9911796707
TMI Blog2024 (4) TMI 1139X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudicating court, the said order of adjudicating authority is annulled. In other words, it is to be ignored for all purposes - In the present case, the appellant started paying duty as determined by the finalization order dt. 18.03.1996 and intimated the department that they do not accept the order and are paying duty provisionally. In the present case, even after receiving the letters issued by appellant informing the department that they intend to continue under provisional assessment the department has not passed any order rejecting the said request. Pertinently, there was already an earlier order for provisional assessment passed under Rule 9B. It is not a situation where there is no order passed under Rule 9B at all. In the present case, though the appellant has issued invoices, the duty element is not mentioned in these invoices. This means the duty is not collected from the buyer. The invoices are therefore more in the nature of a delivery challan. The description and price of goods has been indicated in the invoices. It is difficult to understand the procedure for issue of such invoices. Though it was well within the knowledge of the department, there has been no dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they were heard together and are disposed of by this common order. 2. Brief facts are that the appellant is engaged in the manufacture of cotton fabrics and holds Central Excise registration. They commenced production of Denim fabric in January 1994. They filed classification list with the Superintendent of Central Excise on 09.02.1994 classifying the products under heading 5206, claimed total exemption from excise duty vide Notification No. 31/93 dated 28.02.1993 and so discharged only additional excise duty (as per Goods of Special Importance Act, 1957) at the rate specified in the Notification No. 48/90 CE dated 20.03.1990 as amended. The classification list was approved by the Assistant Commissioner, Coonoor on 03.03.1994 and the appellant accordingly paid duty till December 1994. Subsequently, on 09.12.1994 the appellant filed classification list claiming classification of Denim fabrics under tariff heading 5206 and claiming benefit of exemption Notification No. 253/82 dated 08.11.1992 which allows total exemption from Basic Excise Duty and additional Excise duty under the erstwhile Central Excise and Salt Act, 1944 read with Goods of Special Importance Act, 1957. It was state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but it is not at all helpful in determining the controversy in the present case. On this count alone the order of Commissioner (Appeals) is unsustainable and requires to be set aside. The question is whether the matter can be referred to the Commissioner (Appeals) to deal with the materials placed by the appellants and also to answer the points dealt with by the Assistant Commissioner. We would have been inclined to send the matter to the Commissioner (Appeals). However, we find that the Assistant Commissioner in the Order-in-Original has not properly comes to grasp with the allegations made by the revenue and has not analysed the effect of the evidences placed by the assessee. . 18. We also find that in view of our order noted above, that the additional evidence sought to be introduced at this stage by the appellants is in fact relevant to the issue and should be considered to arrive at the truth. Therefore, in view of this as well as the above infirmities in the Assistant Commissioner's order, interest of justice would clearly require that the matter is remanded back to the Assistant Commissioner concerned for a de novo consideration of these issues as well as any other evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not eligible for credit and show cause notices dt. 29.07.1998, 7.9.1998, 27.11.1998, 13.01.1999, 16.03.1999 and 31.05.1999 were issued for different periods proposing to disallow the credit and to recover the wrongly availed credit. 8.1 While conducting de nova adjudication of the matter which had been remanded by the Tribunal, the assessee requested to adjudicate the Show Cause Notice dated 18.06.1998. The appellant was yet to reply to this SCN. In para 13 of the de novo order dt. 13.07.1999, the original authority observed that since the question of manufacture is the root issue which has to be decided first, and this question being now open and the Tribunal having found that the failure to decide this question being fatal, this issue which goes to root of the matter is taken up first. Thus, in the de nova Order in Original dated 13.07.1999, the Original Authority had taken up the matter of finalization of provisional assessment remanded by the Tribunal as well as the demand raised by the