2020 (1) TMI 1448 - AT - Central Excise

Principle sof natural justice - rejection of refund claim of EC and SHEC paid on OID cess by adjudicating authority was neither discussed by the learned Commissioner(Appeals) in its order nor by the Department in the present appeal - HELD THAT - In his impugned order, the only issue taken into consideration for remanding the case to adjudicating authority is delay in passing the order from the date of personal hearing. The issue is no more res integra and has been decided by the Hon ble Hon ble Supreme Court in the case of MIL INDIA LTD. VERSUS COMMISSIONER OF C. EX., NOIDA 2007 (3) TMI 8 - SUPREME COURT where it was held that the Commissioner (A) continues to exercise the powers of the adjudicating authority in the matters of assessment. Under Section 35B any person aggrieved by the order of the Commissioner as an adjudicating authority is entitled to move the Tribunal in appeal. Section 35B indicates that the decision of order passed by the Commissioner (A) shall be treated as an order of an adjudicating authority. In the circumstances the High Court had erred in holding that the assessee was not entitled to agitate the question of dutiability in appeal before the Tribunal. The appeal filed by the department is allowed by way of remand to the adjudicating authority to decide the Refund claim in view of the decisions of the superior Courts.

Summary

Issues:
1. Liability to pay Oil Industry Development Cess (OID Cess), Education Cess (EC), and Secondary and Higher Education Cess (SHEC) on crude oil sold.
2. Discontinuation and refund claim of EC and SHEC on OID Cess.
3. Denial of refund claim based on unjust enrichment and limitation.
4. Appeal challenging the power of Commissioner(Appeals) to remand the case.
5. Interpretation of the limitation under Section 11B of the Central Excise Act.
6. Violation of principles of natural justice in passing orders.
7. Applicability of the decision in Joshi Technologies International, INC-India Projects v. Union of India.
8. Decision on remand to adjudicating authority.

Analysis:
1. The respondent, engaged in crude oil production, was liable to pay OID Cess, EC, and SHEC. Initially, EC and SHEC were paid on OID Cess based on a bonafide belief. Subsequent circulars clarified the applicability of EC and SHEC on duties collected by the Ministry of Finance, leading to a discontinuation of EC and SHEC payments on OID Cess from 2014.

2. A refund claim of EC and SHEC on OID Cess was submitted, contested by a Show Cause Notice citing unjust enrichment and limitation under Section 11B. Despite a detailed response, the refund claim was rejected due to the limitation and unjust enrichment element.

3. The appeal challenged the power of Commissioner(Appeals) to remand the case. The main issue of rejecting the refund claim was not discussed in the appeal. The respondent cited a High Court decision favoring their stance on the limitation issue.

4. The judgment highlighted the violation of natural justice principles, referencing a Supreme Court decision emphasizing the Tribunal's authority to decide on excisability issues independently from lower authorities' decisions.

5. The Tribunal allowed the appeal, remanding the case to the adjudicating authority for reconsideration in line with superior court decisions. The order instructed the adjudicating authority to decide on the refund claim within three months from the date of receipt of the order.