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TMI Blog2015 (11) TMI 953X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.1.2007 and excess paid duty to the extent of Rs. 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 Concentrate& 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 Rs. 8,75,83,871/- (BED Rs. 8,58,66,650/- + Education Cess Rs. 17,17,221/-) under Rule 7(3) of the Central Excise Rules, 2002 and appropriate the duty of Rs. 5,23,04,910/- already paid by the assessee towards the short payment and order to pay the remaining amount of Rs. 3,52,78,961/- (Cenvat Rs. 3,44,49,170/- + Education Cess 8,29,791/- within seven days under the provisions of Section 11A of Central Excise Act, 1944. (2) The assessee have also paid excess duty amounting to Rs. 3,53,74,279/- (BED Rs. 3,45,42,536/- + Education Cess Rs. 8,31,743/- ) in respect of Lead Concentrate & Zinc Concentrate which were transferred to their sister concerns (i.e. smelter units) for captive consumption for the per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (supra) would clearly showed that at the time of finalisation, the question of duty short paid or excess paid arises only after the inter se adjustment of the duty short paid and excess paid during the period of provisional assessment. We find that the case laws referred to in this regard pertained to a period prior to 2011 the year in which the Hon'ble CESTAT's Larger Bench in its order in the case of Excel Rubber Ltd. Vs. CCE, Hyderabad -2011 (268) ELT 419 (Tri.-LB) decided the issue of inter se adjustment of duty short paid and excess paid at the time of finalisation of the provisional assessment, after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 11B, as already pointed out, clearly specifies that in order to justify the payment of the refundable amount to the assessee, 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 credites to the fund clearly rests upon the assessee. The obligation to make specific application and further to establish the claim by necessary evidence clearly discloses 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 or the assessment and within the period prescribed for the same and in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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 applying for refund would obviously 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 inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t fall in payment of duty after the final assessment order as Rs. 10,63,417/-. In respect of other items, the assessee has paid Rs. 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 the final order is more than what was paid under provisional assessment. The approach of the authorities in this regard is erroneous, unwarranted and unsupported by any statutory provision. If we keep in mind the principle underlying the provisions, it is only when the duty is due and it is not paid within the stipulated time and the duty is paid thereafter, in order to compensate the revenue, interest is imposed, if that is to be kept in mind, in the instant case, when the assessee has paid a sum of Rs. 1.66.56,740/- excess duty which is entitled to claim refund, he cannot be taxed with payment of excess duty in the form of interest, [emphasis added] The entire approach of the department is unreasonable, contrary to the sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 means that the appellants passed on the burden of the said excess duty and as a consequence they were not entitled to claim refund thereof under Section 11B ibid. Thus, either which way, it is beyond doubt that the Appellants were/are not entitled to claim refund of the duty excess paid. As an aside, it is also pertinent to point out that inter se adjustment of duty excess paid and duty short paid in effect means refunding of the excess duty paid to the extent of such adjustment towards duty short paid. Refunds are governed by Section 11B which makes it clear that excess duty paid by an assessee is not unconditionally refundable to the assessee. Thus such inter se adjustment, unless the duty excess paid is eligible to be refunded to the assessee, will d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 were clearly not entitled to claim refund of duty excess paid. Therefore the said judgement of Hon'ble Karnataka High Court is clearly distinguishable and inapplicable to the present case and does not come to the rescue of the Appellants even with regard to the liability of interest on the duty short paid. 18. In view of the foregoing, we do not find any merit in the Appellants' appeal and consequently the same is rejected. (Pronounced in Court on.......................) (Archana Wadhwa) Member (Judicial) (R.K. Singh] Member (Technical) Per Archana Wadhwa 19. Having gone through the order passed by my learned brother, I proceed to record a different finding. 20. As per facts on record, the appellants which is a large sector public limited company i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 Excise or the Deputy Commissioner of Central Excise, as the case may be, shall pass order for final assessment, as soon as may be, after the relevant information, as may be required for finalizing the assessment, is available, but within a period not exceeding six months from the date of the communication of the order issued under sub-rule (1): (4) The assessee shall be liable to pay interest on any amount payable to Central Government, consequent to. order for-final assessment under sub-rule (3), at the rate specified by the Central Government by notification issued under section 11AA or section 11AB of the Act from the first day of the month succeeding the month for which such amount is determined, till the date of payment thereof. (5) Where the assessee is entitled to a refund consequent t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tand 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 provisional basis towards the other liabilities of the same assessee. Of course, the said adjustment is subject to unjust enrichment with which I will deal separately. If that be so, the excess duty paid by the assessee during the continuation of provisional assessment, for a particular financial year, would result in additional burden to the assessee and need to be neutralized against any short falls