CX - Rule 7 of CER, 2002 - Provisional assessment - consequent upon finalisation of assessment, excess duty paid can be adjusted against short payment as there is no unjust enrichment involved - appeals allowed: CESTAT
By TIOL News Service
MUMBAI, OCT 02, 2015: TWO appeals have been filed by the assessee against the orders passed by the Commissioner(A), Pune-I.
In the first Appeal filed in the year 2007, the issue is regarding adjustment of excess payment of duty against short payment of duty. The appellant had sought provisional assessment of the goods cleared from their factory premises for the period April 2002 to March 2003. On finalization of provisional assessment, it was noticed that the appellant is entitled for refund. The adjudicating authority held that such adjustment is to be done and ordered for refund of an amount which was paid in excess.
In Revenue appeal, the Commissioner(A) reversed the decision taken by the adjudicating authority and set aside the adjustment of excess duty paid against short payment.
The second appeal filed in the year 2009 concerns refund claim filed consequent to the order passed by the adjudicating authority &which was rejected on the ground that the refund claim is premature as an appeal was disposed of in favour of the Revenue by the first appellate authority and CESTAT has not finally disposed of the appeal. The Commissioner(A) also took a similar view.
Be that as it may, before the CESTAT the appellant submitted that adjustment of excess duty towards short payment of duty during the particular period, more specifically in the case of provisional assessment is covered by the provisions of Rule 7 of CER, 2002 and has been contested before the Hon'ble High Court of Karnataka in the case of Toyota Kirloskar Auto Parts Pvt. Ltd. vs. CCE - 2012-TIOL-10-HC-KAR-CX which has been followed by the Division Bench of the Tribunal in the case of CCE v. BSL Ltd. - 2014-TIOL-1410-CESTAT-DEL.
The AR relied upon the Larger Bench decision in the case of Excel Rubber Ltd. - 2011-TIOL-536-CESTAT-DEL-LB wherein the Larger Bench held that any amount which has been paid in excess has to go through the hurdle of unjust enrichment even if it is arising out of finalization of assessment. Advertence is also made to decision in My Car Pune Pvt. Ltd. - 2015-TIOL-412-CESTAT-MUM where it is held that excess payment cannot be adjusted against short payment.
The Bench considered the submissions and observed that the issue is no more res integra. Inasmuch as the Karnataka High Court in the case of Toyota Kirloskar Auto Parts Pvt. Ltd. - 2012-TIOL-10-HC-KAR-CX has held that while finalizing a provisional assessment, the excess payment of duty can be adjusted against the short payment and this judgment is binding on the Tribunal as held in the case of BSL Ltd. - 2014-TIOL-1410-CESTAT-DEL.
As for the LB decision cited by the AR, the Bench observed that the same will not carry the case of the Revenue further since in the case of Excel Rubber Ltd. (supra), in para 50, the LB had specifically recorded that "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 the applicability of the principle of unjust enrichment."
The Bench also observed that the decision in My Car Pune Pvt. Ltd. was one of remand.
Taking note of the fact that in the case on hand it is clearly held that there is no unjust enrichment and the adjudicating authority had correctly followed the LB decision which specifically lays down that excess payment can be adjusted against any dues of an assessee and that the decision of the Karnataka High Court would prevail over the decisions of the Tribunal, which is a settled law, the Bench set aside the orders of the lower appellate authority and allowed the appeals with consequential relief.
(See 2015-TIOL-2095-CESTAT-MUM)
