2016 (6) TMI 773 - HC - Central Excise

Refund of Education Cess and Secondary and Higher Secondary Education Cess inadvertently paid on cesses - Whether Crude Oil Cess is in the nature of excise duty - Applicability of provisions of section 11B of the CE Act - Period of limitation - Held that - Crude Oil Cess is not in the nature of excise duty and consequently, the Education Cess and Secondary and Higher Secondary Education Cess computed thereon, also does not bear the character of a duty of excise, but is merely an amount paid under a mistake of law. As a necessary corollary, it follows that the provisions of the Central Excise Act, 1944 would not be applicable for refund of such amount paid by mistake. Moreover, since there was no liability to pay Education Cess and Secondary and Higher Secondary Education Cess, the provisions of the Central Excise Act as incorporated in the OIC Act would also not apply to the amount paid by mistake. Therefore, the alternative remedy suggested by the respondents cannot be said to be an efficacious remedy inasmuch as the amount paid by way of mistake is neither a duty of excise nor is it Crude Oil Cess to which the provisions of the OID Act apply, and consequently, the machinery provisions under the Central Excise Act, 1944 would not apply to refund of such amount. - Refund allowed - Decided in favor of petitioner. Interest on delayed refund - Held that - Insofar as the claim of interest is concerned, the amount admittedly had been paid by the petitioner by way of a mistake. The position of law in this regard was not clear and hence, no fault can be found in the approach of the revenue authorities in retaining such amounts till the time the Circular dated 07.01.2014 came to be issued, clarifying the issue. It has been held hereinabove, that the amount in question is not in the nature of a duty of excise and hence the provisions of the Central Excise Act for refund would not be applicable. Consequently, the provisions of section 11BB of the Central Excise Act, which provides for interest on delayed refund, would also not be applicable. It is settled legal position that in the absence of a statutory provision entitling the assessee to interest, a mandamus cannot be issued to the revenue to pay interest. Though the petitioner has claimed interest at the rate of 18%, the same is not backed by any statutory provision and hence, the relief prayed for in the petition to that extent cannot be granted. Refund allowed - claim of interest rejected - Decided partly in favor of appellant.

Issues Involved:
1. Levy of Education Cess and Secondary and Higher Secondary Education Cess on Oil Cess.
2. Applicability of Section 11B of the Central Excise Act, 1944.
3. Limitation for filing a refund claim.
4. Doctrine of unjust enrichment.
5. Maintainability of the writ petition in light of alternative remedies.
6. Entitlement to interest on the refunded amount.

Issue-wise Detailed Analysis:

1. Levy of Education Cess and Secondary and Higher Secondary Education Cess on Oil Cess:
The court held that merely because the provisions of the Central Excise Act, 1944 and the rules framed thereunder for collection and refund have been incorporated in the OID Act for collection and refund of the cess levied thereunder, it cannot be inferred that the Oil Cess imposed under the provisions of the OID Act assumes the character of central excise duty. The court noted that the adjudicating authority's finding that the Oil Cess is in the nature of excise duty is erroneous and contrary to the law laid down in Commissioner v. Sahakari Khand Udyog Mandli Ltd. The court also clarified that the reference to sugar cess and tea cess in the Circular dated 7th January 2014 is merely illustrative and that cesses collected by the Department of Revenue but levied under an Act administered by a different department are not chargeable to Education Cess and Secondary and Higher Secondary Education Cess.

2. Applicability of Section 11B of the Central Excise Act, 1944:
The court held that since Oil Cess is not a duty of excise, the amount paid by the petitioner by way of Education Cess and Secondary and Higher Secondary Education Cess cannot be considered a duty of excise. Therefore, the provisions of Section 11B of the Central Excise Act, 1944, which apply to the refund of any duty of excise, are not applicable to the petitioner's claim. The petitioner was justified in making the application for refund under a mistake of law and not under Section 11B of the Central Excise Act, 1944.

3. Limitation for Filing a Refund Claim:
The court held that since the provisions of Section 11B of the Central Excise Act are not applicable to the petitioner's refund claim, the limitation prescribed under the said provision would also not be applicable. Instead, the general provisions under the Limitation Act, 1963, would apply. Section 17 of the Limitation Act provides that when a suit or application is for relief from the consequences of a mistake, the period of limitation would not begin to run until the mistake is discovered. The court found that the petitioner filed the refund application within the prescribed period of limitation upon discovering the mistake after the issuance of the Circular dated 7th January 2014.

4. Doctrine of Unjust Enrichment:
The court held that if the adjudicating authority was not satisfied with the Chartered Accountant’s certificate and other material produced by the petitioner, he could have called upon the petitioner to produce further documentary evidence. However, without affording a reasonable opportunity to the petitioner, the adjudicating authority was not justified in holding that there was unjust enrichment. The court found that the material on record clearly established that the incidence of Education Cess and Secondary and Higher Secondary Education Cess had not been passed on to the buyer, and hence, the question of any unjust enrichment on the part of the petitioner did not arise.

5. Maintainability of the Writ Petition in Light of Alternative Remedies:
The court held that the provisions of the Central Excise Act, 1944, would not be applicable for the refund of the amount paid by mistake since the amount paid was neither a duty of excise nor Crude Oil Cess to which the provisions of the OID Act apply. Consequently, the alternative remedy suggested by the respondents could not be said to be an efficacious remedy. The court found that the petitioner was justified in filing the writ petition, and the contention that the petition was not maintainable due to the availability of an alternative statutory remedy was rejected.

6. Entitlement to Interest on the Refunded Amount:
The court held that since the amount in question is not in the nature of a duty of excise, the provisions of the Central Excise Act for refund would not be applicable, and consequently, the provisions of Section 11BB of the Central Excise Act, which provides for interest on delayed refund, would also not be applicable. It is settled legal position that in the absence of a statutory provision entitling the assessee to interest, a mandamus cannot be issued to the revenue to pay