2013 (4) TMI 25 - AT - Central Excise

Demand of differential amounts of cess interest on cess and penalties - u/s 15 of the Oil Industry (Development) Act 1974 the relevant provisions of the Central Excise Rules and under Rule 26 Central Excise Rules by the Department on crude oil cleared by the respondent. Department provides the Tribunal s decision in the case of ONGC Ltd. v. CCE Mumbai 2000 (12) TMI 148 - CEGAT COURT NO. III NEW DELHI . The demands are contested by the respondent and also respondent asked for the refund of differential cess in respect of such shortages and the differential amounts of cess admissible and also pointed out that a plea for set-off the excess quantity of crude oil against shortage as refund should be adjusted against the differential amounts of cess demanded by department in the event of the quantity of crude oil actually received by the refinery being adopted as the basis for demands of cess under Section 15 of the Oil Industry (Development) Act 1974. In this connection the respondent referred the decisions of this Bench in their own cases viz. Final Order No. 1472/2006 dated 12-9-2006 (Cairn Energy India Pvt. Ltd. v. CCE & C Visakhapatnam-II) reported in 2006 (9) TMI 41 - CESTAT, BANGALORE (Tri.-Bang.) . Held that - The excess quantities were considered for recovery of differential cess from the respondent and the shortages were ignored. If the assessee was liable to pay differential cess on the excess quantities of crude oil in terms of Section 15(2) of the Oil Industry (Development) Act 1974 they could claim refund of differential cess in respect of the shortages. Therefore the assesses claim for adjustment was liable to be considered by the proper officer of Central Excise at the time of finalization of provisional. There is also two more citations which are considered by department before taking the decisions 2007 (3) TMI 538 - CESTAT KOLKATA & 2010 (8) TMI 226 - CESTAT AHMEDABAD . Any such adjustment between demand and refund of cess is not hit by the bar of unjust enrichment as mentioned in the decision of the Larger Bench of Tribunal Excel Rubber Ltd. v. CCE Hyderabad 2011(3)TMI 527 . - Decided in favor of assessee.

Summary

Issues:
- Appeal against common order passed by Commissioner (Appeals) in three appeals filed by respondent against three adverse Orders-in-Original demanding differential amounts of cess on crude oil.
- Dispute over liability to pay cess on quantity of crude oil acknowledged by refinery in Intake certificates.
- Department's reliance on Tribunal's decision in ONGC case and Board's Circular for cess payment on excess quantities received.
- Commissioner (Appeals) remanding the matters due to inconsistency in Department's stand.
- Department's contention of Commissioner (Appeals) lacking power of remand.
- Respondent's claim for refund of cess on shortages and plea for adjustment against demanded cess.
- Tribunal's analysis of respondent's liability under Section 15 of Oil Industry (Development) Act, 1974.
- Tribunal's consideration of remand power of Commissioner (Appeals) and respondent's claim for adjustment.
- Decision to set aside impugned order and remand case to original authorities for fresh assessment.

Detailed Analysis:
1. The appeals were filed against a common order by Commissioner (Appeals) regarding the demand for differential cess on crude oil. The dispute centered around the liability to pay cess based on quantities acknowledged in Intake certificates by the refinery, not Bill of Lading quantities. The original authorities confirmed demands against the respondent, leading to appeals and remand by Commissioner (Appeals) due to inconsistency in the Department's stand.

2. The Department relied on the Tribunal's decision in the ONGC case and a Board's Circular for cess payment on excess quantities received by the refinery. The Department argued that the respondent is liable to pay cess under Section 15(2) of the Oil Industry (Development) Act, 1974, on quantities reflected in the Refinery's Intake certificates.

3. The Tribunal considered the Department's arguments and the respondent's claim for adjustment. The Commissioner (Appeals) remanded the case, prompting the Department to challenge the remand power of the Commissioner (Appeals). The respondent sought a refund of cess on shortages and requested adjustment against the demanded cess.

4. The Tribunal analyzed the respondent's liability under Section 15 of the Act, emphasizing that cess is payable on quantities received in the refinery. The Tribunal upheld the original authorities' view on the substantive issue. However, the Tribunal addressed two key questions: the remand power of the Commissioner (Appeals) and the respondent's claim for adjustment.

5. Referring to the Supreme Court's judgment, the Tribunal concluded that the Commissioner (Appeals) lacked the power of remand. The respondent's claim for adjustment was found valid, subject to conditions to prevent unjust enrichment. The Tribunal set aside the impugned order and remanded the case to the original authorities for fresh assessment, ensuring the respondent's right to be heard.

This detailed analysis covers the legal judgment comprehensively, addressing the issues involved and the Tribunal's decision on each point with relevant legal references and arguments presented by both parties.