[26/07, 12:20] Sekarreporter: 👍 [26/07, 12:21] Sekarreporter: * THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HON’BLE SRI JUSTICE NARSING RAO NANDIKONDA +CENTRAL EXCISE APPEAL NO.41 OF 2008 %12-06-2025 # VST Industries Ltd, Azamabad, Hyderabad. …Appellant Vs. $ Commissioner of Customs & Central Excise, Hyderabad-II Commissionerate, 7th Floor, Kendriya Shulk Bhavvan, Basheerbagh, Hyderabad – 500 004 …Respondent !Counsel for the Appellant: Ms.L.Maithili ^Counsel for the Respondent : Sri A.Ramakrishna Reddy, Learned Standing Counsel for CDEC. Head Note: ? Cases referred: 1. 1997 (94) E.L.T. 495 2. 1999 (114) ELT 162 (Tri.) 3. 2023 (385) ELT 94 SC 4. 2023 (384) ELT 626 SC 5. 2010 (252) ELT 502 (Cri) 6. 1997 (89) ELT 247 SC 7. 2006 (203) ELT 532 (SC) para 12 8. 1991 (51) ELT 278 9. Manu/OR/0616/2008, dated 18.03.2008 10. Civil Appeal No.2416 of 2000 & batch, dated 06.08.2003 11. 2003 (156) ELT 161 (SC) HIGH COURT FOR THE STATE OF TELANGANA, AT HYDERABAD MAIN CASE NO: CENTRAL EXCISE APPEAL NO.41 OF 2008 Between: VST Industries Ltd, Azamabad, Hyderabad. .. Appellant And Commissioner of Customs & Central Excise, Hyderabad-II. .. Respondent DATE OF JUDGMENT PRONOUNCED: 12.06.2025 SUBMITTED FOR APPROVAL: THE HON’BLE SRI JUSTICE NARSING RAO NANDIKONDA 1. Whether Reporters of Local news papers Yes/No may be allowed to see the Judgments? 2. Whether the copies of judgment may be Yes/No marked to Law Reporters/Journals 3. Whether Their Ladyship/Lordship wish to Yes/No see the fair copy of the Judgment? __________________________________________ JUSTICE NARSING RAO NANDIKONDA THE HON’BLE SRI JUSTICE P.SAM KOSHY AND THE HON’BLE SRI JUSTICE NARSING RAO NANDIKONDA CENTRAL EXCISE APPEAL NO.41 OF 2008 JUDGMENT: (per Hon’ble Sri Justice Narsing Rao Nandikonda) This appeal has been filed under Section 35G of the Central Excise Act, 1944 (for short, ‘the Act, 1944’) against the Final Order No.731 of 2007, dated 28.06.2007, in Appeal No.E/408/2005 on the file of Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore, whereunder and whereby, the appeal filed by the appellant for refund of claim for an amount of Rs.1,12,30,127/- for the period from 01.03.1986 to 30.09.1994, was rejected in respect of excess of duty paid by it on printed shells used as inputs in manufacture of Cigarettes packed in packets 2. Heard Ms.L.Maithili, learned counsel for the appellant and Sri. A.Ramakrishna Reddy, learned Standing Counsel for CDEC, appearing for the respondents. 3. Brief facts of the case are that the appellant is a limited company registered under the Hyderabad Companies Act, IV of 1320 Fasli, having its Registered Office and Factory at Azamabad, Hyderabad. It manufactures cigarettes falling under Chapter 24 of the Central Excise Tariff Act, 1985 (for short, the Act, 1985’). It also manufacture shells which are consumed captively in packing of cigarettes, which are sold in packets of 10s or 20s on the basis of MRP printed on such packets. As per the Act, 1985, the appellant sought classification of shells under Chapter 49 and filed a classification list accordingly on 03.03.1986. Upon which, the jurisdictional Assistant Commissioner vide its letter C.No.V/48/17/12/86-Vo.II, dated 14.03.1986 classified that under Chapter sub-heading 4818.13, for which the appellant vide its letter, dated 14.03.1986 agreed to pay duty @15% advance, applicable to Chapter sub-heading 4818.13 under protest subject to the final outcome of the appeal pending on the issue of classification, which according to the appellant should be under Chapter 49. It is the further case of the appellant that since the classification issue was not decided finally till 1995 and as prices were based on costing method under Rule 6(b)(ii) of the then Central Excise Valuation Rules, 1975, no final assessment was done. Therefore, the appellant challenged the Department’s classification by filing appeal before the Commissioner (Appeals), who upheld the stand of the Department. Aggrieved by the said order, the appellant filed appeal before the Customs Excise & Gold (Control) Appellate Tribunal (CEGAT), New Delhi. On 31.08.1995, CEGAT disposed of the appeal vide Final Order Nos.253 to 256/95C holding that the disputed items were classifiable under sub-heading 4848.90 upto 29.02.1988 and under subheading 4823.90 from 01.03.1988 onwards. The said classification was accepted by the appellant and sought for refund of excess duty paid by it by addressing letter, dated 26.12.1995 to the Assistant Commissioner of Central Excise, Division V, Hyderabad. In the said letter it is stated that since the dispute between the company and the Department has been finally resolved by CEGAT, the work sheets based on reclassification of shells have been constructed for the periods from 01.03.1986 to 30.09.1994 i.e., from the