Case Law Details
Indian Oil Corporation Ltd Vs C.C.E. & S.T (CESTAT Ahmedabad)
The case of Indian Oil Corporation Ltd vs C.C.E. & S.T (CESTAT Ahmedabad) revolves around the question of whether a refund claim for excise duty, paid under protest, is barred by limitation. The key issue also involves the withholding of the refund claim by the department due to the pendency of an appeal in the Supreme Court.
Background: Indian Oil Corporation Ltd (IOCL) had collected an amount under the head of other charges for warehouse goods, on which excise duty was not paid. The department contended that duty should be paid on these other charges. IOCL paid an amount of Rs. 93,36,942 “under protest” based on an audit and informed the department. Subsequently, IOCL filed a refund claim for the same amount, asserting that it was not payable, citing a favorable decision by the Hon’ble CESTAT in another case.
The Assistant Commissioner of Central Excise, Surat, rejected the refund claim on the grounds that the CESTAT order in favor of IOCL’s terminal at Siddhpur had been challenged by the department and was pending in the Supreme Court. Additionally, it was argued that the refund claim, filed on 18.09.2012, was beyond the six-year limitation period. The Commissioner (Appeals) upheld this decision, leading to IOCL’s appeal.
Key Issues and Findings:
i. Limitation and Payment Under Protest: The primary issue was whether the refund claim filed by IOCL was time-barred under section 11B of the Central Excise Act, 1944. IOCL had paid the excise duty under protest, and it was contended that the limitation did not apply in such cases. Several legal precedents and circulars were cited to support this argument. The tribunal held that when duty is paid under protest, it does not fall within the scope of section 11B, and therefore, the limitation did not apply.
ii. Withholding of Refund During Appeal: The department had withheld the refund claim pending an appeal in the Supreme Court challenging the CESTAT’s decision in IOCL’s favor. The tribunal emphasized that merely filing an appeal does not warrant the withholding of a refund. It cited Central Board of Excise and Customs circulars that stated that unless a stay order is obtained from a higher court, a refund cannot be held in abeyance. Therefore, the withholding of the refund was deemed unjustified.
Conclusion: The decision in the Indian Oil Corporation Ltd vs C.C.E. & S.T case highlights the significance of payment under protest in excise duty matters and its impact on the applicability of limitation under section 11B. When duty is paid under protest, it falls outside the scope of limitation. Additionally, the case underscores that the mere filing of an appeal by the department does not authorize the withholding of a refund unless a stay order is obtained from a higher court.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The issue involved in the present case is that whether the refund claim filed by the appellant is barred by limitation, when the excise duty for which the refund sought for was paid under protest.
1.1 The brief facts of the case are that in respect of warehouse goods the appellant was collecting an amount under head of other charges on which excise duty was not paid. The department’s contention was that the duty on such other charges is required to be paid. On the basis of the audit, the appellant paid an amount of Rs. 93,36,942/- vide TR-6 challan No. 01/200506 dated 03.03.2006 “under protest” and informed the department vide their letter dated 30.03.2006. Based on the favourable decision by the Hon’ble CESTAT’s order No. A/1666/WZB/AHD/2011 dated 10.08.2010/29.09.2011 [2013(291) ELT 449 (Tri.- Ahmd.)] in their another Terminal at Siddhpur, the appellant filed a refund claim for Rs. 93,36,942/-vide their letter dated 18.09.2012 on the ground that the said amount was not payable and issue has been resolved in their favour. The sanctioning authority i.e. Assistant Commissioner of Central Excise, Surat, by Order-in-Original No. SRT-II/DIV-II/09/R/2014-15 dated 27.01.2015 rejected the refund claim based on the ground that CESTAT order No. A/1666/2011-WZB/AHD dated 29.9.2011 in favour of IOCL-Siddhpur has been challenged by the department and has been admitted by the Hon’ble Supreme Court and is pending.
1.2 He further held that the refund has been filed on 18.09.2012 and refund claim of duty paid on 30.03.2006 i.e. after more than 6 years. Being aggrieved by the Order-in-Original, appellant filed appeal before Commissioner (Appeals) who upheld the Order-in-Original vide the impugned order dated 28.06.2016. Hence, the present appeal filed by the appellant.
2. Shri Sachin Chitnis & Shri Kiran Charan Learned Counsel, appearing on behalf of the appellant submits that the amount was voluntarily deposited but „under protest‟ at the behest of the department. Therefore, limitation under section 11B is not applicable. He placed reliance on the following judgments:
- Indian Oil Corporation Ltd. – 2013 (291) ELT 449 (Tri-Ahmd.) do- admitted by Supreme Court – 2015 (316) ELT -27 (SC)
- Indian Oil Corporation Ltd. – CESTAT Ahmedabad Order No. A/10944/2018 dated 24.4.2018
- Indian Oil Corporation Ltd. – CESTAT Ahmedabad Order No. FO/A/11551/2023-EX [DB] dated 21.7.2023
- Nirlep Alliances Ltd. – 2018 (362) ELT 915 (Tri-Mum)
- GE Power India Ltd. – CESTAT Order No. A/12615/2021 dated 15.02.2021
- Nayara Energy Ltd. – CESTAT Order No. A/12562/2021 dated 2.12.2021
- Indian Oil Corporation Ltd. – 2019-TIOL-837-CESTAT-AHMD
2.1 He submits that even in their own case this Tribunal vide order No. A/11551/2023 dated 21.07.2023 held that the limitation is not applicable eve, in a case where the under protest letter was not submitted but the duty was paid on the objection of the audit party and subsequently the issue is already in favour of the assessee. He submits that this case is on much better footing than the case decided by Tribunal’s order dated 21.07.2023.
3. Shri R K Agarwal, Learned superintendent (AR) appearing on behalf of the revenue reiterates the finding of the impure order.
4. On careful consideration of the submission made by both the sides and perusal of record, We find that the appellant had paid the duty on the behest of the audit objection which itself is a payment of duty under protest. Moreover, the appellant have also clearly mentioned in their TR-6 challan that the payment of duty is under protest. The appellant have also submitted a letter declaring that such payment of duty is under protest. In this position limitation provided under section 11B is not applicable for refunding the Excise Duty.
4.1 It is also the contention in orders of lower authorities that the department has filed appeal before the Supreme Court against the Tribunal order, whereby the Tribunal held that the duty paid on other charges, which is related to local Sales Tax is not payable.
4.2 We are of the view that merely by filing the appeal, appellant’s refund cannot be with held which has been clarified by the Central Board of Excise Customs in various circulars from time to time, that unless until stay is obtained from the Higher Court the refund cannot be kept pending. Therefore, on both the counts, we are of the view that appellant is entitled for refund.
5. Accordingly, we set aside the impugned order and allow the appeal.
(Pronounced in the open court on 18.09.2023)
