2017 (3) TMI 1097 - AT - Central Excise

Invalid show cause notice for excise duty demand due to premature issuance; excess duty adjustment did not warrant unjust enrichment. Challenge assessment order before demanding refunds. Appeal allowed.

Centuary Enka Ltd Versus Commissioner of Central Excise, Pune

Centuary Enka Ltd Versus Commissioner of Central Excise, Pune - 2017 (358) E.L.T. 1002 (Tri. - Mumbai) Issues:- Validity of show cause notice for demand of excise duty- Adjustment of excess paid duty against short paid duty- Requirement of unjust enrichment for refundable amountAnalysis:1. Validity of show cause notice for demand of excise duty:The appeal challenged the show cause notice issued by the revenue contending that the demand of excise duty was premature and unsustainable as the final assessment order itself was appealable. The appellant argued that without challenging the final assessment order, proposing a demand through a show cause notice was not legally tenable. The adjudicating authority had contended that since the excess paid duty was adjusted against the short paid duty, no refund arose for the excess amount. The appellant maintained that the demand in the show cause notice was not sustainable due to the absence of unjust enrichment as it applies only when an amount is refunded to the assessee.2. Adjustment of excess paid duty against short paid duty:The assessing authority had finalized the provisional assessment order, adjusting the excess paid duty against the short paid duty. The appellant was directed to file a separate refund claim for the remaining excess amount. The adjudicating authority held that only the refundable amount should be considered for unjust enrichment verification, and since the excess amount was not refundable, there was no need to verify unjust enrichment for that amount. The appellant contended that the excess paid duty, once adjusted, did not warrant unjust enrichment verification as it was not subject to refund.3. Requirement of unjust enrichment for refundable amount:The Assistant Commissioner argued that verification of unjust enrichment was essential for excess paid duty, even if not physically refunded to the assessee, as it could only be adjusted if legally refundable. The duty paid in excess, if not proven to be unpassed to any other party, would not be refundable, and thus, the demand confirmed in the impugned order was deemed valid. However, the appellant maintained that unjust enrichment verification was unnecessary for the excess amount adjusted against the short paid duty, as it did not qualify for a refund.In the judgment, the Member (Judicial) analyzed the submissions and records, noting that the final assessment order had attained finality as it was not challenged by the revenue. Citing relevant Supreme Court judgments, the Member emphasized that without challenging an appealable assessment order, demands or refunds could not arise from it. Consequently, the show cause notice was deemed lacking jurisdiction, rendering all proceedings stemming from it legally invalid. Relying on established legal principles, the Member set aside the impugned order, ultimately allowing the appeal.