TaxTMI 
TaxTMI 
2026 (6) TMI 702
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....D Cess was paid at ad valorem rate pursuant to Notification dated 28.03.2016 issued under Section 15 of the Oil Industry (Development) Act, 1974. The Appellant subsequently claimed refund contending that excess cess was paid on an incorrect assessable value. 2. The Appellant, having realized that OID Cess had been paid in excess during the period from March 2016 to May 2016 due to adoption of an incorrect assessable value, filed a refund claim of Rs.4,42,08,044/- under Section 11B of the Central Excise Act, 1944. The original adjudicating authority rejected the claim on the ground that the Appellant failed to establish that the incidence of duty had not been passed on, thereby attracting unjust enrichment. Being aggrieved, the Appellant preferred an appeal before the Commissioner (Appeals), who, vide the Impugned Order, upheld the rejection, holding that the burden under Section 12B had not been discharged. 3. Being aggrieved, the Appellant is now before this Tribunal. 4. The Ld. Advocate Shri Raghav Rajeev appeared on behalf of the Appellant and advanced arguments in support of the appeal. The Ld. Authorized Representative Shri Anoop Singh appeared for the Respondent/Depa....
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....x of the case, and the judicial precedents relied upon by both sides, upon careful consideration of the rival submissions and the material available on record including the invoices, refund claim and the verification report. Issue (i): Whether the Appellant is entitled to refund of excess OID Cess paid on account of incorrect valuation 9. The core issue here lies in determining whether the Appellant has established that excess OID Cess was paid during the relevant period due to adoption of an incorrect assessable value and whether such excess payment is refundable in law. At the outset, it is necessary to examine the statutory scheme under which OID Cess is levied. Section 15 of the Oil Industry (Development) Act, 1974 provides that cess shall be levied and collected as a duty of excise on crude oil produced in India. The nature of levy underwent a significant change by virtue of Notification dated 28.03.2016, whereby the earlier specific rate was replaced by an ad valorem levy at 20% of the value of crude oil. Once the levy assumes an ad valorem character, the determination of value necessarily attracts the principles of valuation under Section 4 of the Central Excise Act, 1....
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....tructured to include cess. A clearer appreciation of the Appellant's claim of excess payment emerges from the manner in which OID Cess was computed during the relevant period. It is seen from the records and the refund verification report that for the months of March 2016, April 2016 and May 2016, the Appellant discharged cess at the rate of 20% on the sale price of crude oil (excluding VAT), treating such price as if it were exclusive of duty. However, in terms of Section 4 of the Central Excise Act, 1944, once the transaction value does not separately recover duty and is governed by a pricing mechanism under the COSA, the price is required to be treated as a cum-duty price. In such a situation, the correct assessable value ought to be derived by backing out the duty element from the sale price. In other words, where the sale price is taken as Rs.100, the correct assessable value would be Rs.100 / 1.20, i.e., Rs.83.33, and the duty payable would be 20% of Rs.83.33, i.e., Rs.16.67. However, by adopting the incorrect methodology, the Appellant paid duty of Rs.20 on the same value of Rs.100, thereby paying excess duty of Rs.3.33. This error continued uniformly for March 2016, April 2....
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....den were made in favour of the appellant................" The Tribunal has held that once excess payment is established and the Department does not dispute the computation, refund cannot be denied on merits. 16. We also find that the principle underlying these decisions is rooted in Article 265 of the Constitution, which mandates that no tax shall be collected except by authority of law. Where excess amount is collected due to incorrect application of valuation provisions, retention of such amount would be contrary to constitutional mandate. The Department has not brought on record any material to dispute the correctness of the Appellant's computation or the methodology adopted post-June 2016. The rejection of refund on merits is therefore not sustainable. The entire basis of rejection is unjust enrichment, which is separately dealt with under Issue (ii). 17. In view of the above, we hold that the Appellant has successfully established that excess OID Cess was paid due to incorrect valuation methodology, namely adoption of ex-duty value instead of cum-duty value. The excess payment is therefore refundable in principle. Accordingly, issue (i) is decided in favour of the App....
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....gal significance. It demonstrates that the parties to the contract have consciously excluded OID Cess from the price components chargeable to the buyer. In commercial contracts of this nature, where the pricing formula is detailed and specific, the inclusion of one levy and exclusion of another must be given full effect. The express inclusion of VAT and the complete absence of OID Cess in Schedule B leads to an inescapable conclusion that OID Cess is not intended to be recovered from the buyer and is to be borne by the seller. 19.3 Further, the pricing template contained in Appendix-B (page 78 of the paper book) further reinforces this position. The computation of final price includes specified elements such as FOB price, pipeline/FPSO charges, taxes and duties (limited to customs duty and sales tax components) and NCCD, wherever applicable. Notably, even in this detailed pricing build-up, OID Cess does not find place as a recoverable component. 19.4 Thus, the COSA, read as a whole, clearly establishes that OID Cess is not part of the transaction value charged to CPCL. The agreement operates as a complete code governing price determination, and in the absence of any contractu....
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....ould have borne the incidence if passed on, has expressly stated that no such amount has been paid by it. 23. When both these documents are read together, they form a complete chain of evidence. The Chartered Accountant's certificate establishes, based on books of account and contractual terms, that the duty burden has been borne by the Appellant, while the CPCL certificate provides direct confirmation from the recipient that no such duty has been recovered from it. These two pieces of evidence operate in tandem and mutually reinforce each other. The Department has not brought on record any contrary evidence to discredit these documents or to show that the duty has in fact been recovered from CPCL. 24. In the absence of any rebuttal evidence, and in view of the clear, consistent and corroborative nature of the CA certificate and buyer confirmation, we are of the considered view that the Appellant has successfully discharged the burden cast upon it under Section 12B of the Central Excise Act. The presumption of passing on of duty stands effectively rebutted by these documents, which constitute credible and substantive evidence of non-passing of incidence. 25. The Appellant ....