2018 (9) TMI 1566 - AT - Central Excise

Refund of Excise duty paid - rejection of refund on the ground that the assessment was not provisional and even if it was provisional, refund is premature and that the appellants did not pay duty under protest; the appellants did not produce proof that the equipment manufactured by them were same as those covered by the Tribunal‟s order cited above and they have not given proof that they have not passed on the incidence of duty. Held that - It is seen that the appellants have submitted the documentary proof that the goods cleared by them were manufactured out of the imported items or equipments. Once the appellants have submitted the details of the same, the department could have well verified the claim instead of simply brushing aside the claim saying that the appellants did not prove that the imported equipments and the equipments cleared by them were one and the same. Moreover, the appellants submitted that they have cleared IFWT model telephones which are classifiable under 8525.2017 of Central Excise Tariff Act Provisional assessment - Held that - The records of the case are very clear that the assessments were provisional for not only the impugned period but for subsequent periods also. A show-cause notice dated 15.7.2007 was issued to the appellants and the show-cause notice cites so many letters written by the appellants to show that the assessments were provisional - the Order-in-original also refers to the assessment being provisional; therefore, it is evident that the assessments were provisional. Lower authorities have also taken a plea that assessments are provisional for the purpose of valuation and not for classification - Held that - The provisional assessment has to be treated as provisional for all purposes and not necessarily in respect of particular grounds considered. From the available records of the case, it is not clear as to whether the assessments have been finalised or not. In the absence of the same, it is to be understood that the assessments are provisional, therefore, the refund claim made by the appellants is not hit by limitation. Moreover, there was no reason or requirement for the appellants to file a refund claim as grant of refund should be a normal process on finalization of the assessments. Unjust enrichment - Held that - Prima facie, a strong case has been established by the appellants that there was no scope for believing that the incidence of duty has been passed on by the appellants to their customers - there is no question of unjust enrichment in the instant issue. However, as the finalization of assessment did not appear to have been finalized, this aspect can be verified by the lower authority on finalization of the provisional assessments. Appeal allowed by way of remand.

Summary

Issues:
Refund claim time-barred, Classification of goods, Provisional assessment, Unjust enrichment

Refund claim time-barred:
The appellant, a manufacturer of excisable goods, filed a refund claim for excise duty paid on goods cleared during 2003-04 and 2004-05. The claim was based on a CESTAT order classifying the goods under a specific Customs Tariff Heading. The Commissioner rejected the claim as time-barred, stating the appellant failed to prove the goods' identity and that provisional assessments cannot lead to refunds until finalized. The appellant argued assessments were provisional and additional grounds can be claimed later. Various tribunal and court cases were cited supporting the provisional assessment concept.

Classification of goods:
The appellant contended the goods were classified correctly under a specific tariff heading, supported by documents showing no duty incidence passed on to customers. The Department argued the goods were self-classified differently. The Tribunal found the appellant provided evidence of goods' origin and classification, contradicting the Department's dismissal of the claim based on lack of proof.

Provisional assessment:
The Department claimed assessments were provisional only for valuation, not classification, and thus a refund was premature. The Tribunal disagreed, citing evidence that assessments were provisional for the relevant periods and subsequent ones. It held that if an assessment is provisional for any reason, it remains provisional for all purposes, including refunds. The Tribunal emphasized the need to examine all facts, including classification, during finalization of provisional assessments.

Unjust enrichment:
The appellant demonstrated through documents that no duty incidence was passed on to customers, negating the unjust enrichment claim. The Tribunal noted the need for finalizing assessments to verify this aspect. It considered a High Court order supporting the appellant's stance and directed the original authority to finalize the assessments and sanction the refund accordingly. The Tribunal emphasized that the absence of finalized assessments meant the refund claim was not time-barred and should be processed as a routine procedure upon finalization.

In conclusion, the Tribunal allowed the appeal by remanding the case for further proceedings.