department in Show Cause Notices dated 18.06.1998, 29.07.1998 (Rs. 8,19,95,136/-) and 07.09.1998 (Rs. 95,80,312/-) and 27.11.1998, 13.01.1998, 16.03.1999, 31.05.1999 (Rs. 4,65,47,453/-). In de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this writ petition on the above terms. No costs. Consequently, WMPS are dismissed 11. Pursuant to the order of the Hon ble High Court, the refund claim dated 23.07.1999 to the tune of Rs. 2,05,00,400/- (paid during investigation) was refunded to the appellant vide refund sanction order dated 17.08.1999. Against such sanction of refund, the department filed appeal before the Commissioner (Appeals) and vide Order-in-Appeal No. 40/2014 dated 29.01.2014 the Commissioner (Appeals) set aside the sanction of refund. Aggrieved by such order the appellant has filed E/40892/2014. 12. The other four appeals arise out of the refund claim filed by the appellant on 04.11.1999. The appellant filed this refund claims for refund of the duty that was paid by the appellant from 01.04.1996 to 12.05.1999. It is to be noted that this does not relate to the period 16.12.1994 to 29.02.1996 which was the period taken up for finalization of the assessment. The appellant was not paying duty from 16.12.1994 to 29.02.1996 under provisional assessment. They started paying duty only w.e.f. 01.04.1996 after the earlier Order-in-Original dt. 18.03.1996 finalising the assessment. 13. After the earlier finalization ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isional assessment through RG 23A] 26,66,026 [duty paid under provisional assessment] 2,05,00,400 [Paid during investigation refunded to Appellant] Date of refund claim 04.11.1999 04.11.1999 04.11.1999 23.07.1999 Unit claiming refund DTA Unit EOU Unit DTA Unit Order in Appeal No. (Impugned Orders) Order in Appeal No. 38 39/2014 dated 29.01.2014 Order in Appeal No. 50 51/2014 dated 05.02.2014 Order in Appeal No. 40/2014 dated 29.01.2014 15. It is submitted that the Appellant is engaged in the business of processing of cotton fabrics, commonly known as Denim fabrics since 1994. The denim fabrics processed by the Appellant fall under Tariff Heading 5206 during the period prior to 16.03.1995 and under 5207 after such date. of the Central Excise Tariff, 1985. The present appeals pertain to the rejection of refund of excise duties. These excise duties were paid provisionally on clearance of denim fabrics from the DTA unit, EOU Unit, refund of deemed credit availed in terms of Notification No. 29/96-Central Excise (NonTariff) dated 03.09.1996 and refund of excise duty paid as advance deposit under protest during investigation. The factual matrix regarding both the issues is explained as f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2005 CESTAT vide Final Order No. 1204/2005 dated 26.07.2005 affirmed the de novo order 21.08.2014 High Court dismissed department s C.M.A No. 1193 of 2007 before the Madras High Court 02.11.2015 Department filed Civil Appeal No. 014538 of 2015 before the Supreme Court and the same is pending 15.5 In light of the above events that transpired from the Order dated 18.03.1996 till the de novo order dated 13.07.1999, duty was paid by appellant under provisional assessments and the assessments were finalized only vide the de novo order dated 13.07.1999. 15.6 Accordingly, during this period (i.e. from order dated 18.03.1996 to de novo order dated 13.07.1999), the Appellant cleared goods on payment of duty amounting to Rs. 16,06,23,409/- using PLA and amount of Rs. 4,06,82,939/ using RG23A credit from the DTA Unit. The Appellant cleared goods from their EOU Unit on payment of duty amounting to Rs. 26,66,026/-. 15.7 The refund claims of the Appellant were rejected by adjudicating authority on grounds of limitation and unjust enrichment. Aggrieved by the same, Appellant filed an appeal before the Commissioner (Appeals). The department also filed an appeal against the OIO rejecting the refun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision. A.2. In light of the order passed by CEGAT, Madras, status quo ante has been restored and the position that prevailed prior to the passing of Order dated 18.3.1996 gets restituted. A.3. The provisional assessment was restituted in view of CEGAT s Final Order dated 04.02.1999 and hence the Department cannot take a stand that the assessment stood finalized vide the de novo order dated 13.07.1999. A.4. In this regard, it is submitted that when an order is set aside by an appellate forum, the law of restitution will apply, and the matter will go back to the original position as it was before the order set aside was passed. To support this submission reliance is placed upon decision of the Hon ble Supreme Court in South Eastern Coalfields Ltd v. State of M.P. and others 2003 SCC Online SC 1127. A.5. Therefore, by applying the