Case Law Details
Oil and Natural Gas Corporation Limited Vs Commissioner of GST & Central Excise (CESTAT Chennai)
CESTAT Chennai held that refund claim of Education Cess (EC) and Secondary and Higher Education Cess (SHEC) on Oil Industry Development Cess (OID Cess) u/s 11B of the Central Excise Act, 1944 duly available as proved that burden of OID cess is not passed on to the buyer.
Facts- The appellants are engaged in manufacture of crude oil falling under Chapter sub-heading 29094000 of CETA 1985. Appellant filed refund claim on 04.02.2014 for an amount of Rs.19,13,96,099/- being the Education Cess (EC) and Secondary and Higher Education Cess (SHEC) paid by them on the Crude Oil Cess during the period from July 2004 to December 2013. The refund claim was filed consequent to the clarification issued by CBEC vide Circular No.978/2/2014 CX dated 07.01.2014.
Show cause notice dated 18.10.2014 was issued to the appellant proposing to deny the refund claim alleging that the same is hit by limitation as well as the doctrine of unjust enrichment. After due process of law, the original authority held that the refund is barred by limitation as well as is hit by the doctrine of unjust enrichment. Against this order, the appellant filed appeal before Commissioner (Appeals) who upheld the same. Hence this appeal.
Conclusion- Held that refund of Education Cess and Secondary and Higher Education Cess paid by the assessee for the period July 2004 to December 2013 was sought as refund under Section 11B of Central Excise Act, 1944. The refund application was filed on the basis of the very same CBEC circular dated 07.01.2014. In para-11 of the Order-in-Appeal, the Commissioner (Appeals) has observed that the price has been remained same even after the hike of OID cess and that this proves that burden of OID cess is not passed on to the buyer.
Held that we therefore are convinced that the appellant has established that they have not passed on the burden of EC & SHEC on OID Cess (Oil Industry Development Cess) to the buyer.
FULL TEXT OF THE CESTAT CHENNAI ORDER
Brief facts are that the appellants are engaged in manufacture of crude oil falling under Chapter sub-heading 29094000 of CETA 1985. Appellant filed refund claim on 04.02.2014 for an amount of Rs.19,13,96,099/- being the Education Cess (EC) and Secondary and Higher Education Cess (SHEC) paid by them on the Crude Oil Cess during the period from July 2004 to December 2013. The refund claim was filed consequent to the clarification issued by CBEC vide Circular No.978/2/2014 CX dated 07.01.2014.. Show cause notice dated 18.10.2014 was issued to the appellant proposing to deny the refund claim alleging that the same is hit by limitation as well as the doctrine of unjust enrichment. After due process of law, the original authority held that the refund is barred by limitation as well as is hit by the doctrine of unjust enrichment. Against this order, the appellant filed appeal before Commissioner (Appeals) who upheld the same. Hence this appeal.
2. Ld. Counsel Shri Raghavan Ramabadran appeared and argued for the appellant.
2.1 It is submitted by the Ld. Counsel that appellant is engaged in exploration and production of petroleum crude oil falling under Chapter Heading 2709 of the First Schedule to the Central Excise Tariff Act, 1985. The crude oil produced by the appellant is chargeable to NIL rate of excise duty. Appellant cleared crude oil exclusively to M/s. Chennai Petroleum Corporation Ltd. (CPCL). For this purpose, they entered into a Crude Oil Sale Agreement with M/s.CPCL. In terms of clause 9.1 of the agreement, the price payable by M/s.CPCL to the appellant is to be computed as per Schedule B of the Agreement. It is stipulated in Schedule B that the base price shall be computed based on international prices prevailing at that time. Schedule B price also includes taxes and duties specified therein i.e. applicable Sales Tax /VAT in addition to the base price.
2.2 In terms of clause 10.1 of the agreement, all taxes and duties other than taxes and duties mentioned in Schedule B shall be borne by the seller viz. the appellant. Thus all other taxes and duties which are not mentioned in Schedule B, such as Oil Industry Development Cess (OID cess) leviable under Section 15 (1) of the Oil Industry (Development) Act,1974 (OID Act, for short), Educational Cess (EC), Secondary and Higher Education (SHEC) etc. are to be borne by the appellant.
2.3 Ld. Counsel submitted that among other things, the appellant has to pay following taxes and duties on sale of crude oil sold to CPCL :
(a) VAT/Central Sales Tax payable under the Sales Tax Laws of the State;
(b) National Calamity Contingent Duty levied under Section 126 (1)
(c) Oil Industry Development Cess (OID Cess) levied in terms of Section 15 (1) of the Oil Industry (Development) Act, 1974 and collected by the Department of Revenue.
2.4 Ld. Counsel explained that in terms of Section 91 & 93 of the Finance No. (2) of the Act, 2004, Education Cess is levied and collected by the Department of Revenue on the aggregate of all duties of excise. Similarly, in terms of Section 126 and 138 of the Finance Act, 2007, Secondary and Higher Education Cess is levied and collected by the Department of Revenue on the aggregate of all duties of excise.
2.5 OID Cess is levied by the Ministry of Petroleum & Natural Gas but administered and collected by the Department of Revenue, Ministry of Finance. Since OID Cess is collected as duty of excise in terms of Section 15 (1) of the OID Act, the appellant was paying Education Cess and Secondary and Higher Education Cess on OID cess also during the impugned period.
2.6 Meanwhile, CBEC issued Circular No.978/2/2014 CX dated 07.01.2014. clarifying that EC and SHEC can be levied only on those cesses levied and collected by Department of Revenue. Pursuant to the aforesaid clarification, since OID was not levied by the Department of Revenue, the appellant realized that EC and SHEC are not payable on OID Cess on Crude Oil.
2.7 Consequently, the appellant filed a refund claim, in Form R, dated 04.02.2014 seeking refund of Rs.19,13,96,099/- being the EC and SHEC paid by them on OID Cess during the impugned period from July 2004 to December 2013.
2.8 The authorities below have rejected the refund claim on two grounds. It is stated that the appellant has filed refund claim beyond one year from the date of relevant date in terms of Section 11B of the Central Excise Act, 1944 and therefore refund claim is barred by limitation. Secondly, that the value of crude oil sold by the appellant to CPCL includes all taxes. Appellant has failed to prove with documentary evidence that EC and SHEC was not loaded into the price of the crude oil and that it was not passed on to the buyer.
2.9 Ld. Counsel submitted that even though appellant submitted documents in the nature of certificate from CPCL and other records, the department has not considered these documents.
3. On the issue of limitation, it is submitted by the counsel that limitation prescribed under Section 11B (1) is not applicable for refund of amount paid under mistake of law. The amount paid by the appellant can be considered as a deposit and therefore limitation prescribed under Section 11B is not applicable. To support this argument, Ld. Counsel relied upon the decision of the Jurisdictional High Court in the case of 3E Infotech – 2018 (18) GSTL 410 (Mad.) wherein it was held that when tax is paid under mistake of law refund is admissible irrespective of period covered by the refund application. The appellant also relied on the following decisions :
(i) AP Enterprises V CST Chennai – 2019 (6) TMI 18- CESTAT CHENNAI
(ii) Venkatraman Guhaprasad and Others Vs CGST & CE Chennai – 2019 (9) TMI 1143 – CESTAT CHENNAI.
(iii) Oriental Insurance Company Limited Vs CCE & ST, New Delhi – 2020 (1) TMI 324 -CESTAT NEW DELHI
(4) CCE Bangalore Vs KVR Construction – 2012 (26) STR 195 (Kar.)
4. On identical set of facts, the Hon’ble High Court of Gujarat in the case of Joshi Technologies International Vs UOI – 2016 (339) ELT 577 (Guj.) held that for the refund of amount paid under mistake of law the provisions of Section 11B and 11BB would not apply. The Hon’be High Court observed that the amount so collected cannot be retained by the Government in terms of Article 265 of the Constitution of India. The time limit prescribed under the Limitation Act, 1963, if considered, the period has to be computed from the date when the mistake was discovered in terms of Section 17 of the Limitation Act,1963 and then the refund claim would be well within The decision in the case of Joshi Technologies International (supra) was followed by the Hon’ble High Court of Gujarat in the appellant’s own case as reported in ONGC v UOI – 2017 (354) ELT 577 (Guj.) wherein the issue was refund of the OID cess itself.
5. The Ld. Counsel submitted that appellant was under bonafide belief that EC and SHEC were liable to be paid on OID Cess also. Only after the clarification of CBEC vide Circular dated 07.01.2014 was issued, the appellant realized that the EC and SHEC are not payable on OID Cess. Appellant then filed refund claim on 02.2014 immediately and within 3 years from the date on which the mistake was known to them. Therefore the ratio of decisions of Hon’ble High Court of Gujarat in the case of Joshi Technologies International (supra) and in their own case is squarely applicable.
6. The Ld. Counsel adverted to the findings of the OIO and submitted that the authorities below have taken the view that CBEC vide letter dated 10.08.2004 had clarified that Cess is not payable and therefore the contention of the appellant that they had come to know about the mistake only after the circular dt. 07.01.2014 is not It is explained by the Counsel that the letter issued by CBEC in F.No. No.345/2/2004-TRU dated 10.08.2004 clarified inter alia that EC and SHEC are not payable on duties of excise not collected by Department of Revenue. The said circular of 2004 did not deal with applicability of EC and SHEC on duties of excise collected by Department of Revenue but levied by any other Department of the Central Government. This aspect was first clarified by the Board vide circular dated 07.01.2014 only. The same has been considered by the Hon’ble High Court of Gujarat in the case of Joshi Technologies International (supra).
7. To counter the allegation that the refund claim is hit by doctrine of unjust enrichment, Ld. Counsel asserted that the EC and SHEC paid as well as OID Cess has been borne by the appellant. The appellant had submitted the following documents to the department to prove that the EC & SHEC paid by them on OID Cess was borne by them and not passed on to its buyer i.e. CPCL :
(a) Schedule B read with Clause 10.1 of the agreement stipulates that all taxes and duties not covered in Schedule B to the agreement shall be borne only by the appellant. The EC and SHEC paid on OID Cess are not included in the Schedule B price. Therefore, the EC and SHEC paid on OID Cess are not collected from CPCL by the appellant.
