2018 (12) TMI 1474 - AT - Central Excise

Refund of excess amount of duty paid - goods were cleared to their depots on stock transfer basis - Section 4(1)(a) of the Central Excise Act, 1944 - extended period of limitation - whether the duty short paid by the appellant amounting to ₹ 6,44,517/- during the period from July 2005 to March 2005 would be adjusted against the refund of ₹ 10,79,333/- claimed by the appellant for excess amount of duty paid? - Held that - The adjudicating authority has categorically held that the self assessment undertaken by the appellant was on provisional basis. Also, from the records, particularly the letter dated June 2001 and the ER-1 returns filed from time to time to the department, the appellant has categorically claimed that their assessment was provisional and no communication was addressed by the Revenue denying the said facility of assessment on provisional basis. There is no merit in the observation of the learned Commissioner (Appeals) that the assessment was since not provisional, therefore, the appellant is not entitled to adjust the duty short paid against the amount excess paid during the particular period of assessment - the appellant is entitled to adjust the duty short paid during the relevant period with that of excess paid - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Adjustment of duty short paid against excess duty paid during a specific period.
- Provisional assessment of duty by the appellant.
- Application of principles of unjust enrichment in duty adjustment.

Analysis:

Issue 1: Adjustment of duty short paid against excess duty paid
The appellant, engaged in manufacturing excisable goods, cleared lubricating oil to depots at a lower price than the eventual selling price, leading to a refund claim for short payment of duty. The Revenue contended that as the assessment was not provisional as per Rule 7 of the Central Excise Rules, the appellant could not adjust the duty shortage against their liability. However, the adjudicating authority confirmed the self-assessment was provisional, supported by documents like a 2001 letter and ER-1 returns. The Tribunal held that since the appellant consistently claimed provisional assessment and the Revenue did not object, the duty short paid could be adjusted against the excess paid. The impugned order was set aside, and the appeal was allowed.

Issue 2: Provisional assessment of duty
The appellant maintained that their assessment was provisional, as communicated in a 2001 letter and ER-1 returns. The Chartered Accountant argued that the appellant's practice of provisional assessment was acknowledged by the original authority but not by the Commissioner (Appeals). The Tribunal noted the absence of any communication from the Revenue rejecting the provisional assessment claim. Consequently, the Tribunal upheld the provisional nature of the assessment, allowing the duty adjustment in favor of the appellant.

Issue 3: Application of unjust enrichment principles
The appellant contended that unjust enrichment principles did not apply to the duty adjustment, citing a Tribunal judgment. The Tribunal did not delve deeply into this argument in the judgment provided. However, the decision to allow duty adjustment in favor of the appellant indicates that the Tribunal did not find unjust enrichment principles applicable in this case.

This detailed analysis of the judgment highlights the key issues of duty adjustment, provisional assessment, and the application of unjust enrichment principles, ultimately resulting in the Tribunal allowing the appellant's appeal and granting relief as per law.