Custom, Excise & Service Tax Tribunal
M/S. G.I.S. Cotton Mill Limited vs Commr. Of C.Ex., Kolkata-Iv on 14 January, 2010
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EAST REGIONAL BENCH : KOLKATA
Excise Appeal No. EDM-420/05
(Arising out of the Order-in-Appeal No. 113/Kol-IV/2005 dated 30/06/2005 passed by the commissioner, Central Excise (Appeal-IV), Kolkata)
SHRI S. S. KANG, HONBLE VICE PRESIDENT
SHRI S.K.GAULE, HONBLE MEMBER (TECHNICAL)
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1. Whether Press Reporters may be allowed to see :
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982 ?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not ?
3. Whether Their Lordships wish to see the fair copy :
of the Order?
4. Whether Order is to be circulated to the Departmental :
Authorities ?
M/s. G.I.S. Cotton Mill Limited
APPELLANT(S)
Vs.
Commr. of C.Ex., Kolkata-IV
RESPONDENT(S)
APPEARANCE
Sri J.P. Khaitan, Sr. Advocate assisted
by Sri Arvind Baheti, Advocate
FOR THE APPELLANTS
Sri M.B. Bal, JDR
FOR THE RESPONDENTS
CORAM:
SHRI S. S. KANG, HONBLE VICE PRESIDENT
SHRI S.K.GAULE, HONBLE MEMBER (TECHNICAL)
DATE OF HEARING & DECISION : 14.01.2010
ORDER NO.
Per Shri S. S. Kang
The appellant filed this appeal against the impugned order whereby refund claim of the appellant was rejected on the ground that the assessment was not provisional and appellant have not discharged the burden that duty passed on to them. The appellants are engaged in the manufacture of cotton yarn and manmade fabric yarn. The appellant vide letter dated 11/11/96 asked for provisional assessment of the goods on the ground that the appellant are transferring their finished goods from their factory to various depots after payment of duty at the factory gate calculated on the nearest ascertainable price. In the course of final sale of goods, some of the products were sold at the price lower than the calculated price on which duty was paid at the time of clearance from the factory and accordingly refunds were filed in respect of the excess excise duty paid at the time of clearance from the factory gate. The contention is that the request for provisional assessment was kept pending by the Revenue and ultimately rejected vide letter dated 6/4/2009. The appellant relied upon the provisions of Rule 9 of Central Excise Rules to submit that during the period their request for provisional assessment was pending, the clearance are to be treated as provisional. The appellant also relied upon the Board circular dated 14/01/1997 to submit that in view of the Provisions of Rule 9 of Central Excise Rules, the Board clarified that on the respective request for provisional assessment, the Assistant Commissioner will immediately examine it if necessary and pass appropriate order.
2. Contention is that as the assessments during the period in dispute i.e. October, 1996 to July, 1998 are to be treated as provisional as their request for provisional assessment was kept pending by Revenue which was ultimately rejected in the year 1999.
3. It is also submitted by appellant that in view of the provisions of Rule 9B, the assessments are to be treated as provisional and Rule 9B was amended w.e.f. 25/6/99 whereby the principles of unjust enrichment were made applicable and the period in dispute is prior to that date hence the principle of unjust enrichment are not applicable in respect of the refunds in dispute. Appellant relied upon the decision of Hon,ble Supreme court in the case of Commissioner of Central Excise, Chennai Vs. T.V.S. SUZUKI Ltd.- 2003 (156) E.L.T. 161 (S.C.).
4. The contention of Revenue is that the appellant had not produced any order regarding provisional assessment hence the assessments were final and principles of unjust enrichment are applicable and as held by the lower authority as the appellant failed to prove that the burden of duty has not been passed on.