(b) Certificate dated 30.04.2014 from CPCL to the effect that appellant has not recovered the EC and SHEC on OID Cess from them.
(c) Certificate dated 10.03.2015 from M/s.V. Narayanaswamy & Co., Chartered Accountants to the effect that the burden of the EC and SHEC on OID Cess has been borne by the appellant and has not been passed on to the customers or any other person
(d) Letter of the Chairman & Managing Director of the appellant dated 21.03.2012 addressed to the Secretary to the Government of India, Ministry of Petroleum and Natural Gas, clearly stating that OID Cess is not recoverable from their customers.
8. Ld. Counsel submitted that appellant had provided adequate evidence to prove that the burden of the EC and SHEC on OID Cess has not been passed on to the customers. However, the authorities below have totally ignored the above documentary evidences and wrongly concluded that the appellant has not produced the evidence to prove that the burden of EC & SHEC was borne by them.
9. In the impugned order, it is also stated that appellant has not submitted its financial records such as balance sheet, trial balance to prove that they have borne the burden of EC and SHEC on OID Cess.
10. Counsel submitted that non-production of financial records does not ipso facto prove unjust enrichment when other corroborative evidences are produced to prove that the duty burden has not been passed on. To prove this argument, Ld. Counsel relied on the decision of the Tribunal in the case of JK Tyre & Industries Ld. Vs CCE & ST Final Order No.40159/2020 wherein it was held that it is not always necessary that the amount recoverable from the government as refund has to be reflected in the balance sheet as ‘receivables’.
11. In the present case, appellant has furnished necessary documents to prove that the burden of EC and SHEC on OID Cess has been borne by them. Ld. Counsel prayed that the refund claim may be held to be eligible for sanction to the appellant and the appeal be allowed.
12. A.R. Sri R. Rajaraman appeared for the Department and supported the findings in the impugned order. Ld. A.R adverted to Section 11B of the Central Excise Act, 1944 and submitted that as per the said section the refund claim has to be filed within one year from the relevant date. The relevant date being the date of payment of duty. The appellants have filed the refund claim for the period July 2004 to December 2013. The contention of the appellant is that they had realized the mistake of paying OID Cess only after the clarification issued by the circular dated 07.01.2014. This cannot be accepted for the reason that the Board vide earlier circular dt. 10.08.2004 had issued necessary clarification. The circular dated 07.01.2014 only reiterated the earlier circular. Hence the refund claim is hit by the bar of limitation.
13. Ld. A.R adverted to Section 12B of the Central Excise Act, 1944 to argue that as per the said section every person who has issued an invoice and paid the duty of excise on any goods shall be deemed to have passed on the full incidence of such duty to the buyer of such goods. The burden is on the manufacturer to prove that the duty incidence has not been passed on to the buyer. The appellants have not produced their financial records such as balance sheet, trial balance etc. to prove that they have not passed on the incidence of duty to their customers. As the value of Crude oil per 10 BBL at which the crude oil was sold to M/s.CPCL by the appellant, includes all taxes, the burden of payment of EC and SHEC had been indirectly passed on to their buyers. Even though the appellant has produced the certificate of M/s.CPCL stating that Education Cess and Secondary Higher Education Cess has not been collected from them, they have not produced any other supporting documents to show that the incidence of duty has not been passed on to CPCL. Therefore, the authorities below have rightly rejected the claim both on the ground of limitation as well as on the bar of unjust of enrichment. Ld. A.R prayed that the appeal may be dismissed.
14. Heard both sides.
15. The issue that arises for consideration is whether the appellants are eligible for the refund of Education Cess (EC) and Secondary Higher Education Cess (SHEC) paid on OID Cess OR whether the refund claim is hit by limitation and bar of unjust enrichment.
16. The period involved is from 2004 to 2013. Refund claim has been filed on 04.02.2014. First ground for rejection of refund is that the claim is time-barred. It is the case of department that CBEC had issued earlier letter dt. 10.08.2004 whereby it was clarified the situations in which Education Cess and Secondary Higher Education Cess is not required to be paid. The Ld. Counsel for appellant has countered this allegation by submitting that the letter date 08.2004 issued by CBEC did not clarify regarding payment of EC and SHEC on OID Cess which is not levied by Department of Revenue. The letter only clarified that EC and SHEC are not payable on duties of excise not collected by Department of Revenue. The said letter of 2004 did not deal with applicability of EC and SHEC on duties of excise collected by the Department of Revenue but levied by any other Departments of Central Government. It is submitted that for the first time, the Board had clarified the non-requirement of payment of EC and SHEC on Crude Oil Cess which are levied under the Acts administered by other Departments / other than Ministry of Finance but are only collected by the Department of Revenue in terms of those Acts.
17. For better appreciation of this rival contention, the clarification issued by CBEC letter dated 10.08.2004 is reproduced as under :
“..Issue No. (4): Whether duties / cesses which either not collected as duty of excise/customs or are collected so but by a Department other than Department of Revenue, should be included for the purposes of calculation of Education Cess?
Clarication : As the Education Cess is calculated on the aggregate duties of excise/customs (excluding certain duties of customs like anti-dumping duty, safeguard duty etc.) levied and collected by the Department of Revenue, only such duties, which are (a) levied and collected as duties of excise/customs and (b) are both levied and collected by the Department of Revenue should be taken into account for calculating Education Cess.”
18. The clarification issued by the Board vide circular dated 07.01.2014 reads as under :
“2. Representations have been received from trade and field formations seeking clarification as to whether the Education Cess chargeable under Section 93(1) of the Finance (No. 2) Act, 2004 and the Secondary and Higher Education Cess chargeable under Section 138(1) of the Finance Act, 2007 should be calculated taking into account the cesses which are collected by the Department of Revenue but levied under an Act which is administered by different departments such as Sugar Cess levied under Sugar Cess Act, 1982, Tea Cess levied under Tea Act, 1953 etc.
3. The matter has been examined. A cess levied under an Act which is not administered by Ministry of Finance (Department of Revenue) but only collected by Department of Revenue under the provisions of that Act cannot be treated as a duty which is both levied and collected by the Department of Revenue.
4. It is, therefore, reiterated that the Education Cess and the Secondary and Higher Education Cess are not to be calculated on cesses which are levied under Acts administered by Department/Ministries other than Ministry of Finance (Department of Revenue) but are only collected by the Department of Revenue in terms of those Acts.”
19. It is evident that only by circular dated 07.01.2014 the Board has expressly clarified that Education Cess and Secondary Higher Education Cess are not to be collected on Cesses which are levied under other Acts but are only collected by the Department of Revenue in terms of those Acts. The appellant has filed the refund claim immediately after the issuance of the said circular.
20. Counsel has also raised a contention that when the appellant is not required to pay the EC and SHEC on OID Cess, the amount paid can be considered only as a deposit and it does not have the color or character of duty. To support this contention, Ld. Counsel has relied upon the decision of the Hon’ble jurisdictional High Court in the case of 3E Infotech (supra).
21. We have to say that it necessitated the Department to issue a circular dated 07.01.2014 clarifying the confusion as to whether EC & SHEC is to be paid on OID Cess. The amount paid by the appellant in the nature of EC and SHEC on OID Cess can then only be considered as payment made under mistake of law. The Hon’ble jurisdictional High Court in the case of 3E Infoech (supra), while considering an appeal filed by the assessee, against the order passed by the Tribunal, which upheld the rejection of refund on the ground of time bar in terms of Section 11B, held that when the tax/duty is paid under mistake of law the claim of refund cannot be barred by limitation merely because the period of limitation under Section 11B had expired. The refusal to return the amount would go against the mandate of Article 265 of Constitution of India which provides that no tax shall be levied or collected except by authority of law. The relevant discussions of the Hon’ble High Court are as under :
“3. After making the payment, the appellant realised that under Rule 6A of the Service Tax Rules, inserted w.e.f. 1-7-2012, the appellant did not have a liability to pay Service Tax. After realising this error, the appellant on 30-6-2016 made a representation to the Assistant Commissioner of Central Excise (Service Tax) Tirunelveli Division, for the refund of this tax paid by him, which was in excess of his liability.
4. While dealing with the representation of the Assessee, Assistant Commissioner, issued a show cause notice as to why the claim of refund of the Assessee as far as the sum of Rs. 4,39,683/- was concerned not be disallowed. The Assistant Commissioner was of the view that under Section 11 B of the Central Excise Act, the application for refund must be made within a period of one year from the relevant The Assistant Commissioner was of the view that the claim of refund by the Assessee insofar as it related to Rs. 4,39,683/- was barred by limitation, as the application for refund was made after one year from the relevant date.
5. In the refund order, the Assistant Commissioner allowed the refund of Rs. 5,32,772/- and disallowed the refund claim of Rs. 4,39,683/- on the ground that it was barred by limitation.
6. Aggrieved by this order, the Assessee filed an appeal to the Commissioner of Central Excise (Appeals-I), who affirmed the order of the Assistant Commissioner that the claim of the Assessee was barred by limitation, and dismissed the appeal.
7. The Assessee approached the Customs Excise & Service Tax Appellant Tribunal, against the order of the Commissioner. The Tribunal took the view, that it had an obligation to act within the four corners of law, and found no justification to condone the delay in making the application for making a refund, and rejected the appeal.
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11. A similar view has been taken by the Bombay High Court in the case of Parijat Construction v. Commissioner Excise, Nashik, reported in 2018 (359) E.L.T. 113 (Bom.), where the Bombay High Court has held as under :-
4. We are of the view that the issue as to whether limitation prescribed under Section 1 1B of the said Act applies to a refund claimed in respect of service tax paid under a mistake of law is no longer res integra. The two decisions of the Division Bench of this Court in Hindustan Cocoa (supra) and Commissioner of Central Excise, Nagpur M/s. SGR Infratech Ltd. (supra) are squarely applicable to the facts of the present case.
