In a major relief to Indian Oil Corporation Ltd. (IOCL), the Mumbai CESTAT quashed the order refusing refund allowed under Central Excise Act, 1944.
The limited issue in the dispute of M/s Indian Oil Corporation Ltd, against order1 of Commissioner of Central Excise (Appeals), Mumbai-II which, on appeal at the behest of jurisdictional Commissioner of Central Excise, set aside the sanction of refund allowed by the competent authority under section 11B of Central Excise Act, 1944, is the applicability of test of ‘unjust enrichment’ on claim for return of ‘deposits’ made during investigation.
It was nature of the remittance is apparent from the orders of the lower authorities which have recorded that ₹ 1,74,13,087 had been debited in the ‘personal ledger account (PLA)’ on 7th August 2000 even as the demand, for the period from August 1994 to November 2006, was adjudicated only on 27th February 2001.
The appellant had been availing MODVAT credit on ‘tin cans’ used for packing and sale of ‘lubricants’ manufactured by them and proceedings were initiated for denial of the credit as the inputs had not been deployed at the factory of manufacture but in their filling facility. The confirmation of recovery of ₹ 2,46,84,459, contested by them before the Tribunal, was set aside following which an application for refund of the amount deposited in the run up to adjudication was filed and sanctioned.
IOCL contended that the debit of ‘personal ledger account (PLA)’ was tantamount to reversal of CENVAT credit already utilized and not against clearance of any goods and that, as the claim was established and was realized in the same year, it found reflection in the books of accounts as ‘income’ in 2011-12. Reliance was placed on the certificate dated 8th September 2012 of Chartered Accountant.
The Tribunal held that without evaluation of the pricing practice of the appellant for ‘lubricant’, discard of the certification on supposition of it having been treated as ‘expense’ and, therefore, built into the manufacturing cost of products cleared after 2000 is neither logical nor consistent with obligation of appellate authorities to restrict fact finding only upon evidence. In a departmental appeal, that should have been preferred as a ground of appeal on the basis of computation; a finding without such factual evaluation, in circumstances of that onus resting on the reviewing authority, cannot sustain. The certification by Chartered Accountant, considering the contents therein, suffice for discharging obligation to demonstrate that incidence of such duty has not been passed on.
Case Name: Indian Oil Corporation Ltd V/s Commissioner of Central Excise Mumbai – II