Refund of excess excise duty on EOU stock cleared later is allowable when no final assessment was made.

Excise duty paid on finished goods and waste held in stock at the time of exit from the EOU scheme was not final merely because the department verified the payment before removal. Where no provisional assessment was sought and no final assessment order was passed, duty remained linked to each actual clearance and valuation had to be based on the sale price prevailing at removal. Excess duty paid on an earlier, higher valuation was therefore refundable, and the refund claim was maintainable.

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Issues: Whether excess excise duty paid on finished goods and waste lying in stock at the time of exit from the EOU scheme, and cleared only later, was refundable when the duty had been discharged before removal on the basis of the then prevailing sale price.

Analysis: The stock of finished goods and waste was assessed and duty was paid on the cut-off date, but the actual clearances took place later, before the final debonding order took effect. The letters issued by the authorities only verified the duty payment and did not amount to a final assessment order. No provisional assessment had been sought under Rule 7(1) of the Central Excise Rules, 2002, and no finalization order had been passed under Rule 7(3). Since excise duty is linked to removal and valuation must be determined with reference to each removal, the duty paid on the earlier stock valuation could not be treated as final merely because the stock was initially duty-paid before clearance. The excess paid over the duty relatable to the actual sale price was therefore refundable.

Conclusion: The refund claim was maintainable and the rejection was unsustainable; the issue is decided in favour of the assessee.

Ratio Decidendi: Where excisable goods are cleared after the unit continues to remain under the EOU regime until the final exit order, duty paid on stock valued before actual removal does not attain finality merely on verification by the department, and excess duty paid on a higher interim valuation is refundable if no final assessment has been made.

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