5. Both decisions have held the limitation prescribed under Section 1 1B of the said Act to be not applicable to refund claims for service tax paid under a mistake of law. The decision of the Supreme Court in the case of Collector of C.E., Chandigarh Doaba Co-Operative Sugar Mills (supra) relied upon by the Appellate Tribunal has in applying Section 1 1B, limitation made an exception in case of refund claims where the payment of duty was under a mistake of law. We are of the view that the impugned order is erroneous in that it applies the limitation prescribed under Section 1 1B of the Act to the present case were admittedly appellant had paid a Service Tax on Commercial or Industrial Construction Service even though such service is not leviable to service tax. We are of the view that the decisions relied upon by the Appellate Tribunal do not support the case of the respondent in rejecting the refund claim on the ground that it was barred by limitation. We are, therefore, of the view that the impugned order is unsustainable. We accordingly allow the present appeals and quash and set aside the impugned order, insofar as it is against the appellant in both appeals. We fully allow refund of Rs. 8,99,9621/- preferred by the appellant. We direct that the respondent shall refund the amount of Rs. 8,99,962/- to the appellant within a period of three months. There shall be no order as to costs.
12. Further, the claim of the respondent in refusing to return the amount would go against the mandate of Article 265 of the Constitution of India, which provides that no tax shall be levied or collected except by authority of law.
13. On an analysis of the precedents cited above, we are of the opinion, that when service tax is paid by mistake a claim for refund cannot be barred by limitation, merely because the period of limitation under Section 11 B had expired. Such a position would be contrary to the law laid down by the Honpble Apex Court, and therefore we have no hesitation in holding that the claim of the Assessee for a sum of Rs. 4,39,683/- cannot be barred by limitation, and ought to be refunded.
14. There is no doubt in our minds, that if the Revenue is allowed to keep the excess service tax paid, it would not be proper, and against the tenets of Article 265 of the Constitution of India. On the facts and circumstances of this case, we deem it appropriate to pass the following directions :-
(a) The Application under Section 11 B cannot be rejected on the ground that is barred by limitation, provided for under Section.
(b) The claim for return of money must be considered by the ”
22. The Co-ordinate Bench of the Tribunal in the case of Oriental Insurance Co. Ltd. Vs CCE & ST New Delhi – 2020 (1) TMI 324 CESTAT NEW DELHI had occasion to consider a similar issue. In the said case, a notification dated 01.03.2011 was issued exempting taxable service specified under Section 65 (105) (d) of the Finance Act, 1994 from the whole of service tax leviable thereon under Section 66 of the Act. The assessee therein paid service tax between March 2011 and November 2011 and they filed refund claim on 23.12.2013. The order passed by the authorities below rejecting the refund claim as time-barred was set aside by the Tribunal, following the decision of the Madras High Court in the case of 3E Infotech (supra) and held that when service tax is not leviable but is deposited mistakenly, the provisions of Section 11B of the Central Excise Act relating to limitation would not be applicable.
23. The very same issue was examined by the Hon’ble High Court of Gujarat in the case of Joshi Technologies International (supra). The issue in the said case was regarding refund of Education Cess and Secondary and Higher Education Cess paid on OID Cess. The Hon’ble High Court held that when the amount is paid by mistake, Revenue is duty bound to refund the amount and cannot retain it as such retention is hit by Article 265 of Constitution of India. After appreciating the circular dated 07.01.2014 and the issue of limitation as well as unjust enrichment, the Hon’ble High Court held that the petitioner therein is eligible for refund. The relevant paras read as under :
“13. The next question that needs to be addressed is the aspect of limitation. The refund application has been made in July, 2014 seeking refund of the amount paid for the period July, 2004 to April, 2014. On behalf of the revenue it has been contended that in view of the provisions of Section 11 B of the CE Act, the limitation for filing the refund claim would be before the expiry of one year from the relevant date. The expression “relevant date” is defined under clause (B) of the Explanation to Section 11 B of CE Act and insofar as the present case is concerned would be the date of payment of duty. However, as discussed hereinabove, the provisions of Section 11 B of the Act would not apply to the claim of refund made by the petitioner. Consequently, the limitation prescribed under the said provision would also not be applicable.
14. It has been further contended on behalf of the revenue, that in case the limitation prescribed under Section 11 B of the CE Act is not applicable, the general principles of limitation would apply and the limitation of three years for filing a suit would apply, whereas on behalf of the petitioner reliance has been placed upon Section 17 of the Limitation Act, 1963 to contend that this case would be governed by the said provision and hence the limitation would not begin to run till the petitioner discovered the mistake…..
15.1 The contention that the Education Cess and Secondary and Higher Secondary Education Cess having been paid by way of self assessment is not by way of a mistake, is thoroughly misconceived. The fact that despite there being no liability on the part of the petitioner to pay Education Cess and Secondary and Higher Secondary Education Cess, it has paid the same from July, 2004 to April, 2014, on the face of its shows that the same was by way of a mistake. As regards the contention that the self assessment having become final, it is not open for the petitioner to claim refund, the adjudicating authority, in the impugned order has held thus :
“No refund claim can be filed directly on the basis of C.B.E. & C. Circular dated 7-1-2014, before the pending assessment is finalised. Accordingly, for claiming any refund for the period from July, 2004 to April, 2014, on the basis of C.B.E. & C. circular dated 7-1-2014, the essential pre-condition is to first finalise the pending assessment, only then the question of any refund would arise. On verification of records, it is observed that the claimant has already self-assessed and paid the duty under Rule 6 of the CER, 2002 for the period July, 2004 to April, 2014 which is deemed to be final assessment. Hence the question of finalisation of the same does not arise. For the purpose of claiming any refund on the basis of C.B.E. & C. circular the assessment is supposed to be pending whereas in the present case the self assessment is deemed to be final assessment and hence the claim even on merits is not DXGPssibleLE
16.2 Adverting to the facts of the present case, it is the specific case of the petitioner as averred in Paragraphs 5.12 and 5.13 of the memorandum of petition that during the course of personal hearing the petitioner was given to understand that the documents submitted by the petitioner for unjust enrichment are sufficient. It is the case of the petitioner that IOCL is its sole customer, and that the petitioner had furnished a Chartered Accountant’s certificate based on the petitioner’s invoices certifying that the petitioner has not charged any Education Cess and Secondary and Higher Secondary Education Cess to its customer. In the opinion of this court, if the adjudicating authority was not satisfied with the certificate and the material produced by the petitioner, he could have called upon the petitioner to produce further documentary evidence in support of its claim that it had not passed on the incidence of duty to the purchaser. However, without affording a reasonable opportunity to the petitioner to produce documentary evidence in support of its claim that there was no unjust enrichment, the adjudicating authority was not justified in holding that there was unjust enrichment. Therefore, the finding that the petitioner’s claim is hit by unjust enrichment cannot be legally sustained.
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17.5 Applying the above decision to the facts of the present case, the petitioner has clearly shown that it has paid the amount for which relief is sought and has not passed the burden on the consumer and that if such relief is not granted, it would suffer loss. The said decision, therefore, does not in any manner come to the aid of the respondent. In the aforesaid premises, there is no need to remit the matter to the adjudicating authority for examining the aspect of unjust enrichment.
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20. For the foregoing reasons, the petition partly succeeds and is, accordingly, allowed to the following extent :
The order-in-original dated 24th November, 2014 is hereby quashed and set aside. The second respondent is directed to forthwith sanction and grant the petitioner refund of Rs. 73,60,061/- as claimed vide application dated 17-7-2014. Rule is made absolute, accordingly, to the aforesaid extent, with no order as to costs.
21. At this stage, Mr. R.J. Oza, learned Senior Standing Counsel for the respondents has requested that the operation of the judgment be stayed for a period of six weeks from today. The said request is strongly opposed by Mr. Harsh Parekh, learned advocate for the petitioners.
22. Having regard to the facts and circumstances of the case, the request is declined.”
24. Applying the ratio of decisions (supra), we are of the considered opinion that the refund claim cannot be rejected on the ground of limitation. The issue on limitation is held in favour of the assessee, and against the Revenue.
25. The second issue is with regard to bar of unjust enrichment. The appellant has produced the documents as already stated in para-7 of this order. The Department has held that the appellant has not furnished the balance sheet and trial balance and therefore has not passed the test of unjust enrichment. Ld. Counsel for appellant has submitted that they have produced the necessary documentary evidences to establish that the duty element has not been passed on to the buyer. We proceed to examine this contention.
26. On perusal of the agreement, it is seen that Schedule B gives the details as to the payment of taxes and duties. The said clause (5) of Schedule B reads as under :
“5. T&D : Taxes & Duties :
Buyer shall pay Taxes and Duties as per the formula below :
(i) For Mumbai offshore crude :
- Sharing of Sales Tax / VAT and Custom duty:
A notional value @ 3.5% (2.5% in case supplies from Platform) of FOB price would be on Buyer’s account. The above is based on average of the existing Custom Duty of 5% as on 01.04.2010 and CST of 2% (‘N il’ in case of supplies from Platform). The above rate of 3.5% (2.5% In case of supplies from Platform shall be subject to change in case of change in rates of Customs Duty and Sales Tax by Govt. on the principle of equal sharing between Seller and Buyer. The actual applicable Sales Tax will be borne by Seller.
- Notional Calamity Contingent Duty:
Buyer will bear 50% of NCCD in respect of Mumbai Offshore crude oil. (Presently applicable NCCD is @ Rs.50/MT)
(ii) For KG, EOA and Cauvery crudes:
- The Actual applicable Sales Tax/ VAT shall be payable by Buyer at the prevailing rate/s. A template illustrating crude oil price working / built up as per provisions of this COSA is attached as Appendix-B. Both parties agree to use the template at Appendix B for working out crude oil prices.”
27. It can be seen from the above that the said clause does not mention the payment of Education Cess and Secondary Higher Education Cess on OID Cess.
