Custom, Excise & Service Tax Tribunal
M/S. Titan Industries Ltd vs Commissioner Of Central Excise, ... on 24 March, 2009
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal Nos. E/49/2002
(Arising out of Order-in-Appeal No.104/2001 (M-III) dated 28.8.2001 passed by the Commissioner of Central Excise (Appeals), Chennai)
For approval and signature:
Honble Smt. Jyoti Balasundaram, Vice President
Honble Shri P. Karthikeyan, Member (T)
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 the Members wish to see the fair copy of the Order?
4. Whether Order is to be circulated to the Departmental authorities?
M/s. Titan Industries Ltd. Appellants
Vs.
Commissioner of Central Excise, Chennai Respondent
Appearance Shri R. Raghavan, Advocate for the Appellants Shri V.V. Hariharan, Jt. CDR, for the Respondent CORAM Honble Smt. Jyoti Balasundaram, Vice-President Honble Shri P. Karthikeyan, Member (T) Date of Hearing: 24.03.2009 Date of Decision: 24.03.2009 Final Order No. ____________ Per P. Karthikeyan The appellants M/s. Titan Industries Ltd., Watch Division, Hosur manufactured and cleared watches and watch parts in wholesale paying excise duty leviable on their end consumer price (ECP, sale price) following provisional assessment. Such goods similarly stock transferred by the assessees Dehradun unit and watch parts sourced also through imports were sold from outlets situated in Bangalore etc. Assessment of these goods was finalized periodically, after the close of the financial year when the items of expenditure of the outlets such as discount, octroi, cost of transportation allowed on sale of these goods by these outlets were available. Vide Order-in-Original No.109/96 dated 28.6.1996, the original authority identified the admissible deductions from ECP and determined their respective percentages of the ECP adopted for assessment at the time of their clearances from the factory. The assessee staked claim for more items of abatement and filed appeal before the Commissioner (Appeals). The Commissioner (Appeals) vide Order-in-Appeal No. 314/98 (M-III) dated 19.6.98 allowed certain additional items of abatement. Thereupon the assessee claimed refund of the duty paid on the abatements admissible as per the order of the Commissioner (Appeals). This claim was rejected as barred by limitation and on account of unjust enrichment. Yet another ground for the rejection of the refund claim was that the assessee had worked out the percentages of abatements admissible taking into account expenditure of the outlets including that incurred on sales of watches and parts sourced from the assessees Dehradun unit. Vide the impugned order the Commissioner (Appeals) sustained the order of the original authority.
2. Heard both sides. We find that the claim for refund arose pursuant to finalization of provisional assessment. The relevant statutory provisions contained in Rule 9B at the material time read as follows:-
Rule 9B Provisional assessment to duty (1).. ......................................................................................................................................................................................................................
(5) When the duty leviable on the goods is assessed finally in accordance with the provisions of these rules, the duty provisionally assessed shall be adjusted against the duty finally assessed, and if the duty provisionally assessed falls short of, or is in excess of the duty finally assessed, the [assessee] shall pay the deficiency or be entitled to a refund, as the case may be.
