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TMI Blog2025 (2) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... le either wholly or partly to be credited to the Consumer Welfare Fund and only thereafter make an order of adjustment to the extent the amount found to be actually refundable.
Hon'ble High Court of Karnataka in the case of Toyota Kirloskar Auto Parts Pvt. Ltd. [2011 (10) TMI 201 - KARNATAKA HIGH COURT] where it was held that when there is provisional assessment, the same is applicable to the entirety of the goods and to arrive at final duty liability, adjustments of duty excess paid against short payment will have to be made.
Conclusion - In cases of provisional assessment, adjustments of excess duty paid against shortfalls should be made in a consolidated manner, and the doctrine of unjust enrichment does not apply when the duty incidence has not been passed on. The Appellant was entitled to adjust excess duty payments and was not subject to the doctrine of unjust enrichment.
Appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... s) Valuation Rules, 2000 (CEVR) as per which value to be adopted was 110% of Cost of Production of such goods. As the Appellant was unable to determine the cost of production of such goods at the time of clearances from factory, a request was made for provisional assessment in terms of Rule 7 of the Rules. The Appellant thereafter submitted CAS 4 certificates based on which provisional assessments were finalised. The Appellant paid the differential duty and also sought for refund of excess duty paid by them towards differential duty. The lower authority confirmed the demand and appropriated the amount already paid by the Appellant but dis-allowed the claim for refund/ adjustment of amount paid in excess and credited the same in the consumer welfare fund. Aggrieved, the Appellant went on appeal before the Lower Appellate Authority who dismissed the appeal and upheld the Orders-in-Original. Hence, the present appeals preferred by the Appellant before this forum. 3. The main contentions of the Appellant as culled out from the Grounds of Appeal have been summarised below: - i. It was submitted that the issue was no longer res integra as the issue of whether excess payment can be adj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eiterated the averments in the grounds of appeal and further submitted that that the excess amount of Rs.2,73,179/- and the interest was paid only on finalization of the assessment i.e., post the clearance of goods from the Appellant's premises and it was settled law that unjust enrichment is not applicable to any duty paid after the clearance of goods. Reliance in this regard is placed on the case of Silwester Textiles Private Limited v. Commissioner of Central Excise, Mumbai [2003 (156) E.L.T. 216 (Tri. - Mumbai)]. 4.2 It was submitted that it was evident from Rule 7(6) of the Central Excise Rules, 2002, that unjust enrichment is applicable only on the refund of net amount of duty paid in excess after the finalization of the provisional assessment which was not the case of the Appellant. 5. The Ld. Authorised Representative Shri M. Selvakumar representing the Department affirmed the findings in the impugned order and submitted that the Appellant had passed on the duty incidence and is not entitled to claim refund of excess duty paid. Hence, it was prayed for dismissal of the appeal filed by the Appellant. 6. We have carefully considered the submissions made by both the sides a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of duty provisionally assessed. (3) The Assistant Commissioner of Central Excise or the Commissioner of Central Excise as the case may be, shall pass the 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) : Provided that the period specified in this sub-rule may, on sufficient cause being shown and the reasons to be recorded in writing, be extended by the Commissioner of Central Excise for a further period not exceeding six months and by the Chief Commissioner of Central Excise for such further period as he may deem fit. (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 of twenty four per cent per annum 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 to order for final assessment under sub-rule (3), subject to sub-rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 for certain items the Adjudicating Authority has held the shortfall 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al's final order dated 27.07.2015. Whereas, in para-5 while concluding the provisional assessment for the year 2004-05 has been omitted, which is a factual mistake on record and it is rectified. The para-5 in final order dated 27.07.2015 should be read as follows: "5. By respectfully following the Hon'ble Karnataka High Court decision in the case of Toyota Kirloskar (supra), and the Tribunal's order (supra), we hold that appellants are eligible for adjustment of excess duty paid while finalizing the provisional assessment for the year 2004-05 and for the year 2005-06 and the question of unjust enrichment does not arise. Accordingly, the impugned orders are set aside and appeals are allowed with consequential relief." 11. On similar issues, in the case of Jonas Woodhead & Sons (I) Limited Vs. CCE, this Tribunal vide Final Order No. 40480 to 40484/2015 dated 20.4.2015 reported in [2015 (329) ELT 577] has held as follows: - "1.2 Learned Counsel submitted that it is rule of law that during a period when clearances are allowed provisionally for no appropriate duty liability being determinable for that period, at the time of clearance, provisional assessment is made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a 9 of judgment held as under :- "9. In the instant case, admittedly for certain items the adjudicating authority has held the shortfall 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 shortfall in the excess payment made. If there is no shortfall 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... industan Zinc Ltd [2023 (384) E.L.T. 626 (S.C.)] has held as follows: - "2. In all these cases the common question which arises is whether claim for refund of amounts deposited towards provisional duty, as a condition for clearance of imported goods can be the subject matter of refund after conclusion of assessment proceedings and having regard to its outcome, under Section 18 of the Customs Act. It is not disputed that this issue has been considered both in the context of provisional assessment under Rule 9B of the Central Excise Rules by judgments of this Court as well as in the context of Section 18 of the Customs Act, in "Commissioner of Customs, New Delhi v. M/s. Oriental Exports, New Delhi" [2006 (200) E.L.T. A138 (S.C.)]. The Court held that even though Rule 9B of the Customs Rules (applicable in that case) was not retrospective, nevertheless pending applications were entitled to the relief prescribed by it. This Court had occasion again to consider the issue in the light of the conflict of decision by a three Judge Bench, in a three Judge Bench decision in "Commissioner of Central Excise, Mumbai-II v. Allied Photographics India Ltd." [(2004) 4 SCC 34 = 2004 (166) E.L.T. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 11B. It is also made clear that if an independent refund claim is filed after the final decision under Rule 9B(5) reagitating the issues already decided under Rule 9B - assuming that such a refund claim lies - and is allowed, it would obviously be governed by Section 11B. It follows logically that position would be the same in the converse situation. Nature and character of refund claims under the Central Excises and Salt Act and the Customs Act." 5. The judgment in "Sahakari Khand Udyog Mandal Ltd.", in this Court's considered view, has to be confined to the facts of that case for the reasons mentioned above. In this view of the matter, there is no infirmity with the findings and conclusions recorded in the impugned judgments, which are in accord with the ratio in Allied (supra). The revenue's appeals are, accordingly, dismissed" 14. We concur with the above Final Order of the Bench where similar issue has been decided in the appellants own case and there being no change in the facts or law, following judicial discipline, we are inclined to decide the issue in favour of the Appellants. 15. In the result, the impugned Orders-in-Appeal No. 45/2016(CXA-II) dated 29.01.2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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