2017 (3) TMI 1098 - AT - Central Excise

Tribunal favors appellant: Final duty assessment should consider total duty for year, not monthly basis.

The tribunal ruled in favor of the appellant, emphasizing that the final duty assessment should consider the total duty paid for the entire financial ... Provisional assessment - whether adjustment of excess paid duty against short paid duty is permitted? - Rule 7 of the CER 2002 - Held that: - In view of provisions of provisional assessment, it is clear that at the time of the finalization of the assessment, total duty paid/payable has to be taken in to account and if there is net amount either short paid or excess paid only that amount will be available either for recovery or refund. Therefore final assessment is done in consolidation in respect of clearances made in particular financial year. There is no specific provision in Rule 7 that finalization of assessment shall be done either on consignment basis or monthly basis - the Asstt. Commissioner, suo-moto assessing the duty on monthly basis and wherever there is short payment, demand was raised ignoring the excess paid duty is not permitted in terms of provisional assessment as provided u/r 7 of CeER, 2002 - decision in the case of Toyota Kirloskar Auto Parts Pvt Ltd Vs. CCE., LTU, Bangalore [2011 (10) TMI 201 - KARNATAKA HIGH COURT] followed - adjustment of excess paid duty against short paid duty is permissible for the entire year i.e. 2003-04 at the time of finalization of the assessment - appeal allowed - decided in favor of assessee. Issues Involved:1. Provisional assessment under Rule 7 of the Central Excise Rules, 2002.2. Finalization of duty assessment on a monthly versus yearly basis.3. Adjustment of excess duty paid against short payment during the final assessment.Issue-wise Detailed Analysis:1. Provisional Assessment under Rule 7 of the Central Excise Rules, 2002:The appellant opted for provisional assessment for the year 2003-04 for their products sold through various channels, including depots, consignment agents, and captive consumption. The provisional assessment was finalized by the jurisdictional Assistant Commissioner, who raised a demand of Rs. 37,25,811/- based on a monthly comparison of duty paid and payable. The appellant contended that the final assessment should consider the entire year's duty paid against the duty payable, as per Rule 7 of the Central Excise Rules, 2002. Rule 7 allows for provisional assessment when the assessee cannot determine the value of excisable goods or the applicable duty rate. The rule mandates that the final assessment should account for the total duty paid or payable for the entire financial year, not on a consignment or monthly basis.2. Finalization of Duty Assessment on a Monthly Versus Yearly Basis:The appellant argued that the final assessment should be based on the total duty paid for the entire year, consolidating any short payments and excess payments. The Assistant Commissioner, however, finalized the assessment on a monthly basis, raising demands wherever there was a short payment without considering the excess payments in other months. The appellant cited several judgments supporting the view that the final assessment should consider the entire year's duty payments. The tribunal noted that the valuation of goods for provisional assessment involved cost construction methods based on actual data for the entire financial year, not on a consignment basis. Therefore, the final assessment should be consolidated for the entire year.3. Adjustment of Excess Duty Paid Against Short Payment During the Final Assessment:The appellant relied on various judgments to argue that excess duty paid in some months should be adjusted against short payments in other months during the final assessment. The tribunal agreed, referencing the following judgments:- Toyota Kirloskar Auto Parts Pvt Ltd Vs. CCE., LTU, Bangalore: The Karnataka High Court held that the final assessment should consider the total duty payable for all goods and adjust any excess payments against shortfalls.- Hindustan Zinc Ltd Vs. Commissioner of Central Excise, Jaipur: The tribunal reiterated that the total duty payable for all goods should be considered, and any shortfall should be adjusted against excess payments.- Commissioner of Central Excise, Jaipur-II Vs. M/s. BSL Ltd: The tribunal held that the final assessment should allow adjustments of excess duty paid against short payments, following the Karnataka High Court's ruling in Toyota Kirloskar Auto Parts Pvt Ltd.The tribunal concluded that the Assistant Commissioner's approach of assessing duty on a monthly basis and raising demands for short payments without considering excess payments was incorrect. The final assessment should be consolidated for the entire financial year, allowing adjustments of excess duty paid against short payments. The tribunal set aside the impugned order and allowed the appeal, directing the assessing authority to quantify the correct duty liability in line with these observations.