TMI Blog2010 (7) TMI 961X X X X Extracts X X X X X X X X Extracts X X X X ..... ion value would have been that as agreed mutually in a contract and paid by the OMC. Denial of refund of duty paid on quantities short received by OMCs compared to the quantity on which the Refinery had paid duty - Held that: - The issue has arisen due to a clerical mistake on the part of M/s. IOC. There is an automatic systems of debit of duty by the respondents in the account of IOC. Even if mistake occurs, duty in the account of IOC at the end of the respondents automatically gets debited. The only way, in such a register, to correct the mistake is to provide credit to IOC. In the present case it is seen that the invoice was raised on 17-4-2002 and the rectification was done on 5-7-2002 i.e. within a fort-night. If the respondent is not given the refund, it will be traverse of justice, as the respondents will never be able to set the refund of duty paid erroneously or due to a clerical error. Appeal rejected - decided against assessee. - E/299-300, 302-303, 872/2007, E/148-152, 448, 377-378/2008, E/739 & 739-A, 1000-1001 & 751-754/2006 - Final Order Nos. 1027-1047/2010 - Dated:- 22-7-2010 - Shri M.V. Ravindran, Member (J) and P. Karthikeyan, Member (T) Shri Jayasan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 22-6-2006 12/2004 21,31,065 6. E/1001/2006 -do- 1/2005 9,65,962.64 7. E/751/06 OIA Nos. 279 280/2006, dated 30-3-2006 1/2004, 3/2004 5/2004 26,01,392 8. E/752/06 -do- 6/2004 to 8/2004 13,87,345 9. E/753/06 OIA No. 341/2006, dated 31-5-2006 11/2004 1,71,643 10. E/754/06 OIA No. 290/2006, dated 29-3-2006 9/2004 to 10/2004 17,56,236 + 18,42,924 11. E/377/08 OIA Nos. 31 32/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... latable 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 ₹ 2,64,11,781/- along with applicable interest for the delay in payment of differential duty has been confirmed. An amount of ₹ 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 ₹ 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 through pipelines, the Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment 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 ₹ 2,38,675/-; ₹ 9,68,353/-; ₹ 21,77,028/-; ₹ 6,39,358/- and ₹ 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 claims arose are exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble 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 Excise, Chandigarh v. Oswal Cotton Spinni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich 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 product) of the consignment moved and such total monthly tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 commodity manual relied on by the appellants did not condone the transit loss suffered by the consignment transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 are distinguishable from that of Oswal Cotton Spinning Mills (supra). The appeals do not say how the ratio of the judicial author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... informed them that the excise duty paid will not be honoured. By this time they had paid the duty to the Department. Therefore, even though they had already debited M/s. IOCL in their books while accounting for the invoice, raised a credit note for rectifying the mistake. From the above it can be seen that the present case can be differentiated from the Addison s case cited supra. There was no actual transfer of duty or availment of Cenvat by M/s. IOC. In the case of the respondents, they are maintaining an account in the name of M/s. IOC and whenever clearance is effected a debit entry is made in the said books and M/s. IOC reconciles the accounts periodically. The issue has arisen due to a clerical mistake on the part of M/s. IOC. There is an automatic systems of debit of duty by the respondents in the account of IOC. Even if mistake occurs, duty in the account of IOC at the end of the respondents automatically gets debited. The only way, in such a register, to correct the mistake is to provide credit to IOC. In the present case it is seen that the invoice was raised on 17-4-2002 and the rectification was done on 5-7-2002 i.e. within a fort-night. If the respondent is not give ..... X X X X Extracts X X X X X X X X Extracts X X X X
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