date of introduction of Act, 1985 till the closure of shells manufacturing activity in respondent factory premises, and a differential duty of Rs.1,12,30,127.47 representing the difference between the duties paid and the duty payable in terms of CEGAT order. In response to the said letter, the Superintendent (Tech), Central Excise, Hyderabad-V Division, gave reply vide, letter, dated 03.01.1996 asked the respondent-company to furnish documents i.e., PLA Register from March, 86 to March, 94, documentary evidence to prove that the respondent-company has not passed on the burden of the Central Excise Duty on its customers as required under Section 12-B of the Central Excise and Salt Act, 1944 and also furnish the documentary evidence to prove that they have followed the procedure while paying duty under protest as required under Rule 233-B of the Rules, 1944. Thereafter, on 16.04.1996, the Assistant Commissioner of Central Excise, Division V, Hyderabad, issued show cause notice to the appellant stating that on verification of refund claimed by it, as no documentary evidence is available to prove that the excise duty paid by it was not passed onto the final customers and as the said goods were utilized by it for captive consumption within the factory in manufacture of cigarette, there is no sale of the goods and requested the appellant to produce all the evidence upon which they intend to reply in support of their defence at the time of hearing of the case The appellant gave reply on 30.05.1996 to the show-cause notice, dated 16.04.1996, which reads thus: “8) It is out of contention that the principles of unjust enrichment do not apply in the instant case as the issue here relates to classification of shells which are only used as inputs in the manufacture of cigarettes packed in packets and are not sold by us to the ultimate consumers. They are only one of the many inputs that go into the manufacture of cigarettes packed in packets which we sell to the customers. It is a well settled principle that where the goods are only used for captive consumption or as inputs in the manufacture of other finished goods, the question of unjust enrichment does not arise. 10. Applying these principles to the present case the duty paid shells are captively consumed by the manufacturer of cigarettes. Since, they are not sold to the consumer to whom the incidence of duty can be passed on directly together with the right to receive the refund, the principles of unjust enrichment cannot apply in this case. 13. It is therefore, contended that as the principles of unjust enrichment embodied in the Act do not apply to shells, we are entitled to the refund of the differential duty as claimed and our Refund claim should be accordingly allowed.” 4. After receipt of the said reply, the Assistant Commissioner of Central Excise, Hyderabad, passed an order, dated 30.05.1997, vide C.No.V/48/18/3/96-R, rejecting refund claim of the appellant. Against which, an appeal being A.No.427/97 (H) CE, dated 17.05.1999 was preferred against the order in Appeal No.57/99 (H-III) CE and the learned Commissioner of Customs and Central Excise (Appeals) Lal Bahadur Stadium Road, Basheerbagh, Hyderabad, dismissed the said appeal holding that on verification of refund claim in the instant case, it was noticed that no documentary evidence is available to prove that excise duty paid on shells was not passed onto the final customers. The shells were used in relation to the packing of Cigarettes for the purpose of selling the same. To arrive value of the cigarettes, normally among other ingredients, the basic cost of the shells plus central excise duty would be paid at the relevant time and the same be taken into account. The appellant has not disputed same. It appears that the duty paid on shells was included in the price of the Cigarettes and finally the incidence of duty was not borne by the appellant. But the burden of payment of excise duty was shifted onto the final customers. It is further stated that as per the provisions of Section 12B of Central Excise & Salt Act, 1944 (for short, ‘the Act, 1944’), every person who paid the duty of excise on any goods under the Act shall unless contrary is proved, it is deemed to have passed on the full incidence of such duty to the buyers of such goods. Further, it was held that the appellant has passed on the duty incidence to the final customer and such amount so accrued shall be credited to the Consumer Welfare Fund in terms of Section 11D of the Act, 1944, which reads as follows: “7. The appellant is a manufacturer of cigarettes falling under Chapter 24 of the Central Excise Tariff. Cigarettes are sold in packets of 10s or 20s on the basis of MRP printed on such packets with Central Excise Tariff Act, 1985, which came into effect from 28.02.1986. The appellant sought classification of shells under Chapter-49, rate of duty-NIL and filed a classification list accordingly on 03.03.1986. The jurisdictional Assistant Commissioner vide letter C.No.V/408/17/12/86-Vol.II, dated 41.03.1986 classified the same under Chapter subheading 4818.13. The appellant vide its letter, dated 14.03.1986 agreed to pay duty @ 15% advance applicable to Chapter sub-heading 4818.13 under protest subject to the final outcome of the appeal pending on the issue of classification, which according to the appellant should be under Chapter 49.” 