The Tribunal in the case of Shriram Pistons & Rings Ltd. Vs. Commissioner of Central Excise, Ghaziabad - 2003 (152) ELT 359 decided that there was no need for the assessee claiming refund of the excess duty paid ascertained on finalization of provisional assessment. The Tribunal observed as follows:
We are constrained to observe that the direction given therein to file refund claim is totally unwarranted in view of the provisions contained under Rule 9B of the Central Excise Rules, 1944. The above rule relates to the provisional assessment to duty. Sub-rule 5 reads as under:-
When the duty leviable on the goods is assessed finally in accordance with the provisions of these rules, the duty provisionally assessed shall be adjusted against the duty finally assessed and if the duty, provisionally assessed falls short of, or is in excess of the duty finally assessed, the assessee shall pay the deficiency or be entitled to a refund, as the case may be. provisional assessment without the assessee making a claim for refund. The above rule envisages an order of refund to follow finalisation of the A direction, as contained in the order dated 14-7-2000 would only help in multiplicity of the proceedings which is not warranted by the statutory provisions. The decision is to the effect that the assessing officer was required to determine and allow the excess duty, if any paid, on finalization of provisional assessment. Requiring the assessee to file refund claim entailed avoidable multiplicity of proceedings. We also find that the apex Court in para 95 of its judgment in Mafatlal Industries case reported in 1997 (89) ELT 247 (SC) made the following observations :
95 Rule 9B provides for provisional assessment in situations specified in Clauses (a), (b) and (c) of sub-rule (1). The goods provisionally assessed under sub-rule (1) may be cleared for home consumption or export in the same manner as the goods which are finally assessed. Sub-rule (5) provides that when the duty leviable on the goods is asssessed finally in accordance with the provisions of these Rules, the duty provisionally assessed shall be adjusted against the duty finally assessed, and if the duty provisionally assessed falls short of or is in excess of the duty finally assessed, the assessee shall pay the deficiency or be entitled to a refund, as the case may be. Any 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. However, if the final orders passed under sub-rule (5) are appealed against - or questioned in a writ petition or suit, as the case may be, assuming that such a writ or suit is entertained and is allowed/decreed - 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) re-agitating the issues already decided under Rule 9B - assuming that such a refund claim lies - and is allowed, it would obviously be governed by Section 11B. It follows logically that position would be the same in the converse situation. Thus the refund of the excess duty paid under Rule 9(B)(5) was not governed by the provisions of Section 11B of the Central Excise Act (the Act). This implied that the excess duty paid determined by the assessing officer had to be granted as refund to the assessee without the assessee making a claim. Only the differential duty allowed as consequential relief following a successful appeal against the order of finalization granting refund by the proper officer under Rule 9(B)(5) is governed by the provisions of Section 11B. In the instant case, even though the original authority finalized the provisional assessment of clearances in the year 1994 95 vide Order-in-Original No. 109/96 dated 28.9.1996, the refund due was not sanctioned. The assessee was forced to file a claim for the excess duty paid, in October 1999. This is not a claim independent of the issues involved in provisional assessment and so governed by Section 11B. We find that under various instructions issued by the CBEC, for example, Circular No. 288/4/97-CX| dated 14.1.1997 and Circular No. 382/15/98-CX dated 19.3.1998, the field officers were directed to finalize provisional assessment within three months/six months. At present the relevant rule provides that provisional assessment should be finalized within six months of ordering it and in cases where such finalization is not possible, the proper officer should obtain permission for continued provisional assessment from the jurisdictional Chief Commissioner. In view of the ratio of the decision of the Tribunal in Shriram Pistons & Rings Ltd. Vs. Commissioner of Central Excise, Ghaziabad (supra) and the apex Courts judgment in Mafatlal Industries case we hold that refund of the excess duty paid by the assessee while clearing watches and parts during 1994 95 is not governed by Section 11B at the time when the provisional assessment was finalized. Therefore, we hold that the finding that the claim for refund was barred by limitation is not sustainable.
3. As regards unjust enrichment, the apex Court held in Mafatlal Industries case that Section 11B did not apply to grant of refund arising out of finalization of provisional assessment. In the instant case the assessment was finalized before 25.6.99 when Rule 9(B) cases of refund were brought under the purview of Section 11 B of the Act by amendment of the provisons. During the material time there were no provisions requiring an assessee to file claim for refund of excess duty paid. In the circumstances we hold that the assessee has to be allowed the excess duty determined to have been paid on the impugned clearances of watches and parts made by the appellants during the year 1994 95 without their having to satisfy the authorities that such refund would not entail unjust enrichment of the assessee.
4. As regards the objection of the authorities that the appellants had claimed amount of each abatement based on a percentage of ECP ascertained considering the total sales of the outlets and expenditure under each head such as freight and discount, instead of ascertaining the expenses incurred by the outlets relatable to the clearances by the appellant (Hosur Division) and the applicable percentage, we find that the authorities have taken a legally correct stand. Accordingly we allow the appeal by way of remand for allowing the refund after ascertaining the eligible amount as above. The appellants shall be allowed an effective opportunity for presenting their case by the original authority before taking a fresh decision. The appeal is disposed of.
(Operative portion of the order was pronounced
in open court on 24.3.2009)
(P. KARTHIKEYAN) (JYOTI BALASUNDARAM)
Member (T) Vice President
Rex
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