28. The appellant has furnished a certificate issued by M/s.CPCL (buyer) which states that they have not paid the amount of Education Cess and Secondary Higher Education Cess on OID Cess to ONGC (appellant) while purchasing the crude oil from ONGC. Relevant part of the certificate dated 30.04.2014 reads as under :
“We, Chennai petroleum Corporation Limited (one of the “Buyers” ONGC crude Oil) do hereby confirm that from the duty of levy of Primary Education Cess and Secondary & Higher Education Cess, we have not paid the amount of Primary Education Cess and Secondary & Higher Education Cess on OID Cess to ONGC on purchase of ONGC crude oil by us.
This certificate has been issued on the request of ONGC or onward submission to the concerned Central Excise Authorities in support of refund claim of Primary Education Cess and Secondary & Higher Education Cess on OID Cess. This certificate should not be used other than the intended purpose, without obtaining written permission from us.”
29. A certificate by the Chartered Accountant is also furnished. Relevant part reads as under :
“ This is to further certify that the above stated refund claimed of Education Cess and Secondary Education Cess paid by ONGC has been borne by it and the incidence/burden of the Education Cess and Secondary Education Cess paid has not been passed on to the customer(s) or any other person. Also as per the relevant Article read with Schedule-B of respective Crude Oil Sale Agreement entered with IOCL, BPCL, HPCL, CPCL & MRPL, Education Cess and Secondary Education Cess on OID Cess is to be borne by ONGC, hence passing of the incidence of Education Cess and Secondary Higher Education Cess of the OID Cess by ONGC to any other person does not arise.
This Certificate has been issued on the basis of he information, explanations given, documents produced and accounting records of ONGC.
This certificate has been issued for onward submission to the Commissioner of Central Excise & Service Tax-Tiruchirapalli, in support of refund claim of deposit of Education Cess and Secondary Education Cess on OID Cess. This certificate should not be used other than intended purpose without obtaining written permission from us.”
30. The said certificate is accompanied by the calculation of the OID cess paid, Education Cess and Secondary and Higher Education Cess paid by the appellant with challan details.
31. To further substantiate that the incidence of Cess / duty element has not been passed on to the buyer, the Ld. Counsel has furnished the invoices. It is submitted that OID Cess was increased with effect from 17.03.2012. The appellant had filed a letter to the Government expressing its concern over the increase in the rates of OID Cess and consequent increase in absorbing the burden of OID cess by the appellant. The invoices prior to 17.03.2012 and after 03.2012 have been furnished along with appeal to show that the price of crude oil remained the same even after hike in OID Cess. The invoice dated 17.03.2012 shows the Crude Oil price per 10BBL as Rs.61,491.79. The invoice dated 3 1.03.2012 which is after the hike in OID cess also shows the price of crude oil per 10 BBL as Rs.61,491.79. This establishes that OID Cess has been borne by the appellant. The letter issued to the Ministry of Petroleum & Natural Gas, New Delhi by the appellant dated 21.03.2012 puts forward their grievance of the increase in OID cess which reads as under :
“1. Oil Industry Development Cess is levied on Crude Oil produced as a duty of excise under The Oil Industries (Development) Act, 1974. In the Budget 2012 he rate of OID Cess leviable on Crude Oil has been increased from ₹ 2,500/MT to ₹ 4,500/MT i.e. a significant increase of 80%. The above increase is made effective from the midnight of 1 6th / 17th March, 2012.
2. Since OID Cess incurredby ONGC is not recoverable from refineries, increase in OID Cess would directly increase ONGC’s cost of production and thus adversely affect company’s bottom line i.e. profit before tax (PBT) approximately ₹ 2,500/MT Crore annually at current level of supply of crude oil to refineries. The amount of increase per barrel of crude oil works out to the tune of US$ 5.7.”
32. Ld. Counsel has adverted to the Order-in-Appeal No.42/2015 DATED 31.03.2015 passed in the case of sister unit of the appellant by the Commissioner (Appeals), Guwahati. The very same issue came up before Commissioner (Appeals). In the said case, refund of Education Cess and Secondary and Higher Education Cess paid by the assessee for the period July 2004 to December 2013 was sought as refund under Section 11B of Central Excise Act, 1944. The refund application was filed on the basis of the very same CBEC circular dated 07.01.2014. In para-11 of the Order-in-Appeal, the Commissioner (Appeals) has observed that the price has been remained same even after the hike of OID cess and that this proves that burden of OID cess is not passed on to the buyer. The said para reads as under :
“11. The rate of OID has been increased from 2,500/MT to Rs.4,500/MT w.e.f 17.03.2012. The appellant submitted two invoices for Crude Oil supplied to IOCL refinery for prior to 17.03.2012 and after 17.03.2012. On going through these two invoices, I find that there is no change in price of Crude Oil even after the increase of the rate of OID Cess from 2,500/MT to Rs.4,500/MT which proves the burden of OID Cess is not passed on to the buyer refineries and hence the question of passing on the burden of EC & SHEC to the buyer does not arise.”
33. The Commissioner (Appeals) Guwahati, after considering the issue of limitation as well as the issue of unjust enrichment, has ordered for sanction of the refund of EC & SHEC paid on OID Cess by the appellant’s sister concern. We therefore are convinced that the appellant has established that they have not passed on the burden of EC & SHEC on OID Cess to the buyer.
34. In the appellant’s own case on the very same issue of refund, the Hon’ble High Court of Gujarat as reported in 2017 (354) ELT 577 (Guj.) referred to the decision in the case of Joshi Technologies International (supra) and held that appellant is eligible for refund and ordered the Commissioner (Appeals) to process the refund in accordance with decision in the case of Joshi Technologies International (supra). Relevant part of the order reads as under :
“9. From the facts as emerging from the record, it is evident that the above decision would be squarely applicable to the facts of the present case. It is, however, an admitted position that the above referred decision of this Court which was rendered on 16-6-2016 is subsequent to the passing of the Order-in-Original dated 28-4- 2015, and therefore, was not available at the time when the Orderin-Original came to be passed. It appears that the order-in-appeal having been made on 29-6-2016, soon after the judgment and order dated 16-6-2016 came to be passed, the same may not have been produced before the Commissioner (Appeals). Consequently, the authorities below did not have the benefit of the said decision. It would, therefore, be in the interest of justice if the matter is restored to the file of the appellate authority to consider the appeal afresh in the light of the observations made in the above referred decision.
10. For the foregoing reasons, the petition succeeds and is accordingly allowed to the following extent :
11. The impugned Order-in-Appeal dated 29-6-2016 passed by the second respondent Commissioner (Appeals) is hereby quashed and set aside and the appeal is restored to the file of the Commissioner (Appeals) to decide the same in accordance with law, keeping in view the observations made by this Court in the case of Joshi Technologies International, INC-India Projects Union of India (supra) as well as the other submissions that may be made on behalf of the petitioners. Rule is made absolute to the aforesaid extent.”
35. From the foregoing, we hold that appellant succeeds on the second issue of unjust enrichment also.
36. After appreciating the facts, evidences placed before us and also following the decisions in the case of 3E Infotech (supra), Joshi Technologies International (supra) and in the appellant’s own case, we are of the considered view that the rejection of refund on the ground of limitation and unjust enrichment is not justified. We hold that the appellant is eligible for refund.
37. In the result, the impugned order is set aside. Appeal is allowed with consequential relief, if any.
(pronounced in open court on 06.07.2023)
Per contra M. Ajit Kumar,
38. I have perused the order prepared by my learned Sister Ms. Sulekha Beevi C.S., Member (Judicial). Three issues have been taken up by her for consideration as below:-
i) whether the appellant is eligible for the refund of Educational Cess and Secondary Higher Educational Cess paid on Oil Industry Development Cess for the period from July 2004 to December 2013.
ii) whether the refund claim is hit by the bar of unjust
iii) whether the refund is hit by limitation under Section 11B of the Central Excise Act 1944.
After examining the facts and evidences related to the three issues above, she was of the considered view that;
i) the appellant is eligible for refund on Educational Cess and Secondary Higher Educational Cess paid on Oil Industry Development Cess paid due to a ‘mistake of law’, for the period from July 2004 to December 2013.
ii) the appellant has established that they have not passed on the burden of Educational Cess and Secondary Higher Educational Cess paid on Oil Industry Development Cess to the buyer and hence the appellant succeeds on the issue of unjust
iii) the rejection of refund on the ground of time bar under Section 11B of the Central Excise Act 1944 (herein after referred to as the ‘CE Act’) is unjustified While I respectfully agree that duty on Educational Cess and Secondary Higher Educational Cess paid on Oil Industry Development Cess has been paid by the appellant due to a ‘mistake of law’ and that the appellant succeeds on the issue of unjust enrichment, I am unable to persuade myself to concur with the views as at point (iii) above. This being so, I express my divergence on this view below.
39. This is a case where the appellant has filed a refund claim dated 17/09/2014 for the period from July 2004 to December 2013 involving Rs 19,13,96,099/-, based on the Boards circular no 978/2.2014-CX dated 07/01/2014, reiterating its earlier general clarification given in MF (DR) Letter F No 345/2/2004-TRU dated 10/08/2004. Boards circular no 978/2.2014-CX dated 07/01/2014 clarified that Education Cess and the Secondary and Higher Education Cess are not to be calculated on cesses which are levied under Acts administered by Department/ Ministries other than the Ministry of Finance (Department of Revenue) but are only collected by the Department of Revenue in terms of those Acts. The learned Assistant Commissioner vide his order dated 08/01/2015, rejected the refund claim in terms of Section 11B of the Central Excise Act, 1944 (Act) relying upon the judgment of Hon’ble High Court at Bombay in the case of M/s Andrew Telecomm India Pvt Ltd Vs CCE Goa [2014 (34) STR 562 (Bombay)]. The said judgment also related to a case where the amount paid by the appellant as Service Tax was found not imposable or leviable on export of services as clarified by the Department. The Hon’ble High Court held that this was a case squarely falling within the provisions of the CE Act and therefore the rule of limitation under section 11B would apply. The learned Assistant Commissioner also relied on the judgment of the Hon’ble Supreme Court in Mafatlal industries Ltd Vs Union of India [1997 (89) E.L.T. 247 (S.C.)] to hold that the refund was also hit by merits and the doctrine of unjust enrichment. Aggrieved by the said order the appellant approached the Commissioner (Appeals), who after examining a number of judgment including the Supreme Court’s judgment in ‘Mafatlal industries Ltd.’ (supra) rejected the appeal under section 11B of the CE Act on merit, time bar and unjust enrichment. The appellant is hence before us.
