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2019 (3) TMI 1362 - AT - Central ExciseAdjustment of short paid duty against excess paid duty - finalization of provisional assessment - Unjust enrichment - Rule 7 of CER, 2004 - period November 2006 to May 2008 and November 2006 to December 2009 - Held that - Once the appellants have not been found in breach of Guidelines contained in the Office Order dt. 22.12.2004 the finalization of provisional assessment indeed will naturally be treated to have done only following the said Order. It is also to be noted that certain verifications regarding the value and weight of DTS items and the items supplied by assessee s units for all items covered by commercial invoices are required to be done periodically, to ensure that at the time of finalization of assessment there will not be any need to check even figures with respect to any documents other than the commercial invoice. In finalization of provisional assessment the assessee is eligible for adjustment of excise duty paid against short payment of duty and refund of excess amount, if any, arising upon ultimate adjustment without bar of unjust enrichment being applicable. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Valuation of Direct-to-Site (DTS) supplies. 2. Adjustment of short paid duty against excess paid duty. 3. Adherence to 2004 guidelines for finalization of provisional assessment. 4. Jurisdictional authority's role in assessing DTS goods. 5. Transaction value determination under Section 4 of the Central Excise Act, 1944. 6. Potential undervaluation of goods manufactured by the appellant. 7. Application of unjust enrichment doctrine in refund claims. Detailed Analysis: 1. Valuation of Direct-to-Site (DTS) Supplies: The appellants, manufacturers of boiler components, supplied goods to CPCL and Tata Power Company Ltd. under provisional assessment. While excise duty was paid on shop-made goods, no duty was discharged on DTS items. The appellants issued commercial invoices for both types of supplies. The Assistant Commissioner allowed deductions for DTS supplies based on commercial invoices. However, the Commissioner (Appeals) directed that deductions should be based on vendors' invoices, not commercial invoices. The Tribunal found that the method of invoicing/pricing of DTS items by the appellants was in line with the 2004 guidelines, which were in force during the disputed periods. The Tribunal concluded that the finalization of provisional assessment should follow these guidelines, rejecting the department's contention that the guidelines were not in line with Section 4 of the Central Excise Act, 1944. 2. Adjustment of Short Paid Duty Against Excess Paid Duty: The appellants sought adjustment of short paid duty against excess paid duty during the finalization of provisional assessment. The Commissioner (Appeals) rejected this adjustment, citing that the appellants issued Cenvat invoices and passed on the duty incidence to others. The Tribunal disagreed, citing precedents such as Toyota Kirloskar Auto Parts Pvt. Ltd. v. CCE LTU Bangalore, which allowed such adjustments without the bar of unjust enrichment. The Tribunal held that the contrary decisions in the impugned orders could not survive. 3. Adherence to 2004 Guidelines for Finalization of Provisional Assessment: The Tribunal emphasized that the 2004 guidelines, which provided a method for valuation and finalization of provisional assessment, were in force during the disputed periods. These guidelines included using the Estimated Average Value of Goods per kg (EAVGS) for DTS items. The Tribunal found that the finalization of provisional assessment should adhere to these guidelines, noting that the department had not undertaken subsequent costing exercises to prove any drawbacks in the method prescribed by the guidelines. 4. Jurisdictional Authority's Role in Assessing DTS Goods: The appellants argued that the assessment of DTS goods was beyond the jurisdictional central excise authorities, as these goods were sold directly to customers without being brought into their factory. The Tribunal noted that the 2004 guidelines provided a clear method for valuation and finalization, which included the value of DTS items based on commercial invoices. The Tribunal found no breach of these guidelines by the appellants. 5. Transaction Value Determination Under Section 4 of the Central Excise Act, 1944: The department contended that the 2004 guidelines were not in line with Section 4 of the Central Excise Act, 1944, which talks about transaction value. The Tribunal found that the department's suspicion of undervaluation due to high invoicing of DTS items was not sufficiently proved. The Tribunal emphasized that the appellants' method of valuation was in line with the 2004 guidelines and that the department had not provided cogent evidence to prove otherwise. 6. Potential Undervaluation of Goods Manufactured by the Appellant: The department argued that overvaluation of DTS items in commercial invoices could lead to undervaluation of goods manufactured by the appellants. The Tribunal found that this suspicion was not supported by sufficient evidence. The Tribunal noted that the department's approach of picking and choosing invoices of bought-out items was not justified without proving that the values adopted for excise duty on manufactured goods were not actual transaction values. 7. Application of Unjust Enrichment Doctrine in Refund Claims: The Tribunal addressed the issue of unjust enrichment in the context of refund claims. The Tribunal cited precedents, including Toyota Kirloskar Auto Parts Pvt. Ltd., which allowed adjustments of excess paid duty against short paid duty without the bar of unjust enrichment. The Tribunal held that the contrary decisions in the impugned orders on this issue could not survive. Conclusion: The Tribunal set aside the impugned orders, allowing both appeals with consequential benefits as per law. The Tribunal emphasized adherence to the 2004 guidelines for finalization of provisional assessment and allowed the adjustment of short paid duty against excess paid duty, rejecting the department's contentions on undervaluation and unjust enrichment.
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