2025 (11) TMI 121 - AT - Central Excise

Appeal allowed: notifications failed Section 5A(5) conditions, enhanced excise duty not effective until publication, refunds upheld

Bharat Petroleum Corporation Limited Versus Commissioner of CGST & Central Excise Navi Mumbai

CESTAT allowed the appeal, set aside the impugned order and upheld refund claims for differential excise duty. It held the challenged notifications did ... Liability to pay excise duty at the enhanced rates mentioned in N/N. 22/2014-C.E. dated 12.11.2014 and N/N. 24/2014-C.E. dated 02.12.2014 in respect of clearances of petroleum products made on 12.11.2014 and 02.12.2014, respectively, in terms of Section 5A of the Central Excise Act, 1944 - refund claims filed by appellants in respect of differential duty paid under protest in respect of clearances of petroleum products made on 12.11.2014 and 02.12.2014 - Section 11B of the Central Excise Act, 1944 - HELD THAT:- In terms of the sub-section 5(a) to Section 5A ibid, every notification issued shall come into force on the date of its issue by the Central Government for publication in the official Gazette, and not on the date of publication of the notification in the official Gazette. Therefore, it could be concluded that N/N.22/2014-C.E. dated 12.11.2014 and N/N.24/2014-C.E. dated 02.12.2014, even though it was published in the official gazette later, since these were issued by the Central Government for publication in the official gazette on dates of the notification, on the basis of the first requirement or condition of Section 5A(5)(a) ibid alone these notifications could be construed to have come into force on 12.11.2014 and 02.12.2014 respectively. However, as the requirement of Section 5A is that each of the notification issued shall have to fulfill both the conditions of sub-section 5(a) and 5(b) ibid, it is needed to see whether the second condition was also fulfilled in order to come to a conclusion on the effective date of the issue of the notifications under consideration - the legal requirement for the manner of issue of notification, in terms of Section 5A(5) ibid have not been fulfilled in the present case, in order to claim that these notifications have come into force on the date of its issue for publication i.e., on 12.11.2014 and 02.12.2014. Further, it is also found that the Central Government in the subsequent notifications issued in respect of change/ enhancement of rate of duty for petroleum products vide N/N. 01/2015-C.E. dated 01.01.2015 and No.03/2015-C.E. dated 16.01.2015 have specifically stated that the notification shall come into effect from the next date of its issue i.e., 02.01.2015 and 17.01.2015. It is found that in an identical set of facts arising in the case of Param Industries Limited [2015 (6) TMI 732 - SUPREME COURT], the Hon’ble Supreme Court have delivered their judgement dated 05.05.2015, where they have upheld the order of the Hon’ble High Court of Karnataka and rejected the department’s appeal for demand of duty, on account of the notification prescribing the enhanced rate of duty was not published and offered for sale to the public on the date of its issue and therefore it cannot be taken as the effective date for enhanced rate of duty. The dispute is no more open for any debate and the impugned order confirming the rejection of refunds by treating the date of issue of notifications as effective date for applying the enhanced rate of excise duty, does not stand the scrutiny of law - the impugned order dated 29.08.2016 in upholding the rejection of the refund claims of differential excise duty paid under protest by the appellants, is not legally sustainable. The impugned order is set aside - appeal allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether notifications issued under Section 5A of the Central Excise Act come into force on the date of their issue to the Government Printer (date of notification) alone, or only when both (a) issued for publication in the Official Gazette and (b) published and offered for sale to the public on that date, where subsection 5 (as then in force) contained both limbs (5)(a) and (5)(b). 2. Whether refund claims under Section 11B of the Central Excise Act in respect of differential excise duty paid under protest for clearances effected on the disputed dates are admissible where the enhanced-rate notifications were not made known to the public in accordance with Section 5A(5) on the dates of clearance, and whether the impugned orders rejecting such refunds are sustainable. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Effective date of notifications under Section 5A(5) Legal framework: Section 5A (as in force during the period in dispute) required notifications under sub-section (1) (and (2A)) to 'come into force' on the date of issue for publication in the Official Gazette, and-prior to omission-also required that such notification 'also be published and offered for sale on the date of its issue by the Directorate of Publicity and Public Relations, Customs and Central Excise' (the two-limb formulation then embodied in sub-section 5(a) and 5(b)). The phrase 'unless otherwise provided' permits a notification to specify a later effective date. Precedent treatment: The Court considered and followed the Supreme Court precedent which held that both conditions (publication in the Official Gazette and offering for sale on the date of issue by the designated Directorate/Board) are mandatory to give effect to the notification on its date of issue where subsection 5 included both limbs. That precedent also relied on earlier authority treating promulgation/notification to the public as essential for operational effectiveness. Interpretation and reasoning: The Tribunal analyzed (a) statutory text of Section 5A(5) as it stood then, (b) the role and practice of the Department of Publication/Directorate in publishing and offering the Gazette for sale, and (c) factual material from the Department of Publication website and RTI responses showing that the notifications in question, although issued to the Gazette on the notification dates (12.11.2014 and 02.12.2014), were not made available to the public and offered for sale on those dates (one was made available only on 14.11.2014 and the other was not made available on the date of issue). The Tribunal held that both conditions prescribed by the subsection must be fulfilled to bring a notification into force on its issue date; mere issue to the Gazette does not suffice where the requirement to publish and offer for sale on that date was not met. The existence of the express saving 'unless otherwise provided' was noted as permitting a later effective date where the notification so specifies, but where no such alternative effective date is specified the two statutory conditions are conjunctive. Ratio vs. Obiter: Ratio - The mandatory character of both limbs of Section 5A(5) (as then in force) for giving effect to a notification on its date of issue, and the corollary that failure to publish and offer for sale on that date precludes treating the notification as effective on the date of issue. Obiter - Observations on digitization/e-publishing of Gazette and institutional details of the Department of Publication (background context but not essential to the legal ratio). Conclusions: The notifications dated 12.11.2014 and 02.12.2014 could not be treated as having come into force on those dates because the second statutory requirement-publication and offering for sale to the public on the date of issue-was not complied with. Therefore the enhanced rates could not be applied to clearances effected earlier on those dates. Issue 2 - Admissibility of refund claims under Section 11B for differential duty paid under protest Legal framework: Section 11B permits a refund application within one year of the relevant date, but the one-year limitation does not apply where duty has been paid under protest. Refund is available where duty paid is refundable and the incidence of the duty has not been passed on to any other person (statutory conditions and provisos in Section 11B). Precedent treatment: The Tribunal relied on Supreme Court authority (involving materially identical facts and the same statutory provisions) which held that where the statutory publication/offering-for-sale requirement was not complied with, the Department could not validly demand differential duty for clearances already effected that day; and on other decisions recognizing refund eligibility where duty was paid under protest and incidence was not passed on. The Tribunal also noted administrative decisions in same-industry cases treating similar notifications as effective from the next date of issue and granting refunds, consistent with the legal position found in authority. Interpretation and reasoning: Because the notifications were not lawfully effective on the dates of the disputed clearances (see Issue 1), the appellants lawfully discharged duty at the pre-revised rates on those dates. The appellants subsequently paid the differential amounts under protest when directed by the Department and preserved claims for refund, asserting they had not passed on the additional incidence. Given that payment was made under protest and that the invoices reflected pre-revised duty (indicating non-passing on), the statutory proviso to Section 11B removing the one-year limitation applied and the refund claims were admissible and required examination on merits. The Tribunal held that the impugned orders rejecting the refunds by treating the notifications as effective on their issue dates were legally unsustainable. Ratio vs. Obiter: Ratio - Where a notification purporting to enhance duty rates has not come into force in accordance with statutory publication/offering-for-sale requirements, amounts paid at the enhanced rate under protest for clearances made on the date in question are refundable if the payer did not pass on the incidence; the proviso to Section 11B preserves refund claims made after one year when duty is paid under protest. Obiter - References to particular refund sanction orders in similarly placed refineries and administrative practice (illustrative, not essential to the legal ratio). Conclusions: Refund claims in respect of differential excise duty paid under protest for clearances effected on 12.11.2014 and 02.12.2014 are admissible because the notifications were not lawfully effective on those dates. The impugned orders rejecting the refund claims on the ground that the notifications were effective from their dates of issue are set aside; appeals are allowed with consequential relief as per law.