40. The issue on merits and unjust enrichment is held in favor of the appellant as stated above and there is no dispute on this matter. Since these have been dealt with elaborately by the learned Member (Judicial) in her order the same is not being reiterated. There is no dispute that the amounts claimed as refund were not paid as duty ‘under protest’. The appellants after coming to realize their mistake have on their own filed a refund claim under section 11B of the CE Act before the department and have not approached a civil court for relief. Hence this is not a case where monies have been wrongly exacted by the department but it’s a case where monies have been voluntarily paid to the Government exchequer without ‘protest’ and is now being claimed back as having be done under a ‘mistake of law’. In fact, both the lower authorities had examined the issue and have rejected the appellants claim on merit, time bar and unjust enrichment. The only matter of disagreement hence relates to the non-sanction of a refund claim as being time barred in terms of section 11B of the CE Act, as per the impugned order. The issues are;
a) whether the impugned refund claim filed based on payments made towards duty under a ‘mistake of law’ will lie under section 11B of the CE Act or under some other statute.
b) if it does come under the CE Act, can the claim be sanctioned/ allowed by an authority acting under the statute even though the claim is time barred.
Another issue which comes to mind is whether a refund claim arising due to a ‘mistake of law’ can be made even before the discovery of the mistake, through a reasoned order by the Proper Officer. In fact, the discovery of mistake has taken place only now at the second stage of appeal. However, since the matter has not been raised as a dispute between the parties, I don’t intend to examine the same.
40.1 I find that the issue whether a refund claim filed as per a ‘mistake of law’ will lie under section 11B of the CE Act has been dealt with elaborately under the landmark nine Judge verdict of the Hon’ble Supreme Court in Mafatlal industries Ltd Vs Union of India (supra), decided by a majority of 8:1. Hon’ble Justice B.P. Jeevan Reddy, J. speaking for himself and on behalf of four other judges delivered the majority opinion. The passage relevant to the issue under discussion is reproduced below;
“68. Re. : (I) : Hereinbefore, we have referred to the provisions relating to refund obtaining from time to time under the Central Excises and Salt Act. Whether it is Rule 11 (as it stood from time to time) or Section 11 B (as it obtained before 1991 or subsequent thereto), they invariably purported to be exhaustive on the question of refund. Rule 11, as in force prior to August 6, 1977, stated that “no duties and charges which have been paid or have been adjusted… .shall be refunded unless the claimant makes an application for such refund under his signature and lodges it to the proper officers within three months from the date of such payment or adjustment, as the case may be”. Rule 11, as in force between August 6, 1977 and November 17, 1980 contained sub-rule (4) which expressly declared: “(4) Save as otherwise provided by or under this rule, no claim of refund of any duty shall be entertained”. Section 11 B, as in force prior to April, 1991 contained sub-section (4) in identical words. It said:
“(4) Save as otherwise provided by or under this Act, no claim for refund of any duty of excise shall be entertained”. Sub-section (5) was more specific and emphatic. It said: “Notwithstanding anything contained in any other law, the provisions of this section shall also apply to a claim for refund of any amount collected as duty of excise made on the ground that the goods in respect of which such amount was collected were not excisable or were entitled to exemption from duty and no court shall have any jurisdiction in respect of such claim.” It started with a non-obstante clause; it took in every kind of refund and every claim for refund and it expressly barred the jurisdiction of courts in respect of such claim. Sub-section (3) of Section 11 B, as it now stands, is to the same effect – indeed, more comprehensive and all-encompassing. It says, “(3) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any court or in any other provision of this Act or the rules made thereunder or in any law for the time being in force, no refund shall be made except as provided in sub-section”.
The language could not have been more specific and emphatic. The exclusivity of the provision relating to refund is not only express and unambiguous but is in addition to the general bar arising from the fact that the Act creates new rights and liabilities and also provides forums and procedures for ascertaining and adjudicating those rights and liabilities and all other incidental and ancillary matters, as will be pointed out presently. This is a bar upon a bar – an aspect emphasised in Para 14, and has to be respected so long as it stands. The validity of these provisions has never been seriously doubted. Even though in certain writ petitions now before us, validity of the 1991 (Amendment) Act including the amended Section 11 B is questioned, no specific reasons have been assigned why a provision of the nature of sub-section (3) of Section 11 B (amended) is unconstitutional. Applying the propositions enunciated by a seven-Judge Bench of this Court in Kamala Mills, it must be held that Section 11 B [both before and after amendment] is valid and constitutional. In Kamala Mills, this Court upheld the constitutional validity of Section 20 of the Bombay Sales Tax Act (set out hereinbefore) on the ground that the Bombay Act contained adequate provisions for refund, for appeal, revision, rectification of mistake and for condonation of delay in filing appeal/revision. The Court pointed out that had the Bombay Act not provided these remedies and yet barred the resort to civil court, the constitutionality of Section 20 may have been in serious doubt, but since it does provide such remedies, its validity was beyond challenge. To repeat – and it is necessary to do so – so long as Section 11B is constitutionally valid, it has to be followed and given effect to. We can see no reason on which the constitutionality of the said provision – or a similar provision – can be doubted. It must also be remembered that Central Excises and Salt Act is a special enactment creating new and special obligations and rights, which at the same time prescribes the procedure for levy, assessment, collection, refund and all other incidental and ancillary provisions. As pointed out in the Statement of Objects and Reasons appended to the Bill which became the Act, the Act along with the Rules was intended to “form a complete central excise code”. The idea was “to consolidate in a single enactment all the laws relating to central duties of excise”. The Act is a self-contained enactment. It contains provisions for collecting the taxes which are due according to law but have not been collected and also for refunding the taxes which have been collected contrary to law, viz., Sections 11A and 11B and its allied provisions. Both provisions contain a uniform rule of limitation, viz., six months, with an exception in each case. Sections 11 and 11B are complimentary to each other.
To such a situation, Proposition No. 3 enunciated in Kamala Mills becomes applicable, viz., where a statute creates a special right or a liability and also provides the procedure for the determination of the right or liability by the Tribunals constituted in that behalf and provides further that all questions about the said right and liability shall be determined by the Tribunals so constituted, the resort to civil court is not available – except to the limited extent pointed out therein. Central Excise Act specifically provides for refund. It expressly declares that no refund shall be made except in accordance therewith. The Jurisdiction of a civil court is expressly barred – vide sub-section (5) of Section 11B, prior to its amendment in 1991, and sub-section (3) of Section 11B, as amended in 1991. It is relevant to notice that the Act provides for more than one appeal against the orders made under Section 11B/Rule 11. Since 1981, an appeal is provided to this Court also from the orders of the Tribunal. While Tribunal is not a departmental organ, this court is a civil court. In this view of the matter and the express and additional bar and exclusivity contained in Rule 11/Section 11 B, at all points of time, it must be held that any and every ground including the violation of the principles of natural justice and infraction of fundamental principles of judicial procedure can be urged in these appeals, obviating the necessity of a suit or a writ petition in matters relating to refund. Once the constitutionality of the provisions of the Act including the provisions relating to refund is beyond question, they constitute “law” within the meaning of Article 265 of the Constitution. lt follows that any action taken under and in accordance with the said provisions would be an action taken under the “authority of law”, within the meaning of Article 265.
In the face of the express provision which expressly declares that no claim for refund of any duty shall be entertained except in accordance with the said provision, it is not permissible to resort to Section 72 of the Contract Act to do precisely that which is expressly prohibited by the said provisions. In other words, it is not permissible to claim refund by invoking Section 72 as a separate and independent remedy when such a course is expressly barred by the provisions in the Act, viz., Rule 11 and Section 11 B. For this reason, a suit for refund would also not lie. Taking any other view would amount to nullifying the provisions in Rule 11/Section 11 B, which, it needs no emphasis, cannot be done. It, therefore, follows that any and every claim for refund of excise duty can be made only under and in accordance with Rule 11 or Section 11 B, as the case may be, in the forums provided by the Act. No suit can be filed for refund of duty invoking Section 72 of the Contract Act. So far as the jurisdiction of the High Court under Article 226 – or for that matter, the jurisdiction of this court under Article 32 – is concerned, it is obvious that the provisions of the Act cannot bar and curtail these remedies. It is, however, equally obvious that while exercising the power under Article 226/Article 32, the Court would certainly take note of the legislative intent manifested in the provisions of the Act and would exercise their jurisdiction consistent with the provisions of the enactment.
69. There is, however, one exception to the above proposition, i.e., where a provision of the Act whereunder the duty has been levied is found to be unconstitutional for violation of any of the constitutional limitations. This is a situation not contemplated by the Act ”
* ** ** ** * *
“PART – IV
99. The discussion in the judgment yields the following propositions. We may forewarn that these propositions are set out merely for the sake of convenient reference and are not supposed to be exhaustive. In case of any doubt or ambiguity in these propositions, reference must be had to the discussion and propositions in the body of the judgment.
(i) Where a refund of tax/duty is claimed on the ground that it has been collected from the petitioner/plaintiff – whether before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991 or thereafter – by mis-interpreting or misapplying the provisions of the Central Excises and Salt Act, 1944 read with Central Excise Tariff Act, 1985 or Customs Act, 1962 read with Customs Tariff Act or by mis-interpreting or mis-applying any of the rules, regulations or notifications issued under the said enactments, such a claim has necessarily to be preferred under and in accordance with the provisions of the respective enactment before the authorities specified thereunder and within the period of limitation prescribed therein. No suit is maintainable in that behalf. While the jurisdiction of the High Courts under Article 226 – and of this Court under Article 32 – cannot be circumscribed by the provisions of the said enactments, they will certainly have due regard to the legislative intent evidenced by the provisions of the said Acts and would exercise their jurisdiction consistent with the provisions of the Act. The writ petition will be considered and disposed of in the light of and in accordance with the provisions of Section 11 B. This is for the reason that the power under Article 226 has to be exercised to effectuate the rule of law and not for abrogating it.
