TaxTMI 
TaxTMI 
2009 (7) TMI 109
X X X X Extracts X X X X
X X X X Extracts X X X X
....order which is contrary thereto? b) Whether the learned Tribunal erred in law in not appreciating that the law as laid down by the Hon'ble Supreme Court of India that in case of provisional assessment if any duty is due or is to be refunded upon final assessment then that will not be guided by section 11A or 11B as the case may be excepting those claim which arose as a result of any appellate proceedings against such assessment? c) Whether, the learned Tribunal erred in law in not appreciating that the order dated 20.12.2000 was the order of final assessment and vide that order it was held that an excess amount of Rs.23,37,762.35 was deposited and as such applying the law as laid down by the Hon'ble Supreme Court of India getting refund of that excess amount the provisions of section 11 B will not apply and as such the bar of unjust enrichment cannot be applicable in the instant case as has been held in the case of Timken passed by the same Tribunal earlier? The facts of the case briefly are as follows: During 1^st October, 1975 and 30^th September, 1983, the appellant had been manufacturing electric fans cleared on provisional basis under Rule 9B of the erstwhile Centr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent under Rule 9B and that the learned CESTAT having been followed the Constitutional Bench of Supreme Court have held in terms of the statutory definition that assessment includes reassessment. Being aggrieved, the appellant preferred this instant appeal before the High Court. It is the case of the appellant; the appellant cleared the goods upon payment of duty provisionally. Mr. Pronab Kumar Dutta, learned Advocate appearing on behalf of the appellant, contended before us that the order of the Appellate Commissioner was modified by the CESTAT vide order dated 6^th February, 1997, to the extent of disallowance a certain deductions allowed by the Collector (Appeals). The Assistant Commissioner while deciding the case of 20^th December, 2000 to which our attention was drawn by Mr. Dutta and he specifically drew our attention to the followings: "1. Finalization of Provisional Assessment for the deductions claimed from the wholesale prices by M/s The Jay Engineering Works Ltd., during the period from 1.10.75 to 30.9.83. 2. Finalization of case proceedings for claim of refund of Rs.56,14,262,35. 3. S.C. Notice under C. No. V(33)15/I/IV/84(7) dt. 5.1.84 & C. No. V(33)1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....recoveries or refunds consequent upon the adjustment under sub-rule (5) of Rule 9B will not be governed by Section 11A or Section 11B, as the case may be. As a consequence, the concept of unjust enrichment cannot be considered while returning the excess money since refund under Section 11B requires the assessee to satisfy that the burden of tax has not been passed on the ultimate consumers. He further submitted that the said Bench of the learned Tribunal passing the instant order under appeal have followed the decision of Timken India Ltd. Vs. Commissioner of Customs, Kolkata reported in 2007 (217) E.L.T. 197 of the Apex Court as referred to hereinabove for appeal in an identical situation that refund should not be guided by the concept of unjust enrichment. He further submitted that the respondent authority have disallowed the instant demand on the ground that the appellant has failed to produce any proof/documentary evidence, that duty has not been passed on as per Section 12B. It is to be presumed by Mr. Dutta that the incidence of duty has been passed on. This stand of the authorities is fallacious since the period in question involved during 1st October, 1975 ti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....riding provision has been made in the said Act and provision has been made in Section 18 for provisional assessment of duty. The provisional assessment is resorted to the situations specifically enumerated by sub-section (1) of Section 18. The Assessing Authority has a right to direct that the duty leviable on the goods imported be assessed provisionally if the importer or exporter furnishes such security as the Assessing Authority deems fit for payment of the deficiency, if any, between the duties finally assessed and the duty provisionally assessed. Such provisional assessment would reach its finality in terms of sub-section (2) of Section 18 read with all other applicable provisions of the said Act. While making final assessment under Section 18 (2), any duty paid in terms of order of provisional assessment, falling short or any excess of duty finally assessed, an importer or exporter is obliged to pay deficiency or entitled to refund of the excess as the case may be. Refund arising under Section 18 (2) have been expressly directed to be made by the self-contained provisions of that Section like earlier Rule 9B of Central Excise Rules, 1944. For the purpose of determination o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or will be entitled to a refund, as the case may be, ultimately, thus the liability of the assesse would depend upon the undertaking of exercises by the assessing officer to complete the assessment proceeding as contemplated under the Rules." It is necessary for us to quote Rule 9B of the Central Excise Rules, 1944 which has been specifically stated about provisional assessment. 