Order Date – 19 December 2023

Parties: JK Tyres & Industries Ltd. Vs Commissioner of Central Excise Mysore II Division

Facts –

• The Appellant, JK Tyres & Industries Ltd., are engaged in the manufacture of pneumatic tyres, tubes and flaps of rubber. They allow various discounts to their customers. Since the exact quantum of discounts are not known at the time of sale, the appellant resorted to provisional assessment in accordance with Rule 7 of the Central Excise Rules, 2002.
• The assessing authority finalise the provisional assessment by netting off the duty for the month, duty short paid is recovered and excess duty paid is allowed as refund subject to verification of fulfilment of the bar of unjust enrichment.
• Aggrieved by the adjustment of excess duty to that of duty short-paid during the period of provisional assessment, the Revenue filed appeals and the appeal was allowed.

Issue –

• Whether adjustment of excess duty paid to short paid in a month pursuant to finalisation of provisional assessment is permissible?

Order –

• The Tribunal observed that the revenue’s argument the duty excess paid cannot be adjusted against the duty short-paid during a particular month/period of assessment to arrive at the net result of refund or liability, may seem attractive in view of the judgment of Hon’ble Madras High Court in TVS Electronics’s case, but the jurisdictional Hon’ble Karnataka High Court in the appellant’s own case taking note of the judgment of the Hon’ble Supreme Court in Addison & Co. Ltd. case and in the context of finalisation of provisional assessment for different period of the same assessee held that “the refund amount arising due to provisional assessment be subjected to unjust enrichment.”
• Further, the said judgment of the Hon’ble Karnataka High Court has been accepted by the Revenue as communicated through their letter dated 17.11.2023. Needless to mention, the principle laid down by the jurisdictional High Court is binding on the Tribunal in view of the judgment of the Larger Bench of the Tribunal in the case of Collector of Central Excise, Chandigarh vs. Kashmir Conductors: 1997 (96) E.L.T. 257 (Tri.-LB).
• Following the said judgments, the impugned order is set aside and the appeals are allowed.