The said enactments including Section 11 B of Central Excises and Salt Act and Section 27 of the Customs Act do constitute “law” within the meaning of Article 265 of the Constitution of India and hence, any tax collected, retained or not refunded in accordance with the said provisions must be held to be collected, retained or not refunded, as the case may be, under the authority of law. Both the enactments are self-contained enactments providing for levy, assessment, recovery and refund of duties, imposed thereunder. Section 11 B of the Central Excises and Salt Act and Section 27 of the Customs Act, both before and after the 1991 (Amendment) Act are constitutionally valid and have to be followed and given effect to. Section 72 of the Contract Act has no application to such a claim of refund and cannot form a basis for maintaining a suit or a writ petition. All refund claims except those mentioned under Proposition (ii) below have to be and must be filed and adjudicated under the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be. It is necessary to emphasise in this behalf that Act provides a complete mechanism for correcting any errors whether of fact or law and that not only an appeal is provided to a Tribunal – which is not a departmental organ – but to this Court, which is a civil court.
ii) Where, however, a refund is claimed on the ground that the provision of the Act under which it was levied is or has been held to be unconstitutional, such a claim, being a claim outside the purview of the enactment, can be made either by way of a suit or by way of a writ petition ”
(emphasis added)
40.2 Hence as per the majority decision of five Hon’ble Judges, the language of the statute could not have been more specific and emphatic. The exclusivity of the provision relating to refund is not only express and unambiguous but is in addition to the general bar arising from the fact that the Act creates new rights and liabilities and also provides forums and procedures for ascertaining and adjudicating those rights and liabilities and all other incidental and ancillary matters. This is a bar upon a bar any and every claim for refund of excise duty can be made only under and in accordance with Rule 11 or Section 11B, as the case may be, in the forums provided by the CE Act. No suit can be filed for refund of duty invoking Section 72 of the Contract Act.
40.3 The Hon’ble CJI A.M. Ahmadi, concurred with the majority view except with respect to two aspects. The first of these is the issue regarding the extent to which the jurisdiction of ordinary courts is ousted in respect of claims for refund of taxes illegally levied and collected. The other issue relates to the retrospective application of the amended provisions of the Excise Act. Both these issues are not relevant to the discussion in the present dispute, as the refund in this case is not being challenged for the right of the claim to be filed before an ordinary court of civil jurisdiction, instead of being filed before the jurisdictional Central Excise Officer nor is retrospective application of law the issue. Hon’ble Justice Paripoornan, concurring with majority view wrote a separate judgment on behalf Hon’ble Justice Hansaria and himself. He stated as under;
“112. I perused the draft judgment prepared by my learned brother Jeevan Reddy, J. wherein on the main question, he has held that if the person claiming the refund has passed on the burden of duty to another and has not really suffered any loss or prejudice, there is no question of reimbursing him and he cannot successfully sustain an action for restitution, based on Section 72 of the Indian Contract Act. With great respect, I fully concur with the aforesaid conclusion of my learned brother. But, in view of the importance of the question raised, I would like to record my own reasons for the aforesaid conclusion. I shall separately deal with the maintainability of the action either by way of suit or petition under Article 226 of the Constitution – the extent to which there is ouster of jurisdiction of Courts.”
The reasons given by the Hon’ble Justice in his order relate to the jurisdiction of civil courts not being barred in entirety regarding an attack against the levy and/or claim for refund. Hon’ble Justice Hansaria, concurred with Hon’ble Justice Paripooranan. The subject matter of the Hon’ble Justice’s order at para 112 of the Mafatlal Industries Ltd judgment (supra) is also not an issue in this case as stated above. Further the jurisdiction of the Central Excise officers has not been ousted for examining and disposing of claims for a refund of monies paid under a ‘mistake of law’, by any one of the three decisions rendered separately by the majority.
40.4 Based on the discussion above the answer to the question raised at para 3(a) above, as to whether the impugned refund claim filed, based on payments made towards duty under a mistake of law, will lie under section 11B of the CE Act or under some other statute, is answered in favor of the Central Excise Act, 1944. Central Excise officers empowered under the Central Excise Act have/had the authority to admit, examine and decide the impugned claim arising from a ‘mistake of law’, exercising powers under section 11B of the Central Excise Act, 1944. They cannot take resort to an independent remedy from another statute when such a course is expressly barred by the provisions in the Act. Moreover, in this case the appellant paid monies as tax on his own without ‘protest’. It is only after the second clarification issued by the Board that the appellant felt that they had paid duty under a mistake of law and sought a refund, which was dismissed at the two lower levels of the departmental disput resolution mechanism. Its only now that the ‘mistake’ has been discovered by way of an appealable decision settling the dispute. 41. This then takes us to the second question i.e. if the claim made due to a ‘mistake of law’ has to be filed, admitted and disposed of under section 11B of the CE Act, can the refund claim be sanctioned/ allowed by an authority acting under the statute even though the claim is time barred.
The Apex Court in Sri Ram Saha v. State of W.B. , [2004 (11) SCC 497] held;
It is well-settled principle of interpretation that a statute is to be interpreted on its plain reading; in the absence of any doubt or difficulty arising out of such reading of a statute defeating or frustrating the object and purpose of an enactment, it must be read and understood by its plain reading. However, in case of any difficulty or doubt arising in interpreting a provision of an enactment, courts will interpret such a provision keeping in mind the objects sought to be achieved and the purpose intended to be served by such a provision so as to advance the cause for which the enactment is brought into force. If two interpretations are possible, the one which promotes or favours the object of the Act and purpose it serves, is to be preferred. At any rate, in the guise of purposive interpretation, the courts cannot re-write a statute. A purposive interpretation may permit a reading of the provision consistent with the purpose and object of the Act but the courts cannot legislate and enact the provision either creating or taking away substantial rights by stretching or straining a piece of legislation.
The Hon’ble High Court of Madras in A.Ram Mohan vs State, CRL.R.C.No.265 of 2015, dated 30 March, 2015 held as under;
125. Where a statute imposes a public duty and proceeds to lay down the manner and time frame within which the duty shall be performed, the injustice or inconvenience resulting from a rigid adherence to the statutory prescriptions may not be a relevant factor in holding such prescription to be only directory. . . .
I also find that as per the Hon’ble Supreme Court in its landmark judgment in Rohitash Kumar & Ors. v Om Prakash Sharma & Ors [(2013) 11 SCC 451], covering the interpretation of statutes, held that a legal enactment must be interpreted in its plain and literal sense. Inconvenience or hardship is not a ground for the court to interpret the plain language of the statute differently, to give relief. The relevant portion of the judgment is extracted below.
“19. In Bengal Immunity Co. Ltd. v. State of Bihar & Ors., AIR 1955 SC 661 it was observed by a Constitution Bench of this Court that, if there is any hardship, it is for the legislature to amend the law, and that the Court cannot be called upon, to discard the cardinal rule of interpretation for the purpose of mitigating such hardship. If the language of an Act is sufficiently clear, the Court has to give effect to it, however, inequitable or unjust the result may be. The words, ‘dura lex sed lex’ which mean ‘the law is hard but it is the law.’ may be used to sum up the situation. Therefore, even if a statutory provision causes hardship to some people, it is not for the Court to amend the law. A legal enactment must be interpreted in its plain and literal sense, as that is the first principle of interpretation.
20. In Mysore State Electricity Board v. Bangalore Woolen, Cotton & Silk Mills Ltd. & Ors., AIR 1963 SC 1128 a Constitution Bench of this Court held that, ‘inconvenience is not’ a decisive factor to be considered while interpreting a statute.
21. In Martin Burn Ltd. v. The Corporation of Calcutta, AIR 1966 SC 529, this Court, while dealing with the same issue observed as under:–
‘A result flowing from a statutory provision is never an evil. A Court has no power to ignore that provision to relieve what it considers a distress resulting from its operation. A statute must of course be given effect to whether a Court likes the result or not.’
(See also: The Commissioner of Income Tax, West Bengal I, Calcutta v. M/s Vegetables Products Ltd., AIR 1973 SC 927; and Tata Power Company Ltd. v. Reliance Energy Limited & Ors., (2009) 16 SCC 659).
Therefore, it is evident that the hardship caused to an individual, cannot be a ground for not giving effective and grammatical meaning to every word of the provision, if the language used therein, is unequivocal.”
(emphasis added)
In the light of the said judgment and the discussions, it is clear that a refund claim pertaining to monies paid under a ‘mistake of law’ has to be examined by Central Excise officers under Sec 11B of the CE Act. From this it follows that once a refund claim is examined under section 11B of the CE Act, the Proper Officer or any other authority being a creation of the statute, must act within the ambit of that provision and if the application is delayed he has no alternative but to reject it as being barred by limitation. Since the CE Act is a self-contained enactment, providing for the collection and also for refund of taxes which have been collected contrary to law, he cannot import, or act under, the provisions of another statute to examine and dispose the claim.
41.1 A question arises as to whether Tribunals created under the CE Act being higher appellate forums that are independent of the Central Excise Department can examine the claim outside the ambit of the CE Act. To my mind Tribunals being creations of the statute have to work within its four corners. To echo the sentiments of the Hon’ble Supreme Courts in Rohitash Kumar & Ors. cited above ‘A Court has no power to ignore that provision to relieve what it considers a distress resulting from its operation. A statute must of course be given effect to whether a Court likes the result or not.’ A Tribunal acting under a statute cannot question the lack of its power to do ‘full justice’ in resolving the dispute or act in excess of the power given to it by the CE Act. The Hon’ble Apex Court in the case of K.S. Venkataraman & Co. v. State of Madras (1966 2 SCR 229) after discussing the judgment of the Calcutta High Court in the cases of (i) Raleigh Investment Co. Ltd. v. The Governor General in Council (1944 1 Cal. 34), (ii) United Motors (India) Ltd. v. The State of Bombay (1952 55 BLR 246) and (iii) M.S.M.M. Meyappa Chettiar v. Income-tax Officer, Karaikudi (1964 54 ITR 151) held :
“There is, therefore, weighty authority for the proposition that a tribunal, which is a creature of a statute, cannot question the vires of the provisions under which it functions.”
