Provisional assessment and unjust enrichment in excise refunds: statutory procedure was mandatory, but price variation defeated unjust enrichment.

Refund claims were held time-barred under Section 11B(1) because the duty payments could not be treated as provisional: no application for provisional assessment and no order making the assessment provisional had been made, so the statutory requirements under Rule 7B were not satisfied. On unjust enrichment, the contracts contained a price variation clause and the prices were expressly provisional, with later adjustment by the buyer; on those facts, the incidence of duty was not shown to have been borne by the assessee, so the refund was not hit by unjust enrichment.

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Issues: (i) Whether the refund claims were barred by limitation under Section 11B(1) of the Central Excise Act, 1944 on the plea that the duty payments were provisional; (ii) whether the refund granted to the assessee was hit by unjust enrichment.

Issue (i): Whether the refund claims were barred by limitation under Section 11B(1) of the Central Excise Act, 1944 on the plea that the duty payments were provisional.

Analysis: The applications were admittedly filed beyond the prescribed time. The plea that the duty was paid provisionally could not be accepted because there was neither an application for provisional assessment nor an order making the assessment provisional. Provisional assessment under Rule 7B of the Central Excise Rules requires compliance with its statutory requirements, and that prerequisite was absent.

Conclusion: The refund claims were barred by limitation and the assessee's appeals were rejected.

Issue (ii): Whether the refund granted to the assessee was hit by unjust enrichment.

Analysis: The contracts contained a price variation clause and the prices were expressly provisional, with final prices to be adjusted later. The excess amount paid at the time of clearance was subsequently adjusted by the buyer from later payments, showing that the incidence of duty was not borne by the assessee. On those facts, the claim was covered by the earlier view that such refunds were not barred by unjust enrichment.

Conclusion: The refund was not hit by unjust enrichment and the Revenue's appeals were rejected.

Final Conclusion: The assessee succeeded on the issue of unjust enrichment, but failed on limitation and provisional assessment, resulting in rejection of both sets of appeals.

Ratio Decidendi: A duty payment can be treated as provisional only when provisional assessment is sought and ordered in accordance with the prescribed procedure, and where the contract itself provides for price variation with later adjustment, the burden of duty is not shown to have been passed on for unjust enrichment purposes.

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