar issue, the appellant's argument based on the 2007 letter was deemed insufficient, as it only mentioned excess duty due to price escalation without specifying the adjustments made. Consequently, the extended period and penalty were deemed applicable, leading to the dismissal of the appellant's appeal.