A seven Judge Bench of the Hon’ble Supreme Court in L. Chandra Kumar Versus Union Of India [1997 (92) E.L.T. 318 (S.C.)] held as under;
“91 .Before moving on to other aspects, we may summarise our conclusions on the jurisdictional powers of these Tribunals. The Tribunals are competent to hear matters where the vires of statutory provisions are questioned. However, in discharging this duty, they cannot act as substitutes for the High Courts and the Supreme Court which have, under our constitutional set-up, been specifically entrusted with such an obligation. Their function in this respect is only supplementary and all such decisions of the Tribunals will be subject to scrutiny before a Division Bench of the respective High Courts. The Tribunals will consequently also have the power to test the vires of subordinate legislations and rules. However, this power of the Tribunals will be subject to one important exception. The Tribunals shall not entertain any question regarding the vires of their parent statutes following the settled principle that a Tribunal which is a creature of an Act cannot declare that very Act to be unconstitutional. In such cases alone, the concerned High Court may be approached directly. All other decisions of these Tribunals, rendered in cases that they are specifically empowered to adjudicate upon by virtue of their parent statutes, will also be subject to scrutiny before a Division Bench of their respective High Courts. We may add that the Tribunals will, however, continue to act as the only courts of first instance in respect of the areas of law for which they have been constituted. By this, we mean that it will not be open for litigants to directly approach the High Courts even in cases where they question the vires of statutory legislations (except, as mentioned, where the legislation which creates the particular Tribunal is challenged) by overlooking the jurisdiction of the concerned Tribunal.”
It thus holds that the Tribunal being a creation of statute cannot travel beyond the specific provisions of the statute and condone the delay in filing the claim when such a decision would be contrary to the provisions of the statute itself. Looked at from another angle when the Proper Officer acting within the ambit of section 11B finds that the refund application is delayed he has no alternative but to reject it as barred by limitation. The Tribunal exercising its appellate jurisdiction, can using all the powers conferred expressly by the statute, examine that decision for its correctness. Having found that the decision has been taken correctly under the CE Act, it cannot substitute that decision with that of its own, without assigning a reason and disclosing the specific power granted for it to do so.
41.2 Most refunds under the CE Act arise as a result of a mistake of law or fact. Disputes relating to classification, valuation, rate of duty, date of implementation, retrospective effect of provisions! notifications etc when finalised could broadly be classified as disputes where duty has been paid/ exacted due to a ‘mistake of law’ made either by the tax payer! assessee or the department. If this broader categorisation is done and if it is held that such claims are not to be examined under section 11B of the CE Act, and similarly its converse that demand under section 11A of the CE Act for taxes short collected! not collected! paid etc due to a ‘mistake of law’ are also not subject to the limitation of the CE Act, then it would lead to complexities in tax administration and difficulties, both for the department and for the assessee. It is perhaps for this reason that the majority judgment in the Mafatlal Industries case (supra) was quite categoric in declaring and clarifying that all refund claims other than those monies that have been found to have been collected unconstitutionally, must be filed and adjudicated under the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be.
41.3 In the light of the above and the provisions of section 11B(3) of the CE Act, I do not find any specific provision in the said statute which explicitly permits me to judicially decide and condone the delay in the filing of the impugned refund claim, allowing the appeal. I am hence constrained to reject the appeal for refund on the grounds of limitation under Section 11B(1) of the CE Act.
42. I now intend to examine the judgments cited by the appellant under two broad categories, regarding the issue of limitation of time. Judgment passed by High Courts and those passed by the Tribunal. Judgments passed by the Hon’ble High Courts
42.1 Under this category would fall the following judgments listed as per the order in which they are mentioned in the paper book given by the appellant;
a) Oil and Natural Gas Corporation Ltd. Vs. Union of India reported in 2017 (354) ELT 577 (Guj.).
b) 3E Infotech Vs. CESTAT, Chennai reported in 2018 (18)
GSTL 410 (Mad.)
c) Joshi Technologies International Vs. Union of India reported in 2016 (339) ELT 21 (Guj.)
d) Commissioner of Central Excise (Appeals), Bangalore Vs. KVR Construction reported in 2012 (26) STR 195 (Ka r.)
e) Asia Pacific Commodities Ltd Vs Assistant Commr. Of Cus, Kakinada [2012 (280) ELT 481 (AP)]
42.1.1 The judgment of the Hon’ble Gujarat High Court in the case of ‘Oil and Natural Gas Corporation Ltd.’ relies on the judgement in ‘Joshi Technologies International’. The Madras High Courts, decision in ‘3E Infotech Vs. CESTAT’ has considered both the above judgments among others. It is seen from both the judgments (ie ‘Oil and Natural Gas Corporation Ltd.’ and ‘3E Infotech Vs. CESTAT’) that the landmark judgment of the Hon’ble Supreme Court in Mafatlal industries Ltd Vs Union of India (supra) dated 19/12/1996, which lays down the parameters of entertaining an application under Section 11B of the Central Excise Act, 1944, was not independently examined or discussed in the said judgments of the Hon’ble High Courts. Additionally in ‘3E Infotech Vs. CESTAT’ the decision of a coordinate bench of the Hon’ble High court in Assistant Commissioner of Service Tax, Chennai II Division, Chennai Vs M/s. Nataraj & Venkat Associates rep. by its Partner, A. Venkat, [W.A.No. 129 of 2010 & M.P.No. 1 of 2010, decided on: 23- 04-2013) was also not brought to its notice, wherein it was held;
8. From the materials available on record, it is seen that the amounts were credited to the Revenue under the Head of Account “0044 – Service Tax” through TR-6 challans which are purported for payment of Service Tax only and as such, the claim of the respondent that the payment was only deposit and not Service Tax, cannot be sustained. Further, a tax, be it, direct or indirect, is intended for immediate expenditure for the common good of the state and it would be unjust to require its repayment after it has been in whole or in part expended, which would often be the case in most payments of such sort. Therefore, it is impracticable for the authorities to refund applications that are filed beyond time even it is paid under a mistake of law. Therefore, the authorities have rightly rejected the claim of the respondent and this aspect has not been taken note of by the learned single Judge.
(emphasis added)
The judgement of the Hon’ble High Court of Madras in ‘3E Infotech Vs. CESTAT’, (supra) hence proceeds sub silentio. The Hon’ble Supreme Court in State Of U.P. & Ors vs Jeet S. Bisht & Anr (2007 6 SCC586) held as under;
18. No doubt in the aforesaid decision various direction have been given by this Court but in our opinion that was done without any discussion as to whether such directions can validly be given by the Court at all. The decision therefore passed sub silentio . The meaning of a judgment sub silentio has been explained by this Court in Municipal Corporation of Delhi Vs. Gurnam Kaur (1989) 1 SCC 101 (vide paras 11 and 12) as follows :-
“A decision passes sub silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the court or present to its mind. The court may consciously decide in favour of one party because of point A, which it considers and pronounces upon. It may be shown, however, that logically the court should not have decided in favour of the particular party unless it also decided point B in his favour; but point B was not argued or considered by the court. In such circumstances, although point B was logically involved in the facts and although the case had a specific outcome, the decision is not an authority on point B. Point B is said to pass sub silentio.
In General v. Worth of Paris Ltd. (k) (1936) 2 All ER 905 (CA), the only point argued was on the question of priority of the claimant’s debt, and, on this argument being heard, the court granted the order. No consideration was given to the question whether a garnishee order could properly be made on an account standing in the name of the liquidator. When, therefore, this very point was argued in a subsequent case before the Court of Appeal in Lancaster Motor Co. (London) Ltd. v. Bremith Ltd. (1941) 1 KB 675, the court held itself not bound by its previous decision. Sir Wilfrid Greene, M.R., said that he could not help thinking that the point now raised had been deliberately passed sub silentio by counsel in order that the point of substance might be decided. He went on to say that the point had to be decided by the earlier court before it could make the order which it did; nevertheless, since it was decided 11without argument, without reference to the crucial words of the rule, and without any citation of authority11, it was not binding and would not be followed. Precedents sub silentio and without argument are of no moment. This rule has ever since been followed.11
19. The principle of sub silentio has been thereafter followed by this Court in State of U.P. & Anr. Vs. Synthetics & Chemicals Ltd. & Anr. (1991) 4 SCC 139, Arnit Das Vs. State of Bihar (2000) 5 SCC 488, A-One Granites Vs. State of U.P. & Ors. (2001) 3 SCC 537, Divisional Controller, KSRTC Vs. Mahadeva Shetty & Anr. (2003) 7 SCC 197 and State of Punjab & Anr. Vs. Devans Modern Breweries Ltd. & Anr. (2004) 11 SCC 26.
42.1.2 ‘Joshi Technologies International’ contains reference to judgments that have considered the Hon’ble Supreme Court’s judgment in Mafatlal industries Ltd. (supra). The Hon’ble Gujarat High Court in the said case while summarizing their decision held as under;
19). . . .
TO SUMMARISE:-
. . . . . . Since the provisions of Section 118 of the Act are not applicable to the claim of refund made by the petitioner, the limitation prescribed under the said provision would also not be applicable and the general provisions under the Limitation Act, 1963 would be applicable. Section 17 of the Limitation Act inter alia provides that when a suit or application is for relief from the consequences of a mistake, the period of limitation would not begin to run until the plaintiff or applicant has discovered the mistake, or could, with reasonable diligence, have discovered it. Since the period of limitation begins to run only from the time when the applicant comes to know of the mistake, the application made by the petitioner was well within the prescribed period of limitation. Moreover, since the very retention of the Education Cess and Secondary and Higher Secondary Education Cess by the respondents is without authority of law, in the light of the decision of this court in Swastik Sanitarywares Ltd. v. Union of India (supra), the question of applying the limitation prescribed under Section 118 of the CE Act would not arise.