principle of restitution, duty paid during the disputed period which is claimed as refund has been paid under provisional assessment. The order permitting clearance under provisional assessment dated 16.12.1994 will continue till the date of the de novo order dated 13.07.1999, which finalized the provisional assessment with NIL duty liability. A.6. Conse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of finalization of provisional assessment under Rule 9B (5) of CER cannot be rejected on the ground that the refund applications are time-barred. C.4. Without prejudice to the above, even assuming that the time limit prescribed under Section 11B of CEA is applicable, the refund claims in the instant appeal are not time barred. The Appellant submits that the relevant date for filing the refund claims arising out of the order finalizing provisional assessment is the date of the order finalizing provisional assessment which in the instant case is the de novo order dated 13.07.1999. C.5. The Appellant has submitted the refund claims with respect to refund of duty paid under provisional assessment on 04.11.1999, within 6 months from the de novo order dated 13.07.1999, which finalized the provisional assessment. Further, with respect to the refund of the amount paid under investigation, the appellant has filed the refund claim on 23.07.1999 which is also well within 6 months from the de novo order dated 13.07.1999. C.6 Therefore, the refund applications in the instant appeal are not time barred on this ground as well. C.7 Hence, the instant Appeal(s) are to be allowed and refund cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the duty has been passed on by the Appellant to its customers. E.3. The submission of the Appellant before the lower authority to prove that the duty has not been passed on by the Appellant to its customers has not been considered in proper light by the Impugned Order. Hence, the Impugned Order is to be set aside on this ground. F. The amount deposited during investigation is in the nature of deposit and hence Section 11B does not apply to refund of such amount. Hence, the refund claim is not barred by limitation nor subject to the test of unjust enrichment. F.1. The Appellant submits that the de novo order has dropped the proceedings of the case of misdeclaration and consequentially the Appellant is eligible for refund of the amount of Rs. 2,05,00,400/- which was deposited during the investigation. F.2. The Order in Original dated 17.08.1999 has correctly held that Rs. 2,00,00,000/- is an advance deposit and Rs. 5,00,400/- is the amount paid for provisional release of goods and hence the time limit is not applicable and also that the question of unjust enrichment does not arise. F.3. The amount paid during investigation, would be in the nature of deposit under protest and therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty. The department filed appeal against such order before the Tribunal and vide Final Order dated 26.07.2005, the Tribunal upheld the de novo order passed by the adjudicating authority. However, the matter is still pending before the Hon ble Apex Court as the department has filed Civil Appeal No. 014538 of 2015 against the order of the Hon ble High Court of Madras. It is argued by the Ld. AR that the finalization has happened on 18.03.1996 and it cannot relate back when the Tribunal has remanded the matter for de nova adjudication. For this reason, the refund claim filed by the appellant on 04.11.1999 is barred by limitation. As per Section 11B the time limit to file the refund claim was six months during the relevant period. The refund claim having been filed only on 04.11.1999 after the finalization of assessment on 18.03.1996, the adjudicating authority has correctly held that the refund claim is barred by limitation. 19. The second ground on which the refund claim has been rejected is that the appellant has not been able to establish that the duty element has not been passed on to the customers. In the present case, from 01.04.1996 to 12.05.1999 the appellant has been paying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laims. The argument of the appellant is that since the issue of finalisation was remanded and thereafter de novo order was passed only 13.07.1999, the period from 16.12.1994 till 13.07.1999 has to be treated as under provisional assessment. The department contends that the finalisation has happened on the date of earlier order (18.03.1996) itself and therefore the refund claim pertaining to subsequent period is hit by limitation having filed beyond six months. It is also observed by the department that the relevant date is the date of payment of duty and therefore hit by limitation. The appellant contends that if the date of finalisation is taken as 13.07.1999, the refund claim dt. 04.11.1999 is well within time limit of six months. 