9B: Provisional assessment to duty - (1) Notwithstanding anything contained in these rules - (a) Where the assessee is unable to determine the value of excisable goods in terms of section 4 of the Act on account of non-availability of any document or any information ; or (b) Where the assessee is unable to determine the correct classification of the goods while filing the declaration under rule 173B; The said assessee may request the proper officer in writing giving the reasons for provisional assessment to duty, and the proper officer may direct after such inquiry as he deems fit, that the duty leviable on such goods shall be assessed provisionally at such rate or such value (which may not necessarily be the rate or price declared by the assessee) as may be indicated by him, if such assessee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e first of all an order under Rule 9B of the Rules and then material to show that the goods were cleared on the basis of the said provisional basis and payment of duty was also made on the basis of the said provisional classifications. The issuance of notice/show-cause notice for a provisional assessment under Section 18 of the Act is necessary, if any, of the circumstances prescribed by sub-section (1) of Section 18 exists. Through the process of issue of notice, each party knows existence of a particular circumstance prescribed by Section 18 (1) of the Act warranting a provisional assessment. This process, that is provisional assessment, is done pending final assessment and in the course of provisional assessment, the Assessing Authority may direct that the duty leviable may be assessed provisionally subject to furnishing such security as the authority may deem fit and proper for the payment of deficiency, if any, between the duty finally assessed and the duty provisionally assessed. This has already been discussed by the Supreme Court in case of M/s. Metal Forgings v. Union of India reported in 2002 (146) E.L.T. 241 (S.C.). He also drew our attention in page 120 of clauses 4.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eed - then any refund claim arising as a consequence of the decision in such appeal or such other proceedings, as the case may be, would be governed by Section 11B. It is also made clear that if an independent refund claim is filed after the final decision under Rule 9B(5) reaagitating the issue already decided under Rule 9B assuming that such a refund claim lies and is allowed, it would obviously be governed by Section11B. It follows logically that position would be the same in converse situation. 4.9 : Hon'ble Supreme Court following the ration laid down in Mafatlal Industries Ltd. Case (supra), in the case of Commr. Of Central Excise, Mumbai II v. Allied Photogrphics reported in 2004 (166)( E.L.T.)3(S.C) decided on 18-3-2004 held that assessment means determination of tax liability and entitlement to refund would be known only when duty is finally adjusted (Para 7 of judgment). In para 11 of the judgdment it was held that in Para 104 of Mafatlal Industries Ltd. judgment - 1997 (89) E.L.T. 247 (S.C) the Hon'ble Court stated that if refund arises upon finalization of provisional assessment, Section 11B will not apply and any recoveries or refunds consequent upon the adjustme....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e with effect from June 25, 1999 and, therefore, the pending refund application dated July 5, 1996, has to be decided as per the amended Rule 9B(5) "The Hon'ble Supreme Court held that merely because the departmental authorities took a long time to process the application for refund, the right of the assessee therein does not get defeated by subsequent amendment to Rule 9B (5). The principles laid down in Allied Photographics case (supra) was followed by Hon'ble Supreme Court in CC v. Oriental Exports - 2006 (200) E.L.T. A138." The doctrine of "unjust enrichment" means retention of a benefit by a person that is unjust or inequitable. It occurs when a person retains money or benefits which is in justice, equity and good conscience, belongs to someone else. A right of recover under the doctrine of "unjust enrichment" arises where retention of a benefit is considered contrary to justice or against equity in holding the case of Fibrosa Vs. Fairbrain reported in [1942] 2 ALL England Reporter 122. Therefore, it is clear that the doctrine of "unjust enrichment" is based on equity and has been accepted and applied in case of Sahakari Khand Udyog Mandal Ltd. Vs. Commissioner of Centra....