(emphasis added)
It may be recalled the Apex court in ‘Mafatlal Industries Ltd’ had clarified that so far as the jurisdiction of the High Court under Article 226 – or for that matter, the jurisdiction of the Apex court under Article 32 – is concerned, it is obvious that the provisions of the Act cannot bar and curtail these remedies (for a refund under a mistake of law). It is seen that the Division Bench of the Hon’ble High Court of Karnataka, in Commissioner of Central Excise (Appeals), Bangalore Vs. KVR Construction reported in 2012 (26) STR 195 (Kar.) examined a case where the respondent/ assessee after failing at the first round of appeal by-passed the Tribunal and directly approached the Hon’ble High Court, on the ground that they have paid the amount by mistake and therefore they are entitled for the refund of the said amount. The judgment in Mafatlal Industries ltd was examined by the Hon’ble High Court. The Hon’ble Court stated as under;
23. Now we are faced with a similar situation where the claim of the respondent/assessee is on the ground that they have paid the amount by mistake and therefore they are entitled for the refund of the said amount. If we consider this payment as service tax and duty payable, automatically, Section 11B would be applicable. When once there was no compulsion or duty cast to pay this service tax, the amount of Rs. 1,23,96,948/- paid by petitioner under mistaken notion, would not be a duty or “service tax” payable in law. Therefore, once it is not payable in law there was no authority for the department to retain such amount. By any stretch of imagination, it will not amount to duty of excise to attract Section 11 B. Therefore, it is outside the purview of Section 11 B of the Act.
(emphasis added)
The Hon’ble High Court directed the department to refund the amounts. Hence it is seen that the cited judgments contain direction by Hon’ble High Courts to sanction refunds by nature of being Constitutional Courts and not being limited by the provisions of the CE Act. Further, the question raised at para 40(b) above of this order as to whether an authority created by the statute can sanction a refund under the CE Act without taking into consideration the limitations placed by the statute on him, was not a specific matter for consideration. The decisions of the Hon’ble High Courts are in personam, passed considering the facts of the case and issues of law as placed before them and discussed. They are hence distinguished. 4.1.3 As regards the Hon’ble Andhra Pradesh, High court’s judgment in Asia Pacific Commodities Ltd (supra), it relates to the Tribunal considering a new ground of the dispute canvassed by the parties before them. Since this is not a matter of dispute in this case the judgment is not relevant.
Judgments passed by the Hon’ble High Tribunals
42.2 I next consider the judgments of the Hon’ble Tribunals cited by the appellant;
a) A. P. Enterprises Vs. Commissioner of Service Tax, Chennai reported in 2019 (6) TMI 18 – CESTAT Chennai
b) Venkatraman Guhaprasad & Ors. Vs. Commissioner of GST & Central Excise, Chennai South reported in 2019 (9) TMI 1143 – CESTAT Chennai
c) M/s. Avadh Rail Infra Limited Vs. Commissioner of GST & Central Excise, Lucknow reported in 2018 (7) TMI 1114 – CESTAT Allahabad
d) Oriental Insurance Company Ltd. Vs. Commissioner of Central Excise and Service Tax, New Delhi as reported in 2020 (1) TMI 324 – CESTAT New Delhi
42.2.1 Though parties to a dispute must not hesitate in telling the Tribunal the correct position of law when it is binding, there has been a glaring omission in this case and in others. One common feature of all the above judgements is that, although the right to refund and the remedy for refund are the two important mainstream legal positions that has been enunciated by the Hon’ble Supreme Court in its judgment in ‘Mafatlal Industries Ltd’ (supra), the said judgment was not taken up by the respective Benches independently for discussion and consideration. I find that the appellant has also not discussed or relied upon/ enclosed the judgement for consideration in this present case too, even though both the lower authorities have relied on it while coming to their conclusion. As the phrase goes, ‘like staging Hamlet, without the Prince of Denmark’. In D.P. Chadha vs Triyugi Narain Mishra, [(2001) 2 SCC 221], the Hon’ble Supreme Court, held as follows;
“26. A lawyer must not hesitate in telling the court the correct position of law when it is undisputed and admits of no exception. A view of the law settled by the ruling of a superior court or a binding precedent even if it does not serve the cause of his client, must be brought to the notice of court unhesitatingly. This obligation of a counsel flows from the confidence reposed by the court in the counsel appearing for any of the two sides. A counsel, being an officer of court, shall apprise the Judge with the correct position of law whether for or against either party.”
42.2.2 I find that the Hon’ble Tribunal in Oriental Insurance Company Ltd. (supra) did discuss the decision of a Larger Bench of the Tribunal in Veer Overseas Ltd. v. CCE, Panchkula decided on 27 March, 2018, [2018 (4) TMI 910 – CESTAT Chandigarh] which heard the following reference;
“(a) Whether in respect of the claim for refund of illegal levy of Service Tax or of Service Tax collected without authority of law, the statutory time limit prescribed in terms of Section 11 B of Central Excise Act 1944 will be applicable or not?”.
The majority of two Members discussed the Mafatlal Judgment and held that the statutory limit prescribed in section 11-B of the Excise Act would be applicable to refunds claimed for payments made under a mistake of law, relying on the Supreme Courts judgment in Mafatlal Industries. They held as under;
9. The Apex court in Mafatlal Industries Ltd. (supra) observed that the Central Excise Act and the Rules made thereunder including Section 11 B too constitute “law” within the meaning of Article 265 and that in the face of the said provisions — which are exclusive in their nature” no claim for refund is maintainable except and in accordance therewith. The Apex court emphasized that “the provisions of the Central Excise Act also constitute “law” within the meaning of Article 265 and any collection or retention of tax in accordance or pursuant to the said provisions is collection or retention under “the authority of law” within the meaning of the said Article”.
10. Having examined various decided cases and the submissions of both the sides, we are of the considered view that a claim for refund of service tax is governed by the provision of Section 11 B for period of limitation. The statutory time limit cannot be extended by any authority as held by the Apex court.
(emphasis added)
The third Member held to the contra placing reliance on the decision of the Bombay High Court in Parijat Construction. The Hon’ble Tribunal in ‘Oriental Insurance Company Ltd.’ after discussing various High Court judgments concludes as under;
33. It is, therefore, clear from the aforesaid decisions relied on by the Appellant that when service tax is not leviable, but it is deposited mistakenly by the Appellant, the provisions of section 11-B of the Excise Act relating to limitation would not be applicable. In the instant case, the Commissioner (Appeals) has rejected the refund claim of the Appellant only for the reason that it was made beyond a period of one year from the date of payment of duty.
(emphasis added)
42.2.3 It is seen from all the judgements cited above by the appellant, that apart from the contesting parties not placing the binding Apex Courts landmark judgment in Mafatlal Industries Ltd judgment as the center piece of the discussion, the judgments are also passed sub silentio and do not contain any discussions on the provision of the CE Act that they have relied upon to come to a decision that the lower authorities rejecting the refund claim under section 11B is unsustainable, which I could adopt. Moreso in the light of the Larger Bench decision in Veer Overseas Ltd. (supra) based on the Hon’ble Supreme Court’s judgment in ‘Mafatalal Industries ltd’ and when the powers of High Courts and Tribunals are not concomitant. The Hon’ble High Court of Karnataka in C. Narayanaswamy And Others, Etc. vs State Of Karnataka And Another [AIR 1992 Kant 28] decided on 11/03/1991 held as under;
“14. We are bound by the decision of the Supreme Court. If there is a direct decision of the Supreme Court on any question, it is impermissible for the High Court to follow the opinion of any learned author, whatever his eminence be, ignoring the said decision. . .”
Again in M/s New Krishna Bhavan Vs. Commercial Tax Officer (AIR 1961 MYS.3) a Division Bench of the Hon’ble High Court of Karanataka stated that if the majority of Judges of the Supreme Court in a particular case express a view on a proportion of law, then that view of the majority of the judges would be the law declared by the Supreme Court and binding on all courts.
43. Having discussed and found that the question raised by me has been answered by the larger bench of the Hon’ble CESTAT at Chandigarh, in ‘Veer Overseas Ltd’, I summarise my discussions as under:-
a) The landmark judgment of the Hon’ble Supreme Court in Mafatlal Industries Ltd Vs Union of India [1997 (89) E.L.T. 247 (S.C.)] has by a majority verdict declared and clarified all the issues on the right to refund and the remedy for obtaining a refund of monies paid under a ‘mistake of law’, among other things, which is
b) Accordingly Statutory Authorities including Central Excise officers have the authority to admit, examine and decide the impugned claim arising from a ‘mistake of law’ exercising powers under section 11B of the Central Excise Act, 1944. They cannot take resort to an independent remedy from another statute when such a course is expressly barred by the provisions in the Act. To hold otherwise, I feel, would be contrary to judgment by the Hon’ble Apex Court in ‘Mafatlal Industries ltd’ above.
c) A legal enactment must be interpreted in its plain and literal sense. Authorities that are a creation of the statute are bound to act within the four corners of a statute and cannot ignore its provision to relieve what it considers a distress resulting from the operation of law. Hence, I am of the opinion that the impugned refund claim will have to be examined under the provisions of Section 11B of the CE Act. While the claim is found eligible on merits and is not hit by the bar of unjust enrichment, it cannot be sanctioned as it is hit by limitation of time under the said section as stated at para 41.3 above. The impugned order is hence modified on the above terms and partially upheld accordingly. The appeal stands rejected on the grounds of limitation alone.
Sd/-
(M. AJIT KUMAR)
Member (Technical)
Rex
DIFFERENCE OF OPINION
In view of the difference of opinion between the Members, the following questions are framed for resolution by the Third Member:-
1. Whether the appeal is to be allowed on the ground that the refund is not hit by limitation under section 11B of the Central Excise Act, 1944 as held by Member (Judicial)?
(OR)
Whether the appeal is to be dismissed on the ground that the refund is hit by limitation as provided in section 11B of Central Excise Act, 1944 as held by Member (Technical)?
(Pronounced in open court on 06.07.2023)
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