Approved provisional cess procedure allowed PLA re-credit; recovery and interest demand were set aside as unsustainable.

Where excess cess was paid under an approved provisional procedure for crude oil, the excess could be adjusted by re-credit against cess payable in the next month if that procedure expressly permitted such reconciliation. A later insistence on filing a refund claim did not govern the earlier payment, and the recovery demand with interest was held unsustainable on the facts. The procedural adjustment in PLA was therefore treated as permissible, and the demand and associated interest were set aside in favour of the assessee.

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Issues: Whether the excess cess paid through provisional debit in the PLA for March 2004 could be adjusted by re-credit in the next month against cess payable, or whether the assessee was required to file a refund claim and face recovery with interest under the Central Excise Act.

Analysis: The payment of cess on crude oil was made under the trade notice and the modified procedure approved by the Commissioner. That procedure expressly permitted adjustment of any excess cess payment noticed on reconciliation against the cess payable in the next month, with no interest on the excess amount. The authorities subsequently changed the procedure and insisted on a refund claim, but the adjustment made by the assessee was in line with the procedure then in force and with the earlier practice. The dispute was held to be procedural, and the demand raised under the recovery and interest provisions was found unsustainable on the facts.

Conclusion: The adjustment in PLA was held permissible, the demand under the recovery provision and the associated interest demand were set aside, and the appeal was allowed in favour of the assessee.

Ratio Decidendi: Where excess duty or cess has been paid under an approved provisional procedure that itself permits adjustment of the excess against subsequent liability, a subsequent re-credit is a permissible procedural adjustment and not a recoverable amount requiring a refund claim.

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