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2013 DIGILAW 114 (RAJ)

Union of India v. BSL Ltd.

2013-01-15

ARUN BHANSALI, DINESH MAHESHWARI

body2013
JUDGMENT 1. - This appeal by the Revenue under Section 35G of the Central Excise Act, 1944 ('the Act') is directed against the order dated 4-3-2008 as passed by the Customs, Excise & Service Tax Appellate Tribunal, Principal Bench, New Delhi ('the Tribunal') in Appeal No. 1201/2006-SM. The appeal has been admitted on the following substantial question of law:- "Whether claim for refund would be hit by the concept of unjust enrichment in the facts of the instant case." 2. The relevant background aspects of the matter could be noticed in the following : The respondent-assessee is engaged in manufacture of wool worsted and polyester blended yarn. The Assistant Commissioner, Central Excise Division, Bhilwara finalised the provisional assessment in relation to the respondent-assessee by the Order-in-Original dated 31-3-2003.The Assistant Commissioner held that during the period in question, the assessee had short paid the central excise duty to the tune of Rs. 10,55,436/-; and since the duty of Rs. 8,29,816/- had already been debited in PLA, the assessee was directed to deposit the remaining amount of Rs. 2,25,620/-. 3. It was also found by the Assistant Commissioner that the assessee had paid the duty in excess to the tune of Rs. 3,43,405/- (this amount has later on been taken as Rs. 3,43,404/-) in respect of some quantity of yarns transferred for captive consumption to the sister concerns; and in this regard, the assessee was directed to file a separate refund claim under Section 11B of the Act. The Assistant Commissioner observed and ordered as under:- "(1) I hereby, finalise the provisional assessment for the period April 2001 to March 2002 in respect of yarns transferred for captive consumption to their sister concerns as short payment of duty amounting to Rs. 10,55,436/- [i.e. Rs. 9,17,770/- BED + Rs. 1,37,666/- AED (TTA)] under rule 7(3) of the Central Excise Rules, 2002 and the assessee have already debited Rs. 8,29,816/- [i.e. BED Rs. 7,21,579/- & AED Rs. 1,08,237/- vide PLA Entry No. 15 & RG23A pt-II Entry No. 1875 respectively both dated 30-11-2002] which I appropriate it to the govt. account. Now the remaining amount of duty of Rs. 2,25,620/- [BED Rs. 1,96,191/- & AED Rs. 29,429/-] is recoverable which I order recovery under Section 11A of the Central Excise Act, 1944. and direct the assessee to deposit the said amount immediately. account. Now the remaining amount of duty of Rs. 2,25,620/- [BED Rs. 1,96,191/- & AED Rs. 29,429/-] is recoverable which I order recovery under Section 11A of the Central Excise Act, 1944. and direct the assessee to deposit the said amount immediately. (2) That the assessee have also paid excess duty amounting to of Rs. 3,43,405/- (BED + AED) in respect of some quantity of yarns transferred for captive consumption to their sister concerns during the period from April 2001 to March 2002. The assessee may file a separate refund claim for this amount of excess payment under Section 11B, if they have not passed on the incidence of said excess duty to the ultimate customers. (3) I also order them to pay the applicable interest leviable thereon on account of delayed payment of the differential duty under Rule 7(4) of the Central Excise Rules, 2002 and that interest amount to be paid within 7 days of receipt of the order." 4. The assessee filed an appeal against the aforesaid order dated 31-3-2003 before the Commissioner (Appeals-II), Jaipur. The Appellate Authority by its order dated 5-9-2003 directed the assessee to make pre-deposit in regard to the duty found short paid. The assessee carried out compliance of this order on 1-10-2003. Thereafter, the Commissioner (Appeals-II) allowed the appeal by the order dated 28-11-2003 while upholding the contention that the adjudicating authority should have adjusted the amount of duty recoverable against the excess payment made by the assessee, particularly when there was no dispute about excess payment and the assessment for that period being provisional. The Appellate Authority observed and ordered as under:- "9 .... I agree to their contention that the adjudicating authority should have adjusted the amount of duty recoverable from them against the excess payment made by the appellants erroneously, particularly since there was no dispute that the appellants had paid excess duty and the assessment for that period was provisional. 10. In view of the above, I hold that the adjudicating authority has erred in not adjusting the amount of demand against the amount of duty excess paid during finalising the provisional assessment. 11. Appeal disposed of in above terms with the consequential relief if the same is found admissible as per law." 5. Consequent to the observations made and directions issued by the Appellate Authority, ultimately, the Dy. 11. Appeal disposed of in above terms with the consequential relief if the same is found admissible as per law." 5. Consequent to the observations made and directions issued by the Appellate Authority, ultimately, the Dy. Commissioner, Central Excise Division, Bhilwara, by his order dated 1-10-2004, re-adjudicated the matter and allowed the adjustment of the amount of Rs. 2,25,620/- short paid by the assessee from the amount paid in excess; and since the amount of Rs. 2,25,620/- had been deposited by the assessee in compliance of the stay order dated 5-9-2003, the same was ordered to be refunded under Section 11B of the Act. The remaining amount of Rs. 1,17,784/- was, however, ordered to be transferred to the consumer welfare fund. The Dy. Commissioner ordered as under:- "(1) In compliance of the order of the Commissioner (Appeals) dated 28-12-2003 I allow the adjustment of Rs. 225620/- short paid from Rs. 343405/- excess paid duty. Since the amount of Rs. 225620/- has already been