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2018 (5) TMI 605 - HC - Central ExciseUnjust enrichment - provisional assessment - Validity of SCN - Whether tribunal is correct in holding that bar of unjust enrichment is not legally applicable to the provisional assessment cases before amendment to Rule 9B? Held that - the entitlement to refund and finalization of the provisional assessment under Rule 9B of the Central Excise Rules, 1944 is independent from the provisions of refund under Section 11B of the Central Excise Act, 1944. Even if the amendment made by the notification 45/99 with effect from 25.06.1999, is noted, only the procedure established under sub section 2 of Section 11B of the Central Excise Act has been made applicable to the refund arising out of the finalization of the provisional assessment under Rule 9B of the Central Excise Rules, 1944. The procedure regarding unjust enrichment of finalization of provisional assessment will be applicable to the provisional assessment made after 1999 and not before that date as the proviso to Rule 9B in the form of sub Rule 5 did not have a retrospective effect. The doctrine of unjust enrichment therefore would not be attracted to the refunds pertaining to the finalization of the provisional assessment for the period prior to 1999 and sub Rule 5 to Rule 9B of the Central Excise Rule, 1944 will not operate retrospectively. In the present case the period in question is 1998- 99 and the assessment was finalized on 04 /06 /2001. Applying the aforesaid principle, the principle of unjust enrichment could not be made applicable. Appeal dismissed - decided against Revenue.
Issues Involved:
1. Applicability of the bar of unjust enrichment to provisional assessments before the amendment to Rule 9B. 2. Validity of the Show Cause Notice issued without the Commissioner's direction under Section 35E(2) of the Central Excise Act. Issue-wise Detailed Analysis: 1. Applicability of the Bar of Unjust Enrichment: The primary issue was whether the bar of unjust enrichment applies to provisional assessments conducted before the amendment to Rule 9B of the Central Excise Rules, 1944, which came into effect on 25.06.1999. The court examined the sequence of events, noting that the respondent had cleared goods under provisional assessment for the financial year 1998-1999, and the final assessment determined an excess duty payment of ?91,59,977/-. The refund was sanctioned based on the final assessment order dated 04.06.2001. The Revenue's appeal argued that the refund should have been credited to the Consumer Welfare Fund as the respondent had not demonstrated that the duty burden was not passed on to customers. The court referred to several judgments, including the Apex Court's decisions in Commissioner of Central Excise, Chennai v. T.V.S. Suzuki Ltd. and CCE v. Allied Photographics India Ltd., which established that the doctrine of unjust enrichment does not apply to refunds arising from the finalization of provisional assessments conducted before the amendment to Rule 9B. The court concluded that the amendment to Rule 9B, which introduced the bar of unjust enrichment, applies prospectively from 25.06.1999. Therefore, the principle of unjust enrichment could not be applied to provisional assessments for the period before this date, even if finalized afterward. 2. Validity of the Show Cause Notice: The second issue was the validity of the Show Cause Notice issued by the Deputy Commissioner of Central Excise on 04.07.2003, which demanded the recovery of the refunded amount on the grounds of unjust enrichment. The respondent argued that the notice was invalid as it was not issued under the authority of the Commissioner as required by Section 35E(2) of the Central Excise Act. The court agreed with the respondent, noting that the Commissioner had not directed the issuance of the notice, rendering it legally unsustainable. Conclusion: The court upheld the CESTAT's decision, dismissing the Revenue's appeal. It affirmed that the bar of unjust enrichment does not apply to provisional assessments conducted before the amendment to Rule 9B, and the Show Cause Notice was invalid due to the lack of the Commissioner's direction. The appeal was dismissed with no order as to costs.
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