2024 (6) TMI 40 - AT - Central Excise

Refund of excess duty allowed after provisional assessment finalization, unjust enrichment claim rejected under Rule 7

CESTAT Kolkata allowed the appeal filed by the appellant regarding refund of excess duty paid during provisional assessment finalization. The tribunal ... Refund arising on account of finalization of provisional assessment - hit by the clause of unjust enrichment - rejection on the sole ground that the appellant had failed to prove that the duty element claimed to have been returned through credit notes to the immediate buyer, had ultimately reached the consumer - scope of SCN crossed. Refund claim - HELD THAT:- In the present case, upon finalization of provisional assessment vide Order dated 29.09.2008, it was notice that there was short payment as well as excess payment of duty. The proper officer ought to have allowed adjustment of the short paid and excess duty paid as per Rule 7 of the Central Excise Rules, 2002. However, it was not allowed and the appellant was asked to file refund claim for the excess paid amount of Rs.4,55,260/-. Scope of SCN - HELD THAT:- It is observed that the Show Cause Notice was issued for denial of the refund on the ground of time-bar. However, both the authorities below have denied the refund claim on the ground of unjust enrichment. Thus, the submission of the appellant is agreed upon that the impugned order has travelled beyond the Show Cause Notice and therefore, the same is liable to be set aside on this ground alone. Unjust enrichment - HELD THAT:- From the sample certificate issued by the dealers, we observe that all the dealers were not registered under the Central Excise Law for the purpose of availing or passing on the credit. Therefore, the question of any dutiable component in the form of refund of excise duty on the component of discounts as well as CENVAT Credit on the component does not arise - the appellant has produced sufficient evidence to establish that unjust enrichment is not applicable to this case. The evidence available on record which clearly indicates that the appellant has not passed on the duty element to the ultimate customers, it is held that the impugned order denying the refund claim filed by the appellant on the ground of unjust enrichment is not sustainable. The impugned order is set aside - appeal allowed. Issues involved: Refund claim arising from finalization of provisional assessment; Denial of refund claim based on unjust enrichment; Scope of Show Cause Notice.Refund Claim and Provisional Assessment: The appellant, a company selling 'Asbestos Cement Sheets,' filed a refund claim after finalization of provisional assessment, where it was found they had short-paid and overpaid duty. The appellant argued that Rule 7 of the Central Excise Rules, 2002 allows for adjustment of such amounts, but the adjustment was not permitted, leading to the refund claim.Unjust Enrichment and Show Cause Notice: The appellant contended that the denial of the refund claim on the grounds of unjust enrichment exceeded the scope of the Show Cause Notice, which had raised the issue of time-bar but not unjust enrichment. Both authorities had rejected the refund claim based on unjust enrichment, contrary to the original notice.Evidence and Precedents: The appellant presented a Chartered Accountant's certificate stating that duty discounts were not passed on to buyers. They cited previous cases where similar refund claims were allowed, emphasizing that the duty element was not transferred to consumers. The Tribunal noted that the dealers were not registered for CENVAT Credit, further supporting the appellant's position.Decision and Rulings: Relying on precedents and the evidence provided, the Tribunal found that the denial of the refund claim on the grounds of unjust enrichment was unfounded. They set aside the impugned order and allowed the appeal, concluding that the appellant had sufficiently demonstrated that unjust enrichment did not apply in this case.Conclusion: The Tribunal ruled in favor of the appellant, overturning the denial of the refund claim based on unjust enrichment and emphasizing the lack of evidence of passing on the duty element to consumers.