24. The relevant part of the final order passed by the Tribunal while remanding the matter has already been reproduced in para 6 of this order. It can be seen that the Tribunal set aside the order passed by Commissioner (Appeals) and the matter was remanded for de novo adjudication. This means that the finalization which has happened on 18/03/1996 has been completely set aside and has become non-est. The order of finalisation dt. 18.03.1996 becomes an o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above letter it has been expressly stated by the appellant to treat the payment of duty to be under provisional assessment. The department has remained silent and chose not to respond to this letter. After the order passed by Commissioner (Appeals) dated 18.06.1996 upholding the finalization of provisional assessment and holding that the process undertaken by the appellant amounts to manufacture , the appellant preferred an appeal before the Tribunal. Appellant again intimated the department vide letter dated 25.06.1996 requesting the department to treat all the payments of duty made by them under provisional assessment. The said letter reads as under: The Asst. Commissioner of Central Excise 25.06.1996 16-B, Kushal Kiruba Mount Pleasant Road, COONOOR 2. Sir, Sub : Central Excise Our appeal dated 27.5.96. Reg : Your Order-in-Original No. 32/96 dated 18.3.96. In continuation of our letter dated 22.3.96 we write to inform you that against the above cited Order-in-Original we filed an appeal before the Commissioner Appeals, Tichy and today we have received Order-in-Appeal No. 421/96 (CBE) dated 18.6.96. We shall be going on appeal the order dated 18.6.96 and we request you to treat al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for refund dated 04/11/1999 the appellant has stated as under: C. We were allowed to clear under provisional assessment from 23.12.94. The provisional assessment was finalized by the Assistant Commissioner on 18.03.96 for the period upto 28.02.96. During provisional assessment we have executed a B-13 Bond and bank guarantee for Rs. 22.5 lakhs. The bank guarantee was enforced by the department but the security bond executed by us remain in force even now. We did not agree for the provisional assessment finalized by the Assistant Commissioner and we went on appeal up to CEGAT, Chennai. The Hon ble Tribunal have set aside both the order of the Assistant Commissioners and the Commissioners Appeals and also remanded the matter to the original authority with some specific directions and observations. The Commissioner of Central Excise, Coimbatore has adjudicated and held that there is no manufacture and dropped all the proceedings and also allowed consequential benefits to us. In view of the above till the finalization of the provisional assessment by the Commissioner on 13.07.99 the duty should be deemed to have been paid under protest. 2. We enclose the following documents in suppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;s management and where unavoidable, by way of adjudication proceedings. 2.2 Provisional Assessment can be ordered only under circumstances mentioned in rule 9B read with Rule 173B Rule 173C(5). 2.3 Wherever an assessee finds that final assessment is not possible, (in situations mentioned in Rule 9B only) he will make a detailed request to the Divisional Assistant Commissioner of Central Excise, indicating a) Specific grounds, and the documents or information's, for want of which final assessment, cannot be made. b) Period for which provisional assessment is required c) The rate of duty or the value or both, as the case may be proposed to be applied by the assessee for provisional assessment. d) Undertakes to appear before the Assistant Commissioner within 7 days or such date fixed by him and furnish all relevant information and documents within the time specified by the Assistant Commissioner in his order, so as to enable the proper officer to finalise the provisional assessment. 29. In the present case, the request of the assessee for provisional assessment was allowed initially. The dispute was being litigated by both sides before various forums. In fact, the appeal filed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered to be not provisional the appellant has established that they have borne the burden of duty. 32. We have already held that the payment of duty was provisional. During the period prior to 25.06.1999, Rule 9B had not adopted provision of Section 11B of Central Excise Act, 1944 in regard to doctrine of unjust enrichment. Only w.e.f 25.06.1999 an amendment was brought forth by adding proviso to sub rule (5) of Rule 9B and Section 11B was adopted to Rule 9B. Thus, only after 25.06.1999 the issue of the unjust enrichment is applicable to refund of duty paid provisionally. Rule 9B as it stood prior to 25.06.1999 and after is reproduced as under : Prior to 25.06.1999 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 pgoods 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, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ionally assessment, the final assessment shall be made by the proper officer]. 