5. As there was no classification decided till 1995, the appellant is paying duty under protest and there is no final assessment also done. Further, the appellant challenged the department’s classification by filing an appeal before the Commissioner (Appeals), New Delhi, wherein the CEGAT, New Delhi, vide order No.253 to 256/95-C, dated 31.08.1995 properly classified under chapter sub-heading 4818.90 from 01.03.1986 to 29.02.1988 and under chapter sub-heading 4823.90 from 01.03.1988 attracting duty @12% which was later reduced to 10%. As such, re-classification of the appeal has become final. Subsequent to re-classification, the appellant filed refund claim for excess amount of Rs.1,12,30,127/- paid under protest for the period from 01.03.1986 to 30.09.1994. After issuing show-cause notice, the learned Assistant Commissioner passed an order inoriginal bearing C.No.V/48/3/96-R, dated 30.05.1997 rejecting the refund claim under the provisions of Section 11B and ordered to be deposited in the Consumer Welfare Fund in terms of Section 11B of the Act, 1944. Against which, the appellant filed an appeal before the Commissioner of Central Excise Appeals, who upheld the order in Appeal No.57/99 (HIII) CE, dated 17.05.1999 rejecting the claim over the appellant on the purported ground of ‘unjust enrichment.’ The appellant carried the matter in appeal before CESTAT, who set aside the order and remanded the matter back with a direction to ascertain whether the duty paid by the appellant was under protest or not and directed to pass orders afresh. Thereafter, the Commissioner (Appeals) Hyderabad vide Appeal No.12/2005 (H-II) CE dated 31.01.2005 rejected the entire refund claim on the ground that the payment under protest was on the question of classification advanced by the appellant. 6. The main contention of learned counsel for the appellant is that the assessment made was only provisional as on 14.03.1986 and the same stood effectively finalized on 17.04.1996 i.e., the date of the Show Cause Notice as to why refund should not be rejected on the ground of ‘unjust enrichment’ or at any rate by 30.05.1997. She also contended that once the assessment is provisional, it remains provisional in its entirety and cannot be partly provisional and partly final. In support of her contentions she relied upon the judgment of the High Court of Madras in Collector of Central Excise, Madras v. India Tyre Rubber Company Limited , wherein at paragraph No.4 it was held as under: “We find that the issue that has been referred to for our consideration is no longer res integra and the matter is covered by more than one decision of the Apex Court and the larger Bench of the Tribunal constituted under the Act. In the light of the judgment of the Apex Court reported in Samrat International (P) Ltd. V. Collector of Central Excise – MANU/SC/0544/1992 : 1991ECR19 (SC) and the subsequent decision MANU/CE/0112/1191 which came to be rendered by the Larger Bench of the Tribunal under the Act after considering not only the decision of the Apex Court noticed supra, but also several other judgments. We have to answer the question referred to us in the negative and hold that the provisional assessment made should for all purposes to be treated as provisional and not necessarily provisional in respect of the particular ground considered. No costs.” 7. She further contended that there is no legal basis to provisionally assess valuation while treating the classification separately. Rule 9B of the Rules, 1944, mandates a single order for finalization as held by CESTAT in CCE Madras v. Enfield India Ltd . Further, it is settled position of law that provisional assessment must be finalized comprehensively covering both classification and valuation and it cannot be partially finalized as held in appellant’s own case in CCE, Hyderabad v. VST Industries Limited (Final order No.A/30848/2018 in Appeal No.E/1219/2010) and contended that the order dated 30.05.1997, effectively concluded the proceedings under Rule 9B(5) of Rules, 1944 on adjusting the provisionally paid duties with the finally assessed duties, thereby finalizing the provisional assessment. However, the refund was rejected on the ground of ‘unjust enrichment.’ She further contended that in the present case, the principle of ‘unjust enrichment’ is inapplicable prior to 25.06.1999 as proceedings under Rule 9B of the Rules, 1944 and the issue in this case is no longer res integra. She also relied upon the judgment of the Hon’ble Supreme Court in Commissioner of Customs v. Mangalore Refinery and Petrochemicals Limited reiterating that as claim for refund is arising out of finalization of provisional assessment prior to 25.06.1999, the principle of ‘unjust enrichment’ does not arise. She also relied upon the judgment of the Hon’ble Supreme Court in CCE v. Hindustan Zinc Ltd . Though the Department alleged that the appellant failed to prove that the duty was not passed on to the customers, however, in the case of CCE. C & ST Bhubaneswar-I v. Paradeep Phosphates Limited , the High Court agreed with the contention stating that “the assessee cannot be said to be guilty of ‘unjust enrichment’ and need not furnish documents to prove that they have not passed on the excise burden to customers.” She also further argued that the said ruling is relevant in the present case for the reason that the assessment was provisional and the appellant was not required to provide proof during the provisional assessment stage. She further argued that the refund application has been made on 16.12.1995 and it was finalized before 1997, and as such neither Section 11B of the Central Excise Act nor the subsequent amendment to Rule 9B of the Rules, 1944 would be attracted for invocation of the principle of ‘unjust enrichment.’ 8. Further, she also relied on a judgment of the Hon’ble Supreme Court in Mafatlal Industries Limited v. Union of India , wherein it expressly held that refunds arising from provisional assessment adjustments are not covered under Section 11B Central Excise Act. She also further argued that the impugned order is erroneous and it travels beyond the scope of the show cause notice and it is liable to be set aside. The only allegation raised in the show cause notice, dated 16.04.1996 is as to why the refund already determined should not be rejected on the ground of ‘unjust enrichment’ and the show cause notice did not dispute the provisional assessment or its finalization or the quantum assessed. The only issue raised was whether the refund was barred by ‘unjust enrichment.’ 9. She also further argued that the CESTAT had no jurisdiction to introduce such an issue for the first time when it was neither subject dispute, nor was it part of hearing before it. The observation was that “these points were not made before the lower authorities” was also mechanically mentioned without verifying the records, and by losing sight of the fact that no authority had ever disputed finalization of assessment at any stage. She further contended that the department actively processed the refund claim itself presupposes that the provisional assessment was finalized. Therefore, the observation made by the CEGAT in the order with regard to refund for finalizing classification is erroneous, as Departmental actions constitute finalization of provisional assessment, making refund due under Rule 9B (5) of the Rule, 1944. She further argued that finalization of provisional assessment is sine qua non observed by the Hon’ble Supreme Court in CCE & Customs, Mumbai v. ITC Limited and she finally argued that the Department cannot by any stretch of the imagination claim that the assessment remains provisional after 30 years without concrete evidence. The refund quantification sheet and RT-12 returns unequivocally demonstrate that the duties were initially paid provisionally at 15%, as also endorsed therein and was always paid under protest. She argued that the CBEC has issued instructions that provisional assessment should be closed within 3-6 months vide Clause 2.7 of Circular No.288/4/97-CX, dated 14.01.1997. For the reasons mentioned above, the revenue department has not placed on record at any point of time any evidence as part of the payments constituted post-clearance under protest. In such circumstances, the burden of proving ‘unjust enrichment’ lies on the department. The department having failed to discharge its burden, cannot improve the doctrine of ‘unjust enrichment’ and placed reliance on the judgment of the Hon’ble Supreme Court in Kirloskar oil Engines limited v. Union of India. 