deposited by the assessee in compliance of Commissioner (Appeals) stay order dated 5-9-2003. I sanction Refund of Rs. 225620/- under provisions of Section 11B of Central Excise Act, 1944 to M/s BSL Limited, Bhilwara. (2) I also sanction Refund of Rs. 117784/- to M/s BSL Limited, Bhilwara under provisions of Section 11B ibid; but the same is transferred to consumer welfare fund." 6. To the extent the amount of Rs. 2,25,620/- was sanctioned for refund by the Dy. Commissioner, the revenue preferred an appeal that was considered and rejected by the Commissioner (Appeals-II) by the order dated 18-1-2006 while holding that the bar of unjust enrichment was not applicable in respect of the amount deposited as per the condition of pre-deposit under Section 35F of the Act. It was also noticed that this amount has already been ordered to be adjusted while deciding the total refund claim. The Department preferred yet further appeal that was dismissed by the impugned order dated 4-3-2008 with the Tribunal observing, inter alia, as under:- "After hearing both the sides and on perusal of record, I find that the Commissioner (Appeals) in his earlier order, directed to settle the refund claim after adjusting the amount of excess and short payment of duty on the finalisation of provisional assessment. The Tribunal in the case of Timkin India (supra) held that doctrine of unjust enrichment is not applicable to provisional assessment even after finalisation thereof. Therefore, the contention of the learned DR that unjust enrichment is applicable while allowing the refund claim arising out of finalisation of assessment has no merit. I find that the adjudicating authority sanctioned the refund of Rs. 2,25,620/-. The Tribunal in the case of Godrej Industries Ltd. (supra) held that deposits made during pendency of appeal automatically become refundable to the assessee on success of their appeal and provisions of unjust enrichment are not attracted. Commissioner (Appeals) rightly upheld the Adjudication Order as the bar of unjust enrichment is not applicable on the pre-deposit. So, I do not find any reason to interfere with the order of the Commissioner (Appeals). Accordingly, the appeal filed by the Revenue is rejected." 7. Assailing the order aforesaid, it is contended on behalf of the appellant that there being no provision for adjustment of excess paid duty under Rule 7 of the Central Excise Rules, 2002 and refund being available only upon fulfillment of the condition of proving that the incidence has not been passed on to any other person, the orders impugned cannot be sustained. It is submitted that the consequential relief as per the order that had attained finality could have been given to the assessee only if found admissible in law; and when the assessee failed to prove that the incidence had not been passed on to the customers, the entire amount of refund as claimed, was required to be transferred to the consumer welfare fund. 8. Per contra, the learned counsel for the respondent submits that the Dy. Commissioner has not committed any error in ordering refund of the amount deposited in compliance of the order passed by the Appellate Authority on the stay application; and the said order has rightly been upheld by the Appellate Commissioner and then by the Tribunal. 9. After having heard the learned counsel for the parties and having perused the material placed on record, we are unable to find any infirmity in the order passed by the Tribunal so as to call for interference in appeal; and we are clearly of the view that the question as formulated deserves to be answered in the negative. 10. 9. After having heard the learned counsel for the parties and having perused the material placed on record, we are unable to find any infirmity in the order passed by the Tribunal so as to call for interference in appeal; and we are clearly of the view that the question as formulated deserves to be answered in the negative. 10. The facts of the case leave nothing to doubt that the amount in question i.e., a sum of Rs. 2,25,620/-, was deposited in compliance of the stay order dated 5-9-2003 as passed by the Commissioner (Appeals) while entertaining the appeal against the Order-in-Original. It is difficult to apply the principles of unjust enrichment as regards the amount in question that had been deposited only in compliance of the requirement of the statute and the orders of the Appellate Authority. 11. In our view, the Dy. Commissioner, in his order dated 1-10-2004, has considered the case in its correct perspective while holding that the assessee was entitled to the adjustment of the short paid duty from out of the amount of excess paid duty. These directions have truly been in conformity with the order passed by the Commissioner (Appeals) on 28-11-2003 that had attained finality; and whereunder, the amount of Rs. 2,25,620/-, which was short paid, was to be adjusted from Rs. 3,43,404/- paid in excess. As a necessary corollary, the amount as deposited in compliance of the stay order dated 5-9-2003 was required to be refunded; and the revenue was not justified in seeking application of the concept of unjust enrichment in its regard. 12. Noteworthy it is that the Dy. Commissioner, in his order dated 1-10-2004 has, otherwise, ordered transfer of the remaining amount of Rs. 1,17,784/- from out of the excess paid duty to the consumer welfare fund while applying the principles of unjust enrichment thereto because the assessee failed to prove that it had not passed on the duty incidence. 13. In view of the above, we find nothing of error or infirmity in the order passed by the Dy. Commissioner that has been affirmed by the Appellate Authority and then, by the Tribunal. 14. Accordingly, the question as formulated is answered in the negative i.e., against the Revenue and in favour of the assessee. 15. Consequently, the appeal fails and is dismissed. No costs.Appeal dismissed. *******