TaxTMI 
TaxTMI 
2010 (7) TMI 961
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....e Refinery paid duty at the time of clearance. Second set of orders passed by the Commissioner (Appeals) sustained denial of refund of duty paid on quantities short received by OMCs compared to the quantity on which the Refinery had paid duty. Particulars of the appeals are as follows :- I. DEMANDS S/No. Appeal No. OIA/OIO No. & date Material Period Amount of duty (Rs.) Interest (Rs.) 1. E/448/08 OIO No. 1/2008, dated 29-2-2008 7/2006 to 9/2006 1,14,33,593 10,000 2. E/872/07 OIO No. 8/2007, dated 14-9-2007 1/2006 to 6/2006 2,64,11,781 10,000 3. E/739/06 OIO No. 15 & 16/2006, dated 17-4-2006 6/2003 to 5/2004 2,05,37,942 15,00,000 + 5,00,000 4. E/739-A/2006 -do- 6/2004 to 12/2004 7,60,09,748 - II. REFUNDS S/No. Appeal No. OIA/OIO No. & date Period in dispute Amount of refund (Rs.) 1. E/299/07 OIA Nos. 406 to 409/2006, dated 14-11-2006 4/2005 11,07,800 2. E/300/07 -do- 5/2005 41,519 3. E/302/07 -do- 2/2005 17,36,967 4. E/303/07 -do- 3/2005 28,93,072 5. E/1000/2006 OIA Nos. 365 & 366/06, dated ....
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....ce without allowing any set off relatable to cases of short removals claimed by the assessee. In the second category of the orders, the Commissioner (Appeals) sustained orders of the original authority denying claims for refund for short receipts as not admissible. One impugned order each of the two categories of cases are discussed below. The orders are representative of the two categories comprising all orders impugned. Demand of duty : 3. Vide Order-in-Original No. 8/2007, dated 14-9-2007 impugned in appeal No. E/872/2007, a demand of Rs. 2,64,11,781/- along with applicable interest for the delay in payment of differential duty has been confirmed. An amount of Rs. 1,39,65,561/- already paid on net excess removal by the assessee being part of the same liability has been appropriated. A penalty of Rs. 10,000/- has been imposed on KRL under Rule 25 of the Central Excise Rules, 2002. From the impugned order, we observe that there is no dispute as to the excess receipts (removals) evidenced also by debit notes raised on consignee OMCs. While acknowledging the difficulties faced by BPCL-KRL in determining the exact quantity at the time of clearance of each consignment throu....
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....ent it had ignored the excess payment by the assessee towards short removals involved. It is submitted that the procedure followed had been prevalent for a long time when the bond removals were allowed, that the in bond movement was discontinued could not be a ground for deprecating the practice adopted by the appellants. Refunds claimed : 5. We consider one case each of the two types of orders covering all the impugned orders rejecting refund. First category of orders impugned rejected the claims on the ground of refund entailing unjust enrichment when credit note was issued to the buyer for excess duty collected at the time of removal of the goods. These are listed at Sl. Nos. 11 to 17 of the Table II Refunds. Vide the Orders-in-Appeal Nos. 88 to 92/2007, dated 23-11-2007 (Sl. Nos. 13 to 17), the Commissioner (Appeals) confirmed rejection of claims for refund of Rs. 2,38,675/-; Rs. 9,68,353/-; Rs. 21,77,028/-; Rs. 6,39,358/- and Rs. 6,71,912/- pertaining to clearances of petroleum products respectively during June, 2005, August, 2005, September, 2005, January, 2006 and February, 2006 under separate orders of the original authority. The circumstances under which the cla....
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....mitted that the assessee was liable to pay duty only on the transaction value. It had substantiated the correctness of the amount claimed as refund with excise invoices, commercial invoices, PLA abstracts, etc. Therefore the excess amount covered by credit notes was duty paid in excess liable to be refunded to the appellants. The issue of credit notes/debit notes towards price adjustment/revision was commercially accepted as a convenient method of settling the dues between the buyer and the seller. The issue of credit notes was conclusive proof of the assessee having refunded the amount involved. The department had allowed similar refund in an earlier case and could not now take a contrary stand. The Commissioner held that the judicial authorities cited in support of the claim were distinguishable on facts and passed the impugned order. The assessee had relied on the following case laws in support of the claim that issue of credit notes was proof that duty incidence had not been passed on by the seller and refund could be sanctioned to the assessee. (i) Dharamsi Morarji Chemical Co. Ltd. v. CCE, Mumbai [2002 (150) E.L.T. 659 (Tri.-Mumbai)]. (ii) Collector of Central....
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....t of difference in transaction value per unit which was charged for the goods delivered under Section 4(1)(a) of the Central Excise Act. The Order-in-Appeal No. 234/04, dated 14-4-2004 had attained finality. 8. Heard both sides. 9. We have carefully perused the case records and considered the rival submissions. As regards the demand confirmed against BPCL-KRL in various orders impugned, we find that each removal had been taken into account for determining the duty liability and duty short paid demanded along with applicable interest for the delay in making good the short payment. There is no dispute about the excess quantity removed and duty liability confirmed. Only dispute is about the demands being set off suo motu against refunds claimed to be due, by the assessee. We note that the practice of reconciliation and netting of liability/refund involved had been in vogue for a long time in respect of such removals made under bond and that similar adjustments used to be made in settlement monthly. We find that under the procedure of in bond movement, the assessee was required to pay duty towards transit loss in excess of a small percentage (separately fixed for each p....
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....ssee on this account. However, as regards the excess payment claimed to have been made by the appellants on the quantities allegedly removed short, compared to the invoice quantity, the appellant seeks the Revenue to rely on the records relating to commercial settlement of these transactions between the assessee and the OMCs. The appellants ascertained the shortage based on the quantity received against each invoice from the dip readings of the storage tanks in the premises of the buyers (OMCs). There is no logic in accepting the quantity ascertained by the OMCs in preference to the quantity ascertained similarly by taking readings of storage tanks in the assessee's premises while clearing the goods. Except that the OMCs made payments on that basis. For all transactions engaged in by the appellant involving receipt, or removal of goods stored in tanks, it adopts quantities ascertained by dip measurements using the valid calibration chart of the respective tanks. In the bond regime, when the consignee was liable to pay duty on the goods received under bond, the consignor continued to be liable for any quantity short received by the consignee. The instructions contained in the commod....
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....ned by the assessee and the buyer, then the transaction value would have been that as agreed mutually in a contract and paid by the OMC. 12. We also find that in the case of Sangam Processors (Bhilwara) Ltd. v. Collector of Central Excise, Jaipur [1994 (71) E.L.T. 989 (Tribunal)], it was held that refund of excess duty to the assessee would entail unjust enrichment even if the same was passed on to the buyer through credit notes after clearance of the excisable goods. The Civil Appeal filed by the assessee against the said order of the Tribunal was rejected by the Apex Court. The refund claim of the assessee cannot be allowed in the light of this judgment of the Apex Court. 13. We have also considered the case laws relied on by the appellant. The Siltap Chemicals Ltd. v. CCE, Vadodara-II [2006 (193) E.L.T. 461 (Tri.-Mumbai) = 2007 (7) S.T.R. 610 (T)] is a decision of a ld. Single Member of the Tribunal and supports the case of the appellants. In Collector of C. Ex., Chandigarh v. Oswal Cotton Spinning Mills [1999 (108) E.L.T. 841 (Tribunal)], the buyer had not paid the duty initially, though credit note was issued to complete the records. Facts of the present case a....