10. On the other hand, learned Standing Counsel for the respondent contended that consequent upon finalization of classification by the Tribunal, the claim of the appellant for refund was rejected by the Assistant Commissioner under the provisions of Section 11 B of the Central Excise Act and ordered the amount to be deposited to Consumer Welfare Fund. ‘Shells’ are used captively in manufacture and packing of cigarettes. He further contended that as no evidence was produced by the appellant as to the value of shell used in the cigarette packets, the rate of duty included was limited to 10% or 12% only and not 15% which was paid under protest. He further contended that the appellant was bound to pay revised duty upon reclassification by CEGAT, he was entitled to lower rate of duty and the amount of duty so paid excess is of not refundable unless it can prove the amount of duty so paid excess. He further submits that the CESTAT was right in giving finding that the refund claim of the appellant has not arisen on account of finalization of provisional assessment and the same arose only on finalization of classification by the Tribunal. The finding given by CESTAT that the clause ‘unjust enrichment’ would be applicable to the appellant as refund has arisen out of CEGAT order and not on finalization of provisional assessment. He further submitted that there is no substantial question of law in the present appeal and therefore, the appellant is not entitled for any relief 11. On proper analysis of entire material placed on record, admittedly, the petitioner’s company is a limited company registered under Hyderabad Companies Act, IV of 1320 Fasli, having its Registered Office and Factory at Azamabad, Hyderabad. It is manufacture of cigarettes falling under Chapter 24 of the Central Excise Tariff. It also manufactures shells which are consumed captively in packing of cigarettes. Cigarettes are sold in packets of 10s or 20s on the basis of MRP. Admittedly, there was a dispute regarding classification of shells under Chapter 49 which states that the duty was NIL and subsequently the same was classified under 3.3.86. The Jurisdictional Assistant Commissioner has classified the same as 48.18.13 and the appellant has already paid duty. It is not in dispute that @15% in advance under sub-heading as per said letter, dated 12.03.1986, he has paid duty under protest and thus matter was carried to CEGAT wherein the learned CEGAT has clarified under sub-heading 4818.90 upto 29-02-1988 and under sub-heading 4823.90 from, 01-03-88 onwards and directing the same under chapter sub-heading 4823.1990 from 01.03.1955 attracting duty @ 12% which was later reduced to 10%. It is also admitted that refund claim is on account of decision of the Tribunal i.e., subject to Section 12-B of the Act of the Central Excise Act, 1944, reads as under: “12B. Presumption that incidence of duty has been passed onto the buyer- Every person who has paid the duty of excise on any goods under this Act shall, unless the contrary is proved by him, he deemed to have passed on the full incidence of such duty to the buyer of such goods.” 12. The appellant vide letter, dated 14.03.1986 has agreed to pay duty at the rate of 15% on the claims made for the period from 01.03.1986 to 13.09.1994. During which period, the said classification was still limited. The main contention of the appellant is that the said product was consumed for the purpose of packaging of cigarettes, they had definitely paid duty under protest. Pursuant to the order passed by the Collector, the appellant is seeking for refund of excess claim made, as it has not extended the incidence of such duty to the buyer of such goods. Admittedly, the cigarettes are only in respect of adjudication of classification but not the valuation of the said goods. It appears that there is no finalization of assessment of the goods, and it was pending only for provisional assessment. Even after classification, it appears that the revenue Department has not made any efforts to finalize the assessment. In the absence of finalization of the assessment, the entire case revolves around refund of the duty which is paid by the appellant. Since the said payments were made provisionally and once the tenancy is fixed, differential duty could be discharged after certification of the actual cost. It is evident from the record that there is no finalization of the same. 13. Finalization or evaluation of entire product or the goods delayed, counsel for the appellant has placed reliance on the judgment cited above. Once the classification has been made, the next step is whether refund of duty was under protest or not. The other aspect is in view of amendment being made to the Central Excise Act 1984, the aspect of ‘unjust enrichment’ came on record. The ‘unjust enrichment’ has come to light and once without finalization of the provisional assessment, the same cannot be treated as an unjust enrichment and the same cannot be rejected. The claim of the petitioners cannot be rejected or refund refused only on the ground that it is amounts to unjust enrichment. Once the assessment is provisional, it is deemed to be on all counts that is not selectively provisional as there is no such provision