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Issues: (i) Whether clearances made under contracts containing a price variation clause could be treated as provisional assessments in the absence of an /request and formal order for provisional assessment, so as to avoid the limitation bar under section 11B; (ii) Whether the refund claim was barred by unjust enrichment where the excess price and duty were subsequently adjusted against later supplies and supported by buyer certificates.
Issue (i): Whether clearances made under contracts containing a price variation clause could be treated as provisional assessments in the absence of an application and formal order for provisional assessment, so as to avoid the limitation bar under section 11B.
Analysis: The existence of a price variation clause by itself did not make the assessments provisional. The controlling principle applied was that provisional assessment requires a formal request and an order under the relevant assessment procedure. In the absence of any application by the assessee or any order by the proper officer, the clearances could not be treated as provisional, even though the contract provided for later price adjustment. The limitation period under section 11B therefore remained applicable.
Conclusion: The rejection of the refund claim as time-barred was upheld and the issue was decided against the assessee.
Issue (ii): Whether the refund claim was barred by unjust enrichment where the excess price and duty were subsequently adjusted against later supplies and supported by buyer certificates.
Analysis: The evidence showed that on downward price revision the excess amount, including the excise duty element, was deducted from payments for subsequent supplies, and the buyers certified that the appellant was paid only on the reduced value. On those facts, the burden under section 12B was treated as rebutted. The principle that post-clearance adjustment by debit note, credit note, or equivalent settlement can displace the presumption of passing on of duty was applied. The situation was distinguished from cases where only later credit notes were relied upon without proof that the duty burden had actually not been passed on.
Conclusion: The bar of unjust enrichment did not apply and the refund was held payable to the assessee.
Final Conclusion: The appeal succeeded only in part: the time-bar finding on the earlier portion of the refund was sustained, while the balance refund was directed to be paid to the assessee.
Ratio Decidendi: A contract containing a price variation clause does not, by itself, render an excise assessment provisional without a formal provisional assessment order, but the presumption of passing on duty under section 12B can be rebutted by reliable evidence showing that the excess duty burden was ultimately borne by the assessee.
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