32.1 Proviso to Sub-rule (5) of Rule 9B as amended w.e.f. 25.6.1999 reads as under : RULE 9B. Provisional assessment to duty .. . (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 deficient or be entitled to a refund as the case may be. Provided that, if an assessee is entitled to a refund, such refund shall not be made to him except in accordance with the procedure established under subsection (2) of Section 11B of the Act. 33. It can be seen that after, the amendment the refund of any excess duty paid under provisional assessment is subject to subsection (2) of Section 11B of the Act ibid. 34. In the case of Titan Industries Ltd. Vs. CCE, Chennai 2009 (240) E.L.T. 571 (Tribunal, Chennai) the question considered was whether the principle of unjust enrichment is to be examined in a claim made for refund of duty paid under provisional ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... multiplicity of proceedings. We also find that the apex Court in para 95 of its judgment in Mafatlal Industries case reported in 1997 (89) E.L.T. 247 (S.C.) made the following observations. 95. Rule 9B provides for provisional assessment in situations specified in Clauses (a), (b) and (c) of sub-rule (1). The goods provisionally assessed under sub-rule (1) may be cleared for home consumption or export in the same manner as the goods which are finally assessed. Sub rule (5) provides that 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 duly 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 . Any recoveries or refunds consequent upon the adjustment under sub-rule (5) of Rule 9B will not be governed by Section 11A or Section 11B, as the case may be. However, if the final orders passed under sub-rule (5) are appealed against or questioned in a writ petition or suit, as the case may be, assuming that such a writ or suit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisional assessment was finalized. Therefore, we hold that the finding that the claim for refund was barred by limitation is not sustainable. 3. As regards unjust enrichment, the apex Court held in Mafatlal Industries case that Section 11B did not apply to grant of refund arising out of finalization of provisional assessment. In the instant case the assessment was finalized before 25-6-99 when Rule 9(B) cases of refund were brought under the purview of Section 11B of the Act by amendment of the provisions. During the material time there were no provisions requiring an assessee to file claim for refund of excess duty paid. In the circumstances we hold that the assessee has to be allowed the excess duty determined to have been paid on the impugned clearances of watches and parts made by the appellants during the year 199495 without their having to satisfy the authorities that such refund would not entail unjust enrichment of the assessee. (emphasis supplied) 35. In the case of CCE, Mumbai III Vs. CEAT Ltd. 2018 (361 ELT 420 (Bombay) the question of relevant date for finalisation of assessment as well as the issue of unjust enrichment in case of refund of duty paid under provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision made trousers out of the said fabric and since there is no duty of excise on garment, the question of unjust enrichment does not arise. I find that the view point of the claimant regarding non-application of the doctrine of unjust enrichment in respect of the sum of Rs. 2 Crores and Rs. 5,00,400/- is correct. In fact, the refund arises on account of the Order-in-Original passed by Commissioner of Central Excise, Coimbatore, and the refund has to be sanctioned suo motto. The assessee has submitted that the copies of TR-6 challans establishing payment of advance deposit and duty. The claim has been scrutinized and found to be in order . 38.1 Against the above order of sanctioning refund the department filed appeal. We fail to understand how the department could file appeal against sanction of refund without issuing SCN for recovery of erroneous refund. The amount of Rs. 2,05,00,400/- having been paid by appellant during investigation, which is in the nature of a deposit, the issue of limitation or unjust enrichment is not applicable. The view taken by refund sanctioning authority as noticed above is correct. From the foregoing, we find that the appellant is eligible for refund. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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