5. We find that period in dispute is October, 1996 to July, 1998. The appellant vide letter dated 11/11/96 made a request for provisional assessment. The request is ultimately rejected on 6/4/1999. We find that as per the Provisions of Rule 9B of the Rules, the clearances in respect of the excisable goods covered under such request by the assessee submitted to the proper officer shall be deemed to be cleared as provisionally assessed to duty till the date the direction of proper officer is issued. For ready reference the provision of Rule 9B of Central Excise Rules during the relevant period are reproduced below:-
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 of 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 executes a bond in the proper form with such surely or sufficient security in such amount, or under such conditions as the proper officer deems fit, binding himself for payment of difference between the amount of duty as provisionally assessed and as finally assessed :
Provided that all clearances in respect of excisable goods covered under such request by the assessee submitted with the proper officer under the dated acknowledgement shall be deemed to be cleared as provisionally assessed to duty at such rate or at such value as declared by the assessee, till the date when the direction of the proper officer is issued and communicated to the assessee:
6. The reading of the above provisions shows that during the pendency of the request for provisional assessment, the clearances are to be treaded on provisional basis. Further, we find that board issued a circular No. 288/4/97-CX Dated 14 January, 1997 where it has been clarified that on receipt of request for provisional assessment the Assistant Commissioner will immediately examine the request and it is also directed to the lower authority to finalise the provisional assessments within a period of 3 to 6 months. In the present case as during the period in dispute the Revenue kept the request for provisional assessment filed by the appellant pending therefore the assessments are to be treated as provisional.
7. Further we find that Rule 9B of Central Excise rules was amended w.e.f. 25/06/1999 whereby the principles of unjust enrichment was made applicable in respect of refund arising out of finalization of provisional assessment. The Honble Supreme Court in the case of Commissioner of Central Excise, Chennai Vs. T.V.S. Suzuki Ltd. -2003 (156) E.L.T. 161 (S.C.) held that the provisions of sub rule 5 of Rule 9B of erstwhile Central Excise Rules, 1944 is not retrospective in nature and the principles of unjust enrichment are not applicable to the refund claim pertaining to the period of the amendment Rule 9B i.e. 25/6/1999. The Honble Supreme Court held as under:
There is no dispute that the refund claim in this case was made much prior to the addition of the proviso in sub-rule (5) of Rule 9B. On the date on which the refund claim was made, the law applicable was the law as declared by this Court in Mafatlal Industries Ltd. (supra) which we have reproduced above. However, it is contended by the learned Counsel Shri Verma for the department, that the claim of refund would be governed by the proviso introduced in sub-rule (5) of Rule 9B, and that as a consequence, the restrictions in Section 11A and Section 11B with regard to the procedure for refund would apply to the case of the appellant. The same question came for consideration of this Court in Sinkhai Synthetics & Chemicals Pvt. Ltd. V. CCE, Aurangabad (2002 (143) E.L.T. 17 (S.C.). This Court took the view that the case would be governed by the rule laid down in Mafatlal Industries Ltd. (supra). This view has been reiterated in a subsequent judgement of this Court in C.A. No. 2533 of 2001 (Commissioner of Central Excise, Meerut Vs. M/s. Star Paper Mills Limited) upholding the view of the Tribunal that the refund claim of the appellant before the court was justified. Shri Verma fairly concedes that the proviso introduced in sub-rule (5) of Rule 9B cannot be said to be retrospective in operation. He, however, contends that on the date on which the proviso was brought into force, i.e. 25/6/1999, the refund claim was still pending with the departmental authorities and, therefore, it had to be adjudicated in accordance with the law as it became enforceable from 25/06/1999. In our view, this contention cannot be accepted. Merely because the departmental authorities took a long time to process the application for refund, the right of the appellant does not get defeated by the subsequent amendment made in sub-rule (5) of Rule 9B. The Commissioner of Central Excise and the CEGAT were, therefore, justified in holding that the claim for refund made by the appellant had to be decided according to the law laid down by this Court in Mafatlal Industries Ltd. (supra and would not be governed by the proviso to sub-rule (5) of Rule 9B.
8. In view of the above discussion, we find that the rejection of refund claims by the lower authority is not sustainable hence set aside. The appellants are entitled for the refund in question subject to verification of amounts. Impugned order is set aside and the appeal is allowed.
(Operative part of the order is already pronounced in the open court)
Sd/- Sd/-
S.K.GAULE S.S. KANG
Member (Technical) ( Vice President)
k.b/-
Excise Appeal No. EDM-420/05
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