2022 (5) TMI 1036 - AT - Central Excise

Refund claim - provisional assessment not opted - rejection on the ground that the assessee have not opted for provisional assessment in respect of clearances made from their factory to depot and subsequent sales on lower price as compared to the price for goods cleared from the factory - HELD THAT - There is no dispute about the fact that appellant have paid duty on the higher price when cleared the goods from their factory to depot and subsequently the goods were sold at lower transaction value. Therefore, the differential duty paid in excess arose for which the appellant have filed refund claim. Both the lower authorities rejected the refund claim only on the ground that appellant have not opted for provisional assessment. However, there is no dispute on the fact that appellant have paid duty in excess as per Section 4 of Central Excise Act, 1944 and Rules made thereunder. Merely because the appellant have not followed the provisional assessment, the refund cannot be denied as the Revenue cannot retain any amount which is not due as per law. It is settled that even though the assessee has not opted for provisional assessment but the duty was paid in excess admittedly the assessee s claim of refund within stipulated time of one year, the refund is admissible. The refund cannot be rejected only on the ground that assessee has not opted for provisional assessment - Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Whether the refund claim can be denied on the ground that the appellant did not opt for provisional assessment.
2. Whether the excess duty paid, due to lower subsequent sale price, is refundable under Section 4 of the Central Excise Act, 1944.

Detailed Analysis:

Issue 1: Provisional Assessment Requirement for Refund Claims
The primary contention from the Revenue was that the refund claim was rightly rejected because the appellant did not opt for provisional assessment for the goods cleared from the factory to the depot, which were later sold at a lower price. The Revenue relied on several judgments to support their stance, including cases like Greaves Cotton Limited vs. CCE, Chennai and Finolex Cables Limited vs. CCE, Pune-1. These cases suggest that without opting for provisional assessment, a refund claim should not be entertained.

However, the Tribunal found that this stance is not entirely correct. The Tribunal referenced multiple cases, such as KJV Alloys Conductors P. Ltd vs. CCE, Hyderabad, where it was held that even if the provisional assessment was not opted for, a refund claim is still valid if filed within the stipulated time limit. The Tribunal emphasized that the provisional assessment is not a mandatory prerequisite for a refund claim when excess duty has been paid. This principle was reiterated in several judgments, including CC & CCE, Hyderabad-III vs. Premier Explosives Ltd. and Indian LPG Cylinders vs. CCE, Meerut-I.

The Tribunal concluded that the refund claim should not be denied solely on the ground of not opting for provisional assessment, as long as the claim is within the legal time frame and the excess duty paid is evident.

Issue 2: Refund of Excess Duty Paid
The Tribunal examined whether the appellant was entitled to a refund of the excess duty paid due to a lower subsequent sale price. The appellant had paid duty on a higher price at the time of clearance from the factory, but the goods were later sold at a lower transaction value. The Tribunal noted that there was no dispute regarding the excess duty paid, which arose due to the difference in the initial and subsequent sale prices.

The Tribunal referenced several judgments to support the appellant's claim for a refund. In cases like Rajasthan Electronics & Instruments Limited vs. CCE, Jaipur and CCE, Cochin vs. Telk Limited, it was established that the refund is admissible even if the assessment was not provisional, provided the duty paid was in excess and the refund claim was filed within the stipulated time.

The Tribunal highlighted that the excess duty paid by the appellant falls under the purview of Section 4 of the Central Excise Act, 1944, and the rules made thereunder, which justify the refund. The Tribunal also pointed out that the principle of unjust enrichment does not apply here as the excess duty was not passed on to the buyer.

Conclusion:
The Tribunal set aside the lower authorities' orders, which had rejected the refund claim on the ground of non-provisional assessment. The Tribunal allowed the appeal, stating that the refund of the excess duty paid is admissible as per the law, and the Revenue cannot retain any amount not due to them. The appeal was thus allowed, ensuring the appellant's entitlement to the refund.