Refund of excess cess allowed where valuation was inflated and documentary evidence rebutted unjust enrichment presumption.

An ad valorem Oil Industry Development Cess paid on an inflated value was held refundable where valuation should have followed Section 4 principles of the Central Excise Act and the record showed excess payment through adoption of an ex-duty value instead of a cum-duty value. The refund was also held not barred by unjust enrichment because the Section 12B presumption was rebutted by the contract, invoices, a chartered accountant's certificate, and buyer confirmation showing that the cess was not recovered from the buyer. Credible documentary evidence displaced the presumption of duty passing on, making refund admissible in principle.

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Issues: (i) Whether the appellant was entitled to refund of excess Oil Industry Development Cess paid on account of incorrect valuation under the Oil Industry (Development) Act, 1974 and the Central Excise Act, 1944. (ii) Whether the refund claim was barred by unjust enrichment under Sections 11B and 12B of the Central Excise Act, 1944.

Issue (i): Whether the appellant was entitled to refund of excess Oil Industry Development Cess paid on account of incorrect valuation under the Oil Industry (Development) Act, 1974 and the Central Excise Act, 1944.

Analysis: The levy of cess under Section 15 of the Oil Industry (Development) Act, 1974 was ad valorem for the relevant period, so valuation had to be tested on the principles of Section 4 of the Central Excise Act, 1944. The sale price under the crude oil sale agreement was treated as if it were exclusive of duty, though the pricing mechanism did not separately recover the cess. The record showed that excess cess was paid by adopting an ex-duty value instead of a cum-duty value, and the verification report accepted the mathematical excess. The contractual terms and invoices also showed that the cess was not a recoverable component from the buyer.

Conclusion: The appellant established payment of excess cess due to incorrect valuation, and refund was admissible in principle in favour of the assessee.

Issue (ii): Whether the refund claim was barred by unjust enrichment under Sections 11B and 12B of the Central Excise Act, 1944.

Analysis: Section 12B raised a rebuttable presumption that the duty burden had been passed on, but the appellant rebutted it through the crude oil sale agreement, invoices, a chartered accountant's certificate, and the buyer's confirmation. These documents showed that the contractual price did not include Oil Industry Development Cess and that the buyer had not paid that cess to the appellant. The Department produced no contrary material to show passing on of the incidence, so the statutory presumption stood displaced on the evidence.

Conclusion: The refund was not hit by unjust enrichment, and the issue was decided in favour of the assessee.

Final Conclusion: The excess cess paid on incorrect valuation was refundable, and the rejection of refund on unjust enrichment grounds was unsustainable; the appeal succeeded with consequential relief.

Ratio Decidendi: Where an ad valorem cess is paid on an inflated value under a contract that does not permit recovery of the cess from the buyer, refund is allowable if the assessee rebuts the Section 12B presumption by credible contractual and documentary evidence showing non-passing of the duty burden.

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