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d of duty paid provisional assessment is similar to duty paid under protest as both are "On Account" payments adjustable on finalization of assessment or vacating of protest ? Secondly, in the course of such adjustment or vacation of protest, if any amount is found payable by the Department to the manufacture, is it open to the purchaser to contend that he (the purchaser) has stepped into the shoes of the manufacturer seeking refund of "on account payment" and, therefore, he was not bound to comply with Section 11B of the said Act. In this civil appeal, we have to deal with the law governing refund during the disputed period from 1974 to 1984. To resolve the dispute herein, we quote hereinbelow Section11B of the said Act as also Rule 9B of the Central Excise Rules, 1944 as it stood prior to Central Excise and Customs (Amendment) Act, 40 of 1991 : 7.: Before analyzing Section 11B, it is important to note that there is a difference between making of refund and claiming of refund. Section 11B was inserted in the said Act w.e.f. 17-11-1980. Under sub-clause (e) to Explanation B to Section 11B(1), where assessment was made provisionally the relevant date for commencement of limitatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d of excise duty paid is available in respect of the goods themselves or, as the case may be, the excisable materials used in the manufacture of such goods, - (i) If the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India, or (ii) If the goods are exported by land, the date on which such goods pass the frontier, or (iii) If the goods are exported by post, the date of dispatch of goods by the Post Officer concerned to a place outside India; (b) in the case of goods returned for being remade, refined, reconditioned, or subject to any other similar process, in any factory, the date of entry into the factory for the purpose aforesaid; (c) in the case of goods to which banderols are required to be affixed if removed for home consumption but not so required which exported outside India, if returned to a factory after having been removed from such factory for export out of India, the date of entry into the factory; (d) in a case where a manufacturer is required to pay a sum for a certain period, on the basis of the rate fixed by the Central Government by notification in the Official Gazette in full dis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....effect that the doctrine of unjust enrichment is not applicable to the provisional assessment even after finalization thereof". Accordingly, after considering the said decisions of the Apex Court, we have come to the conclusion that after the completion of the final argument, the refund claim was rejected on the ground of unjust enrichment. Mr. Pranab Kumar Dutta, learned Advocated who appearing on behalf of the appellant, contended that the refund claim was never disputed by the Department and the tax burden can only be passed after final assessment. At the time of provisional assessment, burden was not shifted by the manufacturer to the consumer. On the contrary, it was submitted that the appellant had collected the duty from its buyers, therefore, any refund shall unduly enrich the Appellant. The Learned Tribunal holds that although it is not disputed that the refund have arisen by an order dated 20th December, 2000 and the provisional assessment had reached under its finality and there is any dispute in the question of finality of the assessment. The show-cause notice was only issued on 28th of February, 1991 to test the claim of the refund on the adjacent of the princ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xuries Act, 1995 as also other State Acts was challenged on the ground of legislative competence of the State Legislatures were not competent to impose luxury tax on tobacco and tobacco products and declared such Acts were ultra vires. In that case (Godfrey Phillips (supra) the Apex Court further observed as follows :- 47. In the circumstances, speaking through Constitution Bench, one of us, (Ruma Pal, J.) stated; "Following the principles in Somallya Organics (India) Ltd. Vs. State of U.P. (2001) 5 SCC 519 while striking down the impugned Acts we do not think it appropriate to allow any refund of taxes already paid under the impugned Acts. Bank guarantees if any furnished by the assesses will stand discharged. It was stated on behalf of the State Governments that after obtaining interim orders from this Court against recovery of luxury tax, the appellants continued to charge such tax from consumers/customers. It is alleged that they did not pay such tax to respective State Governments. It was, therefore, submitted that if the appellants are allowed to retain the amounts collected by them towards luxury tax from consumers, it would amount to "unjust enrichment" by them.....