Refund claims during provisional assessment may be filed before finalisation, absent an express statutory bar.

In provisional assessment cases, a refund application under the Central Excise Act may be filed before finalisation of assessment if it is otherwise within the statutory time limit, because the refund provisions contain no express bar and can be read harmoniously with the provisional assessment rule. On that view, rejection of the claim as premature is unsustainable, and the matter should be kept pending for determination of the refundable amount after final assessment. A dissenting view stated that refund could arise only after finalisation of provisional assessment and supported rejection as premature.

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Issues: (i) whether a refund claim under Section 11B of the Central Excise Act, 1944 could be filed before finalisation of provisional assessment under Rule 9B of the Central Excise Rules, 1944; and (ii) whether rejection of the refund claim as premature, after the show cause notice had proceeded on limitation, was sustainable.

Issue (i): whether a refund claim under Section 11B of the Central Excise Act, 1944 could be filed before finalisation of provisional assessment under Rule 9B of the Central Excise Rules, 1944

Analysis: The relevant statutory scheme fixed an outer limit of six months from the relevant date for making a refund application. In the case of provisional assessment, the relevant date was linked to adjustment after final assessment. The refund provisions did not contain any express bar preventing an assessee from moving the application while provisional assessment proceedings were still pending. A harmonious reading of the refund provision and the provisional assessment rule supported the view that filing the claim during pendency was permissible, even though adjudication of the amount refundable could await final assessment.

Conclusion: Yes. A refund claim could be filed before finalisation of the provisional assessment, and it was not liable to be rejected merely because assessment had not yet been finalised.

Issue (ii): whether rejection of the refund claim as premature, after the show cause notice had proceeded on limitation, was sustainable

Analysis: The show cause notice proposed rejection on limitation. Once the assessee met that objection by pointing to provisional assessment, the claim was rejected on a different footing, namely prematurity. The final decision held that such rejection was not justified, because the claim should have been kept pending for consideration on finalisation of assessment and the authorities could not deny relief on a ground not put in issue in the notice. The matter also required examination of the actual refundable amount by the adjudicating authority.

Conclusion: No. The rejection of the claim as premature was unsustainable and the matter required fresh adjudication.

Final Conclusion: The refusal to entertain the refund claim on the ground of prematurity was set aside, and the refund claim was sent back for reconsideration of the amount refundable under the statutory scheme.

Ratio Decidendi: In a regime of provisional assessment, the refund statute may be invoked during the pendency of assessment proceedings if the application is otherwise within the statutory time limit, and a claim cannot be rejected as premature in the absence of an express prohibition in the governing provisions.

Dissenting Opinion: The Member (Technical) held that refund could arise only after finalisation of provisional assessment and upheld rejection of the claim as premature.

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