Jyothi Laboratories Ltd vs Commissioner Of Central Excise

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH CHENNAI

Appeal No.E/127/2007 & E/99/2008

[Arising out of Order-in-Appeal No.112/2006 (P) dt. 27.12.2006 and Order-in-Appeal No.175/2007 (P) dt. 28.11.2007 both passed by the Commissioner of Central Excise (Appeals), Chennai]

Jyothi Laboratories Ltd. Appellant

Versus

Commissioner of Central Excise, Pondicherry Respondent

Appearance:

Shri Sai Prasanth, Advocate For the Appellant

Shri L. Paneerselvam, AC (AR) For the Respondent

CORAM :

Honble Shri R. Periasami, Technical Member Honble Shri P.K. Choudhary, Judicial Member

Date of Hearing/Decision : 27.7.2015

FINAL ORDER No.40918-40919/2015

Per R. Periasami

The issue involved in both the appeals is common and hence they are taken up together for disposal.

2. The issue relates to finalization of provisional assessment and demanding differential duty without adjustment of excess payment made against while finalising the assessment in a particular year.

3. Heard both sides. The Ld. Counsel for the appellant submits that in the first appeal, the adjudicating authority demanded short-payment of duty without adjusting excess duty of Rs.6,48,856/- paid by them during 1.11.2004 to 31.3.2005. In the second appeal, while finalising the provisional assessment for the year 2005-06, he demanded differential duty of Rs.5,29,954/- without taking into account payment of excess duty of Rs.2,76,496/-. He submits that the issue is already settled and decided by this Tribunal in the case of Jonas Woodhead & Sons (I) Ltd. Vs CCE Chennai-IV 2015-VIL-344-CESTAT-CHE-CE and also Karnataka High Court's decision in the case of Toyota Kirloskar Auto Parts Pvt. Ltd. Vs CCE LTU, Bangalore  2012 (276) ELT 332 (Kar.) = 2012-TIOL-10-HC-KAR-CX.

4. On the other hand, the Ld. A.R submits that adjustment of duty can be considered provided there is no applicability of unjust enrichment. Further, he relied the case law in the case of Excel Rubber Ltd. Vs CCE 2011-TIOL-536-CESTAT-DeL-LB. He also cites Hindustan Zinc Ltd. Vs CCE Jaipur  2015-TIOL-44-CESTAT-Del which stands referred to a Third Member for final orders.

4. After hearing both sides, we find the issue relates to finalization of provisional assessment and adjustment of excess paid and short paid and this issue has already been settled by the decision of the Hon'ble High Court in the case of Toyota Kirloskar Auto Parts Pvt. Ltd. Vs CCE LTU, Bangalore (supra) and this Tribunals final order in Jonas Woodhead & Sons (I) Ltd. (supra) which followed Hon'ble Karnataka decision in Toyota Kirloskar auto Parts (supra). The relevant para of the Tribunal's order in Jonas Woodhead case is reproduced as under :-

" .... 3.2 So far as the moot question of adjustment of excess payment of duty against short payment thereof is concerned, the ratio laid down in the judgment of the Hon'ble High Court of Karnataka (supra) read with mandate of Rule 7 of the Central Excise Rules, 2002, leads to the conclusion that there is no warrant in law to deal with the consequence of each clearance on case to case basis to determine shortage and excess of payment of duty and consequence thereof. The ultimate duty liability of a relevant period is to be determined in final assessment taking into consideration entire clearance of that period in aggregate and if there arises excess payment of duty upon such finalization of making due adjustment, that shall be refundable. Hon'ble High Court examining the issue, in the case of Toyota Kirloskar case (supra) in para 9 of judgment held as under:-

"9. In the instant case, admittedly for certain items the Adjudicating Authority has held the short fall in payment of duty after the final assessment order as Rs. 10,63,417/-. In respect of other items, the assessee has paid Rs. 1,77,20,157/- in excess. But before imposing interest, the authority should have deducted the short fall in the excess payment made. If there is no short fall in payment of duty, payment of interest does not arise. They have treated the duty payable under two categories. It was found in respect of some items the duty payable after the final order is more than what was paid under provisional assessment. The approach of the authorities in this regard is erroneous, unwarranted and unsupported by any statutory provision. If we keep in mind the principle underlying the provisions, it is only when the duty is due and it is not paid within the stipulated time and the duty is paid thereafter, in order to compensate the revenue, interest is imposed. If that is to be kept in mind, in the instant case, when the assessee has paid a sum of Rs. 1,66,56,740/- excess duty which is entitled to claim refund, he cannot be taxed with payment of excess duty in the form of interest. The entire approach of the department is unreasonable, contrary to the scheme of the Act and negatives the principle underlying these provisions. Therefore, all the authorities were in error in levying and upholding the levy of interest."

In view of the reasoning given by the Hon'ble High Court of Karnataka as above, all the appeals on the point of adjustability of excess payment of duty against shortage of duty paid is allowed and excess duty paid is refundable without bar of unjust enrichment applicable."

5. By respectfully following the Honble Karnataka High Court decision in the case of Toyota Kirloskar (supra), and this Tribunal's order (supra), we hold that appellants are eligible for adjustment of excess duty paid while finalizing the provisional assessment for the year 2005-06 and for the subsequent years question of unjust enrichment does not arise. Accordingly, the impugned orders are set aside and appeals are allowed with consequential relief.

(Dictated and pronounced in open court)

(P.K. CHOUDHARY) (R. PERIASAMI) JUDICIAL MEMBER TECHNICAL MEMBER

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