2019 (1) TMI 1228 - AT - Central Excise

Refund of excess Excise duty paid - unjust enrichment - finalization of provisional assessment - Section 11B of the Central Excise Act - Revenue has argued that even in the case of provisional assessment finalization, refund can be granted only subject to the test of unjust enrichment - Held that - This issue is no more res integra and has been settled by various decisions of the Tribunal wherein it has been consistently held that in a case of provisional assessment, doctrine of unjust enrichment is not applicable. Reliance placed in appellant own case C.C.,C.E. & S. T- MYSORE VERSUS JK TYRE & INDUSTRIES LTD., VIKRANT TYRES LTD. 2018 (6) TMI 174 - CESTAT BANGALORE , where it was held that adjustments at the time of finalization of provisional assessments would be permissible without putting the excess duty paid to the test of unjust enrichment. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Provisional assessment under Rule 7 of the CER 2002
- Unjust enrichment in the context of excess and short paid duties
- Applicability of unjust enrichment in cases of provisional assessment
- Interpretation of Section 12B of the Central Excise Act
- Precedents set by Karnataka High Court and Tribunal decisions on unjust enrichment in provisional assessments

Analysis:

The judgment concerns two appeals challenging an order by the Commissioner upholding an Order-in-Original regarding unjust enrichment in the context of provisional assessment under Rule 7 of the CER 2002. The issue revolves around the adjustment of excess and short paid duties for goods cleared in 2015-16 and 2016-17 by a manufacturer of pneumatic tyres. The adjudicating authority rejected the netting off of duties, citing unjust enrichment under Section 12B of the Central Excise Act, deeming that the duty incidence had been passed on to consumers. The appellant contended that the impugned order contradicted binding judicial precedents, including a Karnataka High Court ruling and a Tribunal decision in a similar case. The appellant highlighted that in their own case, the Tribunal had allowed the appeal against unjust enrichment.

On considering the arguments, the Tribunal found that the issue of unjust enrichment in provisional assessments had been settled through various precedents. Citing the Division Bench's decision in the appellant's case, the Tribunal emphasized that unjust enrichment does not apply in provisional assessments. The Tribunal referenced a previous decision involving Indian Telephone Industries, where it was held that adjustments at finalization of provisional assessments are permissible without subjecting excess duty to the test of unjust enrichment. By following the Tribunal's earlier orders and distinguishing the case from a Supreme Court ruling on normal refunds, the Tribunal concluded that the impugned order was unsustainable in law. Consequently, the Tribunal set aside the order, allowing both appeals of the appellant.

In summary, the judgment clarifies the non-applicability of unjust enrichment in cases of provisional assessment, aligning with established precedents and rejecting the notion that excess duty must always be subjected to the test of unjust enrichment before refund. The decision emphasizes the need to consider specific circumstances and legal interpretations in determining the application of unjust enrichment in excise duty matters.