2017 (5) TMI 145 - HC - Central Excise

Court rules refund claim not time-barred due to mistake of law

M/s. Oil And Natural Gas Corporation Limited Versus Union of India

The court ruled in favor of the petitioners, finding that their refund claim was not time-barred as it was made under a mistake of law, not subject to the ... Refund claim - time limitation - unjust enrichment - It is the case of the petitioners that since OID Cess is levied under an Act administered by the Ministry of Petroleum & Natural Gas and collected by the Department of Revenue, Ministry of Finance, in terms of the above circular, they are not liable to pay Education Cess and SHE Cess on the OID Cess levied on crude oil. The petitioners, therefore, filed a refund claim - Held that: - reliance was placed in the decision of this court in the case of Joshi Technologies International, INC-India Projects v. Union of India [2016 (6) TMI 773 - GUJARAT HIGH COURT], where it was held that since there was no liability to pay Education Cess and Secondary and Higher Secondary Education Cess, the provisions of the Central Excise Act as incorporated in the OIC Act would also not apply to the amount paid by mistake. 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 order-in-original came to be passed - 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. Appeal allowed by way of remand. Issues Involved:1. Legitimacy of the refund claim of Rs. 14,92,44,294/- as time-barred.2. Appropriateness of crediting Rs. 4,22,67,238/- to the Consumer Welfare Fund.3. Applicability of Education Cess and Secondary and Higher Secondary Education Cess on OID Cess.4. Applicability of the limitation period under Section 11B of the Central Excise Act, 1944.5. Issue of unjust enrichment.Detailed Analysis:1. Legitimacy of the Refund Claim as Time-Barred:The petitioners challenged the rejection of their refund claim of Rs. 14,92,44,294/- as time-barred by the adjudicating authority. The petitioners argued that the refund claim was made under a mistake of law and thus, should not be subject to the limitation period under Section 11B of the Central Excise Act, 1944. The court referred to the decision in Joshi Technologies International, INC-India Projects v. Union of India, which stated that the limitation under Section 11B does not apply to claims made under a mistake of law. Consequently, the general provisions under the Limitation Act, 1963, would apply, and the refund claim was within the prescribed period of limitation.2. Appropriateness of Crediting Rs. 4,22,67,238/- to the Consumer Welfare Fund:The adjudicating authority had ordered the refund amount of Rs. 4,22,67,238/- to be credited to the Consumer Welfare Fund, citing unjust enrichment. The petitioners contended that they had not passed on the incidence of Education Cess and SHE Cess to their customers. The court noted that if the adjudicating authority was not satisfied with the evidence provided, it should have asked for further documentation rather than concluding unjust enrichment without giving the petitioners a reasonable opportunity to substantiate their claim.3. Applicability of Education Cess and Secondary and Higher Secondary Education Cess on OID Cess:The petitioners paid Education Cess and SHE Cess on OID Cess under the belief that OID Cess is a duty of excise. However, a circular dated 7.1.2014 clarified that cesses levied under Acts administered by departments other than the Ministry of Finance are not subject to Education Cess and SHE Cess. The court upheld this view, stating that since OID Cess is levied by the Ministry of Petroleum and Natural Gas, it does not qualify as a duty of excise, and hence, the petitioners were not liable to pay Education Cess and SHE Cess on OID Cess.4. Applicability of the Limitation Period under Section 11B of the Central Excise Act, 1944:The court reiterated that the provisions of Section 11B of the Central Excise Act, 1944, are not applicable to claims made under a mistake of law. The limitation period under Section 17 of the Limitation Act, 1963, would apply, which starts from the time the mistake is discovered. Since the petitioners filed the refund claim promptly after discovering the mistake, the claim was within the limitation period.5. Issue of Unjust Enrichment:The court found that the adjudicating authority's conclusion of unjust enrichment was premature and without adequate consideration of the petitioners' evidence. The adjudicating authority should have provided the petitioners with an opportunity to furnish additional evidence to prove that the incidence of duty was not passed on to the customers.Conclusion:The court quashed the impugned order-in-appeal dated 29.6.2016 and restored the appeal to the file of the Commissioner (Appeals) for fresh consideration in light of the Joshi Technologies decision and other submissions by the petitioners. The court made the rule absolute to the extent of setting aside the appellate order and remanding the case for reconsideration.