in Rule 9(b) of the Rules, 1944. As per provisional assessment, duty was paid on receipt of provisional assessment order under protest and the said order is based on assumptions, which cannot be accepted. It is settled proposition of law that as on the date, the principle of ‘unjust enrichment’ is inapplicable prior to 25.06.1999, for such proceedings, under Rule 9 (b) of the Rules, and the issue is no longer re integra. The appellant failed to prove that the duty was not passed on to the customers, as such, it has to be presumed that the said duty was not passed on to the customers, and it amounts to ‘unjust enrichment’. Learned counsel for the appellant made her submissions relying upon the judgment in C.C.E., C. & S.T., Bhubaneswar-I v. Pradeep Phosphates Limited , wherein the High Court of Orissa confirmed that the order passed by the Customs, Excise & Service Tax Appellate Tribunal, dated 25.06.2007 and held that Pradeep Phosphates Limited cannot be said to be guilty of ‘unjust enrichment’ so that they need not be called upon to furnish documents to prove that they have not passed on the excise burden to the customers. Learned counsel for the appellant contended that the said ruling is very much relevant to the present case as the very assessment was provisional. At the stage of provisional assessment, the Appellant need not prove before the authorities that there was no such passing of the duty on to the customers. She also further relied upon the judgment of Commissioner of Central Excise v. T.V.S. Suzuki Limited, Hosur and contended that the delay accounted in finalization of provisional assessment would not defeat the right of the assessees by subsequent amendment of 25.06.1999. She rightly contended that the refund application was made on 16.12.1995 and the same was finalized in the year 1997. It is not the case of the respondent that the said amendment would be applicable retrospectively in respect of the claims which are made prior to 1999, i.e., the date when the amendment has come into force. Neither Section 11B of the Central Excise Act nor the subsequent amendment to Section 9B of the Act, 1944 would be attracted for invocation of the principle of ‘unjust enrichment’ parallel to Mafatlal Industries case (supra). 14. Section 11B of the Central Excise Act, 1944 reads as follows: “11B. Claim of refund of [duty and interest, if any, paid on such duty].- (1) Any person claiming refund of any (duty of excise and interest, if any, paid on such duty) may make an application for refund of such (duty and interest if any, paid on such duty) to the (Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise) before the expiry of (one year) (from the relevant date) (( in such form and manner) as may be prescribed and the application shall be accompanied by such documentary or other evidence to establish that the amount of “(duty of excise and interest, if any, paid on such duty) in relation to which such refund is claimed was collected from or paid by him and the incidence of such (duty and interest if any, paid on such duty) had not been passed on by him to any other person: 15. Section 9B of the Central Excise Act, 1944 reads as follows: “9B. Power of Court to publich name, plac of business etc., of persons convicted under the Act.- (1) Where any person is convicted under this Act for contravention of any of the provisions thereof, it shall be competent for the Court convicting the person to cause the name and place of business or residence of such person, nature of the contravention, the fact that the person has been so convicted and such other particulars as the Court may consider to be appropriate in the circumstances of the case, to be published at the expense of such person, in such newspapers or in such manner as the Court may direct. (2) No publication under sub-section (1) shall be made until the period for preferring an appeal against the order of the Court has expired without any appeal having been preferred, or such an appeal, having been preferred, has been disposed of. (3) The expenses of any publication under sub-section (1) shall be recoverable from the convicted person as if it were a fine imposed by the Court)” 16. As it is observed from the entire material on record that the excess duty which was paid by the appellant is not an excess payment and it is only basing on the provisional assessment made under Section 9B of the Act, 1944. Therefore, the question of ‘unjust enrichment’ could not attract for the reason that the Hon’ble Supreme Court in the case of Commissioner of Central Excise, Chennai v. T.V.S.Suzuki Ltd , wherein it was held that the concept of ‘unjust enrichment’ could not be finalized by way of provisional assessments. It was also held that the provisions of sub-rule (5) of Rule 9B erstwhile Central