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TMI Blog2015 (1) TMI 378X X X X Extracts X X X X X X X X Extracts X X X X ..... lead and zinc concentrates to their sister concerns and as the actual moisture content and arms-length price of the products were not available at the time of clearance, the same were assessed provisionally. The provisional assessments were later finalised for the period from 1.4.2006 to 31.3.2007. At the time of finalisation, it was found that the Appellants had short paid duty to the extent of ₹ 8,75,83,871/-during the period 1.4.2006 to 11.1.2007 and excess paid duty to the extent of ₹ 3,53,74,279/- during the period 12.1.2007 to 31.3.2007. As a result of finalisation, the adjudicating authority vide aforesaid order-in-original passed the following order:- (1) I hereby, finalize the provisional assessment in respect of Lead Concentrates Zinc Concentrate which were transferred to their sister concerns (i.e. smelter units) for captive consumption for the period from 01.04.2006 as short payment of duty amounting to ₹ 8,75,83,871/- (BED ₹ 8,58,66,650/- + Education Cess ₹ 17,17,221/-) under Rule 7(3) of the Central Excise Rules, 2002 and appropriate the duty of ₹ 5,23,04,910/- already paid by the assessee towards the short paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hey contended that inter se adjustments of duty short paid and duty excess paid has been permitted and it has also been held that interest is not chargeable if the duty excess paid is more than the duty short paid. 5. The ld. A.R. essentially stated that the issues involved in this case are squarely covered in Revenue's favour by the CESTAT Larger Bench decision in the case of Excel Rubber Ltd. Vs. CCE, Hyderabad - 2011 [268) ELT 419 (Tri.-LB). 6. As evident for the foregoing there are two issues involved in this case: [1) Whether inter se adjustment of duty short paid and duty excess paid during the period of provisional assessment is permitted at the time of finalisation of assessment in terms of Rule 7 of the Central Excise Rules when the appellants are not entitled to refund of duty excess paid. (2) Whether interest is chargeable on the duty short paid in terms of sub-rule (4) of Rule 7 of Central Excise Rules regardless of the duty excess paid during different segment of the period involved when the appellants are not entitled to refund of duty so excess paid. 7. It is seen that the Appellants have contended that a harmonious reading of Rule 7 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25. If one reads sub-rule 6 of Rule 7, it would be abundantly clear that the obligation cast upon the excise authorities is to credit the refundable amount to the consumer welfare fund, unless the assessee establishes that the incidence of duty had not been passed over to third person. Undoubtedly, sub-rule 6 does not provide for detailed procedure to establish the same. But. it is also undisputed fact that Central Excise Rules, 2001 have been framed in exercise of powers under Section 37(2) of the said Act. Obviously therefore, the said rules have to be read along with statutory provisions comprised under the said Act. Section 11B, as already pointed out, clearly specifies that in order to justify the payment of the refundable amount to the assesses and non-crediting thereof to the consumer welfare fund, it is necessary for the assessee to apply to the concerned authority, for such refund and thereafter the concerned authority after considering the evidences produced by the assessee should decide as to whether whole or any part of such amount is to be credited to the fund. Obligation to justify the refund without being credits to the fund clearly rests upon the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the date of order regarding the refund under sub-section 2 of Section 11B and the interest payable can vary from 10% to 36% per annum as determined by the Government from time to time. Being so, there are statutory provisions prescribing different rules as well as different methodology for calculating the interest liability in relation to the amount refundable in relation to the short duty paid having so ascertained by finalization of the assessment. Clubbing together the issue of refund and payment relating to short duty, by adopting the method of adjustment, would certainly result in nullifying the statutory provisions comprised under Rule 7(4) of the said Rules inasmuch as normally the interest payable and refund is around 15% whereas interest payable on short duty is 24% and therefore, the same would result in unjust enrichment to the assessee if the adjustment is allowed as sought to be claimed. 28. The contention that applicability of principle of adjustment would arise only in case of refund claim and since the assessee does not claim refund, question of applicability of such principle would not arise, is totally devoid of substance. Question of assessee not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisional assessment at the time of finalisation of provisional assessment is concerned, the decision of the Larger Bench of the Tribunal in Excel Rubber Ltd. (supra) continues to be a good and binding law which is directly applicable to the present case. 11. Coming to the question of livability of interest on duty short paid, it is to be noted that in the aforesaid High Court's judgement in the case of Toyoto Kirloskar Auto Parts Pvt Ltd., after a detailed discussion of the provisions of Rule 7 of the Central Excise Rules, 2002, the Hon'ble Court concluded in para 9 of the judgement as under:- 9. In the instant case, admittedly for certain items the Adjudicating Authority has held the short fall in payment of duty after the final assessment order as ₹ 10,63,417/-. In respect of other items, the assessee has paid ₹ 1,77,20,157/- in excess. But before imposing interest, the authority should have deducted the short fall in the excess payment made. If there is no short fall in payment of duty, payment of interest does not arise. They have treated the duty payable under two categories. It was found in respect of some items the duty payable after th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot a statute and should not be read like one. During the course of discussion in a judgement, several observations may be made in the overall context of the issue to be decided but those observations are not to be read as if they are part of the statute or even as an interpretation of the latter. A judgement has its binding force only in respect of the decision contained therein and the ratio laid down in respect thereof. 