during another period of the same financial year, during which the provisional assessments were in operation. In fact sub Rule (5) of Rule 7 itself talks about the assessees' right to a refund consequent to order for final assessment under sub-rule (3) and further goes to prescribe even interest for such refunds. A cumulative reading of all sub-rules of Rule 7 would show that such amounts payable by the assessee or refundable to him, would be the outcome ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents 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, the assessee is liable to pay the interest on the shortfall. In the entire scheme of Rule 7, there is no indication that when an assessee is permitted to pay duty in pursuance of a provisional assessment order, if he is dealing with more than one goods, they have to be treated separately. Even though the duty payable under the Act is to be calculated under each head of each case ultimately it is the total duty payable for all the goods which are the subject matter of the provisional assessment and final assessment which is to be taken into consideration. If after taking into consideration the duty payable in respect of all the goods and the duty paid in pursuance of the final assessment order, if still the assessee is due in any duty, then for the short fall in payment of duty, the assessee is liable to pay interest. 9. In the instant case, admittedly fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 that the assessee has short paid the duty in the first part and paid excess duty in the order? (ii) Whether the duty paid in excess under rule 7 of Central Excise Rules, 2002 can be adjusted aginst the duty short paid? (iii) Whether the assessee is entitled to claim interest on the amount of duty paid in excess? " 28. I also further note that ores concentrates were not being sold to the assessee's sister unit which is a smelting unit and the goods were being removed on unit transfer basis. As such, the question of unjust enrichment also find does not arise in the present case. Further, the smelting unit have taken the credit of duty so paid by the appellant. This, according to my view, cannot be adopted as one of the reasons for denying adjustments inasmuch as it is the appellants total duty liability which would be available as credit to the smelting units. After making adjustme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 Whether the appeal is to be rejected by denying the appellant's request for adjustment of excess paid duties with the short paid duty during the financial year 2006-2007, as held by Member (Technical) or such adjustments have to be allowed as held by Member (Judicial). The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact of the said case are similar to the case in hand or not. 35. The fact in that case are as under: 2. The assessee are the manufacturers of parts of motor vehicles such as Front Axle, Read Axle, Propeller Shaft, Stiffener etc. These goods are cleared on payment of appropriate central excise duties. The major buyer of these goods is M/s. Toyota Kirloskar Motors Private Limited, Bidadi, Bangalore. The assessee and the purchaser are interconnected undertakings and have business interests with one another in the context of Section 4(l)(b) of the Central Excise Act, 1944. The assessee requested the Assistant/Deputy Commissioner of Central Excise, Large Taxpayers Unit, Bangalore for assessment of goods manufactured and cleared by them to M/s. Toyota Kirloskar Motors Private Limited, Bidadi, Bangalore provisionally for the financial year 2007-08. Accordingly, the order dated 24-4-2007 came to be passed in terms of Rule 7 of the Central Excise Rules, 2002 and subject to execution of bond of Rs. 50 lakhs with bank guarantee for Rs. 12.5 lakhs. Bands were executed and the bank guarantee was furnished. Thereafter, on 25-9-2008, the assessee requested for finaiization of the subject pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich also dismissed the same. Therefore, the assessee is before this court." 36. On these facts, which are similar to the facts of the case in hand the Hon'ble High Court has observed as under: 7. A perusal of the aforesaid provision makes it clear that, where the assessee is unable to determine the value of excisable goods or determine the rate of duty applicable thereto, he may request the competent authority as provided in the said provision, to permit him to pay the duty on provisional basis at such rate or on such value as may be specified by him. If the authority is satisfied, he may pass an order permitting such payment and taking all necessary steps for payment of any short fall in the duty payable at the end of assessment. Thereafter, a final assessment order is to be passed. If after the final assessment, if it is found that there is a short fall in payment of duty, sub-rule (4) provides for payment of interest on such short payment of duty. Whereas sub-rule (5) provides for refund of excess duty paid. 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. (Supra) therefore, the decision of the Larger Bench of this Tribunal in the case of Excel Rubber Ltd. (Supra) has no relevance. Consequently, I am of the considered view that"It is total duty payable of all the goods which are subject matter of provisional assessment and final assessment which is to be taken into consideration. After taking into consideration duty payable in respect of all goods and duty paid in pursuant to the final assessment order if still the assessee is due in any duty then for short fail in payment of duty the assessee is liable to pay interest." 38. Admittedly, in this case the Adjudicating Authority has held that for the part of the period in hand the appellant has short paid the duty of Rs. 3,52,78,170/- and in respect of other part of the period the appellant has paid Rs. 3,53,74,279/- duty in excess. Therefore, the duty excess paid by the appellant is more than the duty short paid by the appellant. Therefore, appellant is not required to pay any duty. Consequently, interest is not payable. In these circumstances, I agree with Ld. Sister, Member (Judicial). 39. With these observations, the reference is answered as under: "The appellant is entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X
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