Excise Rules, 1944 cannot be said to be retrospective in operation. The Hon’ble Supreme Court also introduced sub-rule (5) of Rule 9B of the Rules, 1944. The proposal came into force on 25.06.1999 and the authorities concerned and the Hon’ble Supreme Court have rejected the contention of the Department that the refund claim should be adjudicated in accordance with the law as enforced on 25.06.1999 and the Hon’ble Supreme Court upheld the decision to decide according to the law laid down in Mafatlal Industry’s case (supra), wherein it was held that the burden of proof is passed onto the Department to show that the appellant has passed on the duty incident to final customers. The facts and the relevant material placed before this Court. Undoubtedly, the said payment was made under protest and subject to assessment of the said product, the appellant was entitled for refund the same. But initially, the same was rejected on the ground that there was an ‘unjust enrichment’, and there is no proof filed by the appellant to show that the duty paid was passed on to the consumer. The said aspect of ‘unjust enrichment’ was neither raised earlier nor proceedings were initiated as on the date of the finalization of the final assessment and the same was subsequent to 25.06.1999. 17. In the present case, the refund application is made on 16.12.1995 and it was not finalized till 1997. As such, Section 11 (b) of the Act 1944 is applicable or subsequent amendment of Rule 9(b) of the Rule, 1944 would be attracted for invocation of principle of ‘unjust enrichment’. The contention of the respondent is that the appellant has not entertained for refund on the ground of ‘unjust enrichment.’ When the same itself is not applicable to the present facts of the case, the question of unjust enrichment itself is not applicable. Therefore, the question of burden of proving that the said duty was not passed on to the customers does not arise and the said amounts are paid by the appellant under protest. It is contended that the said product was only for the captive consumption. As the same is being for the captive consumption, the contention of the appellant appears to be just and fair and the same has to be accepted. The intention of the respondent in raising the plea of ‘unjust enrichment’ which is not even applicable to the present set of facts as the same is subsequent to the amendment, which clearly shows that there are mala fides on the part of the respondent. As rightly held, as per Rule 9B (5) of the Rules, 1944, it does not prescribe any specific form or application to seek refund of the claim and that once the provisional assessment has been finalized the proper officer has to make the necessary adjustment. As per Rule 9(d) of the Rules, 1944 as it provides for an automatic benefit to the assessee upon finalization of the assessment. In Photographic’s case, this bench has no hesitation to hold that the provisional assessment was finalized and the refund must be processed automatically upon finalization. In the present case, as we said provisional assessment was already finalized in the year 1997. As provisional assessment is finalized, the necessary prerequisite for refund as held by the Hon’ble Supreme Court in CCE & Customs, Mumbai’s case. 18. Further, it is specifically stated that the refund application, which was placed before the Assistant Commissioner, contains the entire set of documents, such as tax returns, challans PLA register etc. This bench is of the opinion that the assessee is entitled to refund of excess duty paid for finalization of provisional assessment and the contention of the respondent that the appellant is not entitled for the refund on the ground of ‘unjust enrichment’ cannot be accepted for the reasons mentioned above 19. Accordingly, this bench, after considering the entire material and after assessing the facts and circumstances of the case and also the judgments cited, is of the considered opinion that the appellant has made out a ground to interfere in the impugned order. 20. Accordingly, the appeal is allowed and the Final Order No.731 of 2007, dated 28.06.2007, in Appeal No.E/408/2005 on the file of Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore, is set aside and the respondent is directed to refund the amount of Rs.1,12,30,127/- along with interest at the rate of 6% per annum to the appellant from the date of the appellant’s had made the application for refund till the date of realization. There shall be no order as to costs. Miscellaneous petitions, if any, pending in this appeal shall stand closed. _________________________________ JUSTICE P.SAM KOSHY __________________________________________ JUSTICE NARSING RAO NANDIKONDA Date:12.06.2025 Note: L.R.copy to be marked (B/o) YVL

by Sekar Reporter · July 26, 2025