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TMI Blog2011 (3) TMI 527X X X X Extracts X X X X X X X X Extracts X X X X ..... es made thereunder, however, such adjustments are subject to the applicability of the principle of unjust enrichment. - E/267, 890 & 3453/2006 - - - Dated:- 30-3-2011 - R.M.S. KHANDEPARKAR, D.R. CHITTARANJAN SATAPATHY, JJ. D.N. PANDA, JUDICIAL MEMBER ORDER Per: R M S Khandeparkar: Heard at length the advocate for the assessee appellant and JCDR and DRs for the respondents. 2. The point for consideration referred for the decision of this Larger Bench is whether an assessee is entitled for adjustment of excess payment of duty towards the short payment of duty ascertained at the time of finalization of provisional assessment, without fastening any liability for penalty. 3. The above issue arises in a situation wherein the Bangalore Bench of CESTAT in Excel Rubber Ltd., v. CCE Hyderabad reported in 2010 (97) RLT ONLINE 457 (CESTAT-BANG), while observing that the Division Bench of the Tribunal at Bangalore in RPG Cables Ltd., v. CCE, Mysore reported in 2008 (229) ELT 680 (Tribunal.-Bang) had taken a view that the excess payment if any made by the assessee would be refundable subject to applicability of the principle of unjust enrichment, the very same bench in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the excess duty paid. That is the whole purpose of Rule 7(5)(6) of the said Central Excise Rules. In the absence of claim for refund question of applicability of such principle does not arise. He further submitted that there could be a situation where other unit to which clearances are made be of the same manufacturer in which case the principle would not apply or there could be only one customer who will either refuse to pay the excess amount or may settle the accounts at the end of the year in which case also, excess payment would remain as a matter of burden borne by the manufacturer. In both the cases, it would be a matter of adjustment of money belonging to the assessee. In any case, question of applicability of such principle assuming that the same is attracted would arise only after adjustment. 6. The learned advocate for the appellants further submitted that Rule 7(4) of the Cenvat Credit Rules requires an assessee to pay any amount payable to the Central Government along with interest thereon from the first day of month succeeding the month for which such an amount is determined till the date of payment. Any excess payment made would be considered as amount paid to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty paid, having ascertained the same on finalization of the assessment Provisions of law merely speak of the right to claim refund and that too subject to compliance of the requirements of law, to the effect that the claim is not hit by the principle of unjust enrichment. It was further submitted that the refund also cannot be granted as a matter of course but the same has to be pursuant to specific demand for the same by the assessee with the provisions of law and subject to the discharging the burden as specified under proviso to sub-rule (6) of Rule 7 read with Section 11B of the Central Excise Act, 1944. Referring to the expression "adjustment" found in Rule 9B, it was sought to be contended that the same refers to the adjustment of the excess or the excise duty paid during the provisional assessment with the duty found payable in terms of the final assessment and it does not relate to the adjustment of excess duty paid in relation to totally independent and different assessment pertaining to different goods. Reliance has been sought to be placed in the following decisions: (1) Gujarat State Fertilizers Ltd., v . CCE [2005 (188) ELT 92] (2) Priya Blue Ind. v. CC(P) [200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) may be cleared for home consumption or export in the same manner as the goods which are not so assessed. (5) When the duty leviable on the goods is assessed finally in accordance with the provisions of these rules, the duty provisionally assessed shall be adjusted against the duty finally assessed, and if the duty provisionally assessed falls short of, or is in excess of the duty finally assessed, the assessee shall pay the deficiency or be entitled to a refund, as the case may be." 10. Rule 9B of the said rules was amended precisely with effect from 6.6.95 and further with effect from 20th November 1996, reads thus: "RULE [9B. Provisional assessment to duty] - (1) Notwithstanding anything contained in these rules, - (a) where the assessee is unable to determine the value of excisable goods in terms of section 4 of the Act on account of non-availability of any document or any information; or (b) where the assessee is unable to determine the correct classification of the goods while filing the declaration under rule 173B; the said assessee may request the proper officer in writing giving the reasons for provisional assessment to duty, and the proper officer may d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the proper officer." 11. The Rule 173-I which came to be introduced with effect from 14.7.1969 provided thus:- "RULE 173-I. Assessment by proper officer.- (1) The proper officer shall on the basis of the information contained in the return filed by the assessee under sub-rule (3) of rule 173G and after such further inquiry as he may consider necessary assess the duty due on the goods removed and complete the assessment memorandum on the return. A copy of the return so completed shall be sent to the assessee (2) The duty determined and paid by the assessee under rule 173F shall be adjusted against the duty assessed by the proper officer under sub-rule (1) and the duty so assessed is more than the duty determined and paid by the assessee, the assessee shall pay the deficiency by making a debit in the account current within ten days of receipt of copy of the return from the proper and where such duty is less, the assessee shall take credit in the account-current for the excess on receipt of the assessment order in the copy of the assessee duly countersigned by a Superintendent of Central Excise." 12. The concept of assessment as comprised under Rule 173F with effect f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xed by the Board in terms of that section." 14. In terms of Rule 6 of the Central Excise Rules, 2001, the self-assessment concept is found incorporated therein and the same reads as under: "RULE 6. Assessment of duty. - The assessee shall himself assess the duty payable on any excisable goods: Provided that in case of cigarettes, the Superintendent or Inspector of Central Excise shall assess the duty payable before removal by the assessee." 15. Under Central Excise Rules, 2001, the provisional assessment is required to be made in terms of Rule 7 and the said Rule provided thus: "RULE 7. Provisional assessment. - (1) Where the assessee is unable to determine the value of excisable goods or determine the rate of duty applicable thereto, he may request the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, in writing giving reasons for payment of duty on provisional basis and the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, may order allowing payment of duty on provisional basis at such rate or on such value as may be specified by him. (2) The payment of du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B, as well as Sections 4 of the Central Excise Act, 1944. 17. The controversy in relation to the above referred issue is essentially with reference to the provisions of law comprised under sub-rules (4), (5) (6) of Rule 7 of the Central Excise Rules, 2001. 18. Sub-rule (4) of Rule 7 relates to the interest payable in relation to the amount due or payable to the Central Government consequent to the finalization of the assessment under sub-rule (3) of the said Rules. Sub-rule (5), relates to the entitlement for refund in relation to the excess amount ascertained pursuant to the finalization of assessment under sub-rule (3). The Sub-Rule (6), however states that such refunds shall be credited to the Consumer Welfare Fund unless the assessee establishes that the incidence of such duty has not been passed over to any other person. 19. The conjoint reading of sub-rules (4), (5), (6) of Rule 7 would disclose that applicability of each of those rules would arise only after finalization of assessment under sub-rule (3) of the said rules. Question of interest being claimed or paid in relation to the amount payable to the Central Government by the assessee would arise pursuant to as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o get the excess payment being adjusted towards short payment. Sub-rule (5) of Rule 9B is very clear in that regard. Being so, the rival contentions about Rule 7 being continuation of Rule 9B, or about omission to use the word adjustment discloses the intention of legislator to exclude such concept therefrom are both devoid of substance. 23. It cannot be disputed that provisions of law comprised under Rule 7 which incorporate the provision safeguarding the right of the assessee to claim refund in case of any amount found to have been paid in excess during the provisional assessment in comparison to the amount ultimately ascertained as payable in terms of final adjustment. However, the right is not absolute and it is subject to the applicability of principle of unjust enrichment. In fact, the said concept is clearly found incorporated in Section 11B with effect from 20th September 1991. It clearly requires the assessee to prove that the duty burden has not been passed over to any other person in order to justify the claim for refund. In other words, even if an assessee is found to have paid any amount in excess of duty payable by such an assessee, merely on the ground of excess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to make specific application and further to establish the claim by necessary evidence clearly disclosed that question of actual refund under sub-rule (5), read with sub-rule (6) of rule 7, would arise only when an assessee specifically applies for the same and produces necessary evidence in support of his claim. In other words, claim of the assessee about his entitlement to get the refund cannot get matured unless, the assessee approaches the excise officer with necessary application and the proof in support of his claim subsequent to the finalization of the assessment and within the period prescribed for the same and in terms of the provisions of law. The right of the assessee would get matured in relation to the amount to be claimed as refundable only after finalization of the assessment and the necessary proof being submitted in that regard by the assessee and occasion to submit the said proof would arise only after claim in that regard is filed before the competent officer in accordance with the provisions of law and within the time frame provided under the law. Hence, all the contentions regarding the right to adjustment in the course of finalization of the assessments are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... result in crediting the refundable amount, if any, to the consumer welfare fund. As already seen above, occasion to consider whether any amount therefrom is actually refundable to the assessee or not can arise only after specific claim in that regard is being made by the assessee and not otherwise. Being so, there is no option left to the assessee but to approach the Excise Officer with an application for refund, in accordance with provisions of law and within the time prescribed. Once such a claim is made, obviously the principle of unjust enrichment will get attracted. 29. The argument about two principal amounts for the purpose of interest is devoid of substance. The contentions in this regard are purely figments of imaginations without any basis. Proper reading of the provisions of law comprised under Rule 7 would disclose that there could be no occasion for considering two principal amounts for the purpose of interest. 30. The decisions which are sought to be relied upon on behalf of the appellants are of no relevance to the issue under consideration. In Tata Oil Mills case, undoubtedly the Apex Court was dealing with the matter arising under Rule 173-I of the Central Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght of adjustment. On the contrary, the decision clearly supports the view that we are taking in this matter. 35. In Pfizer Ltd. case, it was essentially a matter pertaining to error in calculation of differential duty and claim for benefit of modvat credit. 36. In Vinir Engineering Pvt. Ltd. case, same was on the basis of decision of the Tribunal s in Tata Oil Mills case and Divya Enterprises case. It has been observed that in Divya Enterprises case, the Apex Court had clearly held that the demand raised on terry toweling fabric can be adjusted for duty paid on towels. Therefore, in view of the Apex Court ruling, there could not be any doubt with regard to the powers of officer to make adjustment and raise demands at the end of the financial year or at the time of issue of show cause notice and similar view was expressed in Serai Kella Glass Works. As also observed above, the order in Divya Enterprises by the Apex Court was in exercise of powers under Article 142 of the Constitution, whereas the question for consideration in Serai Kella Glass Works was totally different. 37. In Soubhagya Confectionary case, the decision was essentially in relation to point pertaining to invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olidation of such claims had resulted in unjust duty demand, the Tribunal had held that Commissioner could have considered both the claims simultaneously by permitting the higher officer to perform the functions of the lower authority. The finding does not precede any discussion on the scope of the powers of the authorities to deal with such claims simultaneously and the effect thereof. The finding on the point of law without any adjudication of such issue cannot be said to lay down any binding precedent. The law in that regard is well settled by the decision of the Apex Court in the matter of UOI v . Dhanvanti [1996(6) SCC 44)]. In Maruti Udyog s case, P H High Court was dealing with the matter relating to the demand of duty pertaining to the damaged vehicles which were brought back by the company to their factory for repairs and taking into consideration the facts of the case, the High Court had held that clubbing of the claim under rules 173L and 173 H was justified. 45. The Division Bench of the Tribunal in Hindustan Zinc Ltd., case did not decide any point of law as such and entire issue was considered on the basis of the facts of the case. The law as undisputed by the parti ..... 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