2018 (5) TMI 309 - HC - Central Excise

Refund - finalization of provisional assessments - unjust enrichment - Whether the Honble CESTATs decision is correct in holding that refund arising out of the finalization of provisional assessments during the period February 1985 to April 1995 need not pass the test of unjust enrichment as the amendment to sub-rule (5) of Rule 9B came into force only w.e.f. 25.06.1999? - Held that - refund arising out of the finalization of provisional assessments during the period February 1985 to April 1995 need not pass the test of unjust enrichment as the amendment to sub-rule 5 of Rule 9B came into force only w.e.f. 25.06.1999. Reliance placed in the case of TVS Suzuki Ltd. and also Sinkhai Synthetics & Chemicals v. Collector Of Central Excise 2002 (4) TMI 65 - SUPREME COURT OF INDIA , wherein the applicability of amended Rule 9B, in particular sub-rule (5) was discussed, and the specific plea that sub-rule (5) of Rule 9B would be applicable to the refund claims made even prior to the amended provision came into existence, was rejected holding that the operation of sub-rule (5) of Rule 9B was not retrospective. Appeal dismissed - decided against appellant-Revenue.

Summary

Issues Involved:
1. Applicability of the test of unjust enrichment to refunds arising from the finalization of provisional assessments.
2. Whether the CESTAT's Final Order was correct in setting aside the impugned order without discussing the grounds and case laws referred therein.

Issue-wise Detailed Analysis:

1. Applicability of the test of unjust enrichment:
The primary issue in the appeal was whether the refund arising out of the finalization of provisional assessments for the period February 1985 to April 1995 needed to pass the test of unjust enrichment. The Revenue contended that the assessee had not provided documentary evidence to prove that the incidence of duty had not been passed on to any other person. However, the CESTAT held that the amendment to sub-rule (5) of Rule 9B, which introduced the requirement to pass the test of unjust enrichment, came into force only on 25.06.1999 and was not applicable retrospectively. The Tribunal noted that the assessments for the period in question were provisional and the duty was paid under protest. The CESTAT relied on the Supreme Court's judgment in CCE, Chennai v. TVS Suzuki Limited, which held that restrictions under Sections 11-A and 11-B would not apply to refund claims consequent upon the finalization of provisional assessments. Thus, the Tribunal concluded that the assessee was eligible for the refund without passing the test of unjust enrichment.

2. CESTAT's Final Order and the grounds put forth:
The second issue was whether the CESTAT's Final Order was correct in setting aside the impugned order without discussing the grounds and case laws referred therein. The Tribunal's order was challenged on the basis that it did not address the specific grounds and case laws cited by the Revenue. However, the Tribunal found that the Appellate Authority had failed to appreciate the specific contentions of the assessee, particularly regarding the finalization of assessments before 25.06.1999. The Tribunal also noted that the Department had admitted the filing and verification of all relevant documents by the assessee in earlier proceedings. The Tribunal held that the reasoning given by the Appellate Authority, without verification of the record, was improper and biased. The Tribunal's order emphasized that the finalization of assessments is the responsibility of the Department and its failure to do so cannot be held against the assessee. The Tribunal's findings were based on the material on record and the lack of substantial evidence from the Revenue to controvert these findings.

Conclusion:
The High Court upheld the Tribunal's findings, noting that the scope of the appeal under Section 35-G of the Central Excise Act, 1944 is limited to questions of law arising from the Tribunal's orders. The High Court emphasized that the findings of fact recorded by the Tribunal are final and must be accepted unless they are shown to be perverse. The High Court found no merit in the Revenue's appeal, as the substantial questions of law framed did not arise from the facts on record. Consequently, the appeal was dismissed, affirming the Tribunal's decision to grant the refund to the assessee without the requirement to pass the test of unjust enrichment.