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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 ..... and appropriating an amount of Rs.21,91,252/- already paid towards the duty demand, besides rejecting their claim for refund /adjustment in respect of an amount of Rs.2,73,179/- excess paid by the Appellant and crediting it to the consumer welfare fund in terms of Rule 7(6) of the Rules read with Section 11B(2) and Section 12(C) (2) of the Central Excise Act, 1944 (ACT). 1.2 Excise Appeal No. E/40663/2016 has been filed by the Appellant aggrieved by the impugned Order-in-Appeal No. 439/2016 dated 30.11.2016 of Commissioner of Central Excise (Appeals-II), Chennai upholding the Order-in-Original No. 39/2008 dated 30.07.2008 which finalised the provisional assessment in respect of clearances of plastic containers and closures for captive consumption during 2007-08 under Rule 7(3) of the Rules and demanding an amount of Rs.18,19,882/- towards differential duty & Cess along with applicable interest and appropriating an amount of Rs.18,19,882/- already paid towards the duty demand, besides rejecting their claim for refund / adjustment in respect of an amount of Rs.1,02,278/- excess paid by the Appellant, and crediting it to the consumer welfare fund in terms of Rule 7(6) of the Rules r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ROM order is extracted 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." ii. It was averred that finalisation is to be done on a consolidated basis and not transaction wise as there was no provision to split up the assessment between excess payment and short payment. iii. It was pointed out that principle of unjust enrichment is inapplicable in the case of captive consumption and hence impugned order demanding differential duty on one hand and crediting excess duty paid to consumer welfare fund on the other hand was not sustainable. iv. It was pointed out by the Ld. Counsel that the Tribunal's Larger Bench decision in the case of Excel Rubber Ltd. Vs. CCE [2011 (268) ELT 419 (Tri.-Bang.)] was distinguished by the Tribunal Delhi (Third Member refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unit and also in other units of the Appellant. The final product, i.e., Liquid Blue is non-excisable. Since there is no sale involved, the goods are valued under Section 4(1)(b) of the Central Excise Act, 1944 and the assessable value of the goods was determined as per Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, at 110% of the cost of production. As the actual cost of production could not be determined at the end of the financial year, the Appellant opted for Provisional assessment in terms of Rule 7 of the Rules. The main dispute in these appeals relates to adjusting excess duty paid against short payment and rejection of refund claim of excess duty paid. The Lower Adjudicating Authority dismissed the Appellant's refund claim on the ground of doctrine of unjust enrichment and the impugned Orders-in-Appeal dated 29.01.2016 and 30.11.2016 upheld the same. 9. The Provisional assessment is ordered under Rule 7 of the Central Excise Rules which reads as follows: - "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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The duty of excise borne by the buyer, if he had not passed on the incidence of such duty to any other person". Sub-rule 6 ibid safeguards the right of the assessee to claim refund in case any amount is found paid in excess. However, this right is subject to the applicability of principle of unjust enrichment. Rule 7 nowhere talks about adjustment of excess duty paid towards the duty short paid. The view held by the Larger Bench in the Excel Rubber Limited case relied in the impugned order is that before grant of adjustment, the authority finalizing the provisional assessment will have to ascertain whether such excess amount is to be actually refunded or is liable 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. However, this has been interpreted differently by the Hon'ble High Court of Karnataka in the case of Toyota Kirloskar Auto Parts Pvt. Ltd. (supra). The relevant decision reads as under: - "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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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. 10. We find that the very same issue has been considered by this Tribunal in the Appellant's own case vide Final Order Nos. 40818-40819/2015 dated 27.07.2015 read with Miscellaneous Order Nos. 40164-40165/2016 dated 01.03.2016 following the judgements in the case of Jonas Woodhead & Sons (I) Limited Vs. CCE [2015 VIL 344 CESTAT-CHE] and Toyota Kirloskar Auto Parts Pvt. Ltd. Vs. CCE [2012 (276) ELT 332 (Kar.)] has held therein as follows: - "2. The Ld. Counsel, Shri Sai Prashanth, Advocate appearing on behalf of the applicant submits that in both the appeals, finalization of provisional assessment relates to the period 2004- 05 in respect of appeal No. E/127/2007 and finalization of provisional assessment relates to the period 2005-06 in respect of appeal No. E/99/2008. He submits that in para-5 of the Tribunal's Final Order dated 27.07.2015, the Tribunal has recorded that the appellants are eligible for adjustment of excess duty paid while finalizing the provisional assessment for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s refundable, bar of unjust enrichment is not applicable. ... ... 2.1 Appellant explains further that allegation of Revenue that short payment and excess payment if any being independent of each other, that is of no sense to law in view of the Hon'ble High Court of Karnataka in the case of Toyota Kirloskar Auto Parts Pvt. Ltd. v. Commissioner of Central Excise, LTU, Bangalore reported in 2012 (276) E.L.T. 332 (Kar.). 2.2 So far as appeal Nos. E/41680 to 41682/2014, is concerned he submits that other than the issue of adjustment of short payment against excess payment involved in these appeals, additional three issues arise. One such issue is whether cost of freight incurred by the appellant post clearance shall be includible in the assessable value. He submits that such freight is not incurred for clearance of the goods. Therefore, that shall not form part of the assessable value. But the stand of Revenue is contrary. ... ... 3.2 So far as the moot question of adjustment of excess payment of duty against short payment thereof is concerned, the ratio laid down in the judgment of the Hon'ble High Court of Karnataka (supra) read with mandate of Rule 7 of the Central Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel that the impugned order relied on the decision in the case of Excel Rubber Ltd. Vs. CCE [2011 (268) ELT 419 (Tri.-Bang.)] which was distinguished by the Tribunal Delhi (Third Member reference) in the case of Hindustan Zinc Vs. CCE [2016 (336) E.L.T. 328 (Tri. - Del.)], and relevant extracts of which has been reproduced below: - "37. As the facts of this case are similar to the facts in the case of Toyota Kirloskar Auto Parts Pvt. Ltd. (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 fall 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 respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to establish that he or it had paid the amount for which relief is sought and had not passed on the burden to the consumers. This judgment though rendered by a three Judge Bench, overlooked the ruling in Allied (supra). Furthermore, even though the judgment has generally referred to the nine Judge Bench ruling in "Mafatlal Industries Ltd. & Ors. v. Union of India & Ors." [(1997) 5 SCC 537 = 1997 (89) E.L.T. 247 (S.C.)] nevertheless the specific observations in Para 104 appears to have escaped the attention of the Court. Para 104 in Mafatlal Industries Ltd., is extracted below : "104. 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 duty finally assessed, and if the duty provisional assessed falls short of or is in excess of the duty finally assessed, the assessee shall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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