15. As regards the Appellants' claim that as the duty excess paid by them has been passed over only to their sister units which cannot be treated as 'any other person', they are entitled to claim refund thereof under Section 11B of Central Excise Act, we find the argument facetious, totally misconceived and untenable. If the sister units which have taken credit of the excess duty paid cannot be treated as 'any other person', then the Appellants cannot be said to have paid any (excess) duty as whatever they paid, they took it back (as credit) and as a result there is no question of refund. This is not in dispute that the excess duty paid by the Appellants was taken credit of by the recipients of the lead and zinc concentrates which clearly me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove) that even the inter se adjustment for the limited purpose of interest will do violence to provisions of not only Rule 7(4) and Rule 7(5) of Central Excise Rules but also to the provisions relating to interest on duty short paid (contained in Section 11AA) and interest on refund (contained in Section 11BB) of Central Excise Act inasmuch as the provisions relating to interest on demand of duty short paid and interest on refund of duty eligible for refund are not in pari materia and the rates of interest applicable to duty short paid and to refunds are also different. While on the issue of leviability of such interest, the judgement of Karnataka High Court in the case of Toyoto Kirloskar Auto Ltd. (supra) is a binding precedence, as discussed earlier, the ratio laid down by that judgement is that the interest is not chargeable when the duty short paid is less than the duty excess paid which the assessee is entitled to claim the refund of. In this case, as has been discussed, firstly, the Appellants had not paid duty in excess overall; the duty short paid was considerably more than the duty excess paid and secondly it is beyond any doubt that, as elucidated earlier, the Appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of Rule 7 of Central Excise Rules, 2002. For better appreciation the said Rule is reproduced below: 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 value as may be specified by him. (2) The payment of duty on provisional basis may be allowed, if the assessee executes a bond in the form prescribed by notification by the Board with such surety or security in such amount as the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, deem fit, binding the asses see for payment of difference between the amount of duty as may be finally assessed and the amount of duty provisionally assessed. (3) The Assistant Commissioner of Central Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited to the consumer welfare fund. 24. The issue which arises is as to whether during the entire financial year, the liabilities of short payment, arrived at on finalization of assessment, have to be adjusted against excess payments made by the assessee for some period in between. My learned brother has relied upon the Larger Bench decision of the Tribunal in the case of Excel Rubber Ltd. vs. CCE Hyderabad as reported in [2011 (268) ELT 419 (Tri-LB)]. 25. Ongoing through the entire order of the Larger Bench, I find that the main issue, which stand decided is in respect of refund of the excess duty paid by an assessee. In para 50 of their order, it stand held that if the assessee is entitled to refund of excess duty paid, the same would be refundable subject to the satisfaction of principles of unjust enrichment. Infact in said para 50, it stand observed that such excess amount can certainly be adjusted towards any other duty liability of such assessee under the Excise Act, 1944 and Rules made thereunder, however, such adjustments are subject to applicability of principles of unjust enrichment . As such, Larger Bench allowed the adjustment of excess duty paid on the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that in that case, the assessee deposited the short paid duty and also undertook not to claim refund of excess paid duty inasmuch as the duty element had already been passed on to their customers. As such, the only question was of interest in respect of short fall; which the appellant was contesting on the ground that if the duty neutralization is allowed there would not be any short fall, thus requiring no payment of interest under Rule 7(4) of the Central Excise Rules. Hon'ble High Court held that when there is provisional assessment, the same is applicable to the entirety of the goods and even though the assessee has not claimed refund of excess paid duty inasmuch as they had recovered the same from their customers and would be hit by the provisions of unjust enrichment but for arriving at the appellants final duty liability, such adjustments have to be made. By observing so, the interest demand was set aside. For better appreciation I reproduce para 8 and 9 of the said decision:- 8. Therefore, it is clear that after a final assessment order is passed, if the duty paid in terms of provisional assessment is less than the duty payable after the final assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble High Court that interest liability would arise only in respect of short fall of duty, which has to be arrived at after taking into account the overall short and excess payments made by the assessee. The said finding arrived at by the Hon'ble High Court of Karnataka even for the purpose of confirmation of interest has to be held as the law laid by the Hon'ble High Court. If that be so, the adjustment have to be given in the present matter. 27. I also take note of the earlier order of the Tribunal wherein in identical circumstances, such adjustment were not held as admissible. However, in that case, I find that the assessments were done in invoice-wise and the finalization was also on invoice-wise basis. In the present case, it is for the entire financial year. Otherwise also, I find that the appeal filed by the assessee before the Hon'ble High Court against the said Final Order No. 372 /09-Ex dated 14.5.09 stand admitted by the Hon'ble High Court of Rajasthan at Jodhpur vide order dated 13.1.10 by formulating the following substantial question of law: (i) Whether the period of one year can be bifurcated in two imaginary parts and can it be held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of Rule 7 the Central Excise Rules, 2002, In our view the judgment of Hon'ble Karnataka High Court is binding on the Tribunal In view of this, there is no illegality or impropriety in Commissioner (Appeal)'s order dated 05/08/05. The Revenue's appeal No. 3238 of 2005 is accordingly dismissed. The C. O. also stands disposed of As it seen, the Division Bench of the Tribunal has held that the issue before the Hon'ble Karnataka High Court was the same which was the subject matter of the Larger Bench decision of the Tribunal in the case of Excel Rubber Ltd and it stands held that the excess payment made during provisional assessment can be adjusted against the short payments so made. The said order of the Hon'ble Karnataka High Court has been held to be binding before the Tribunal and stands followed by the Tribunal. 30. In view of the my foregoing discussion, I hold that the appellant is entitled to the adjustment of duty excess paid by them with duty short paid and their duty liability has to be arrived at accordingly. The interest would be calculated accordingly on the duty so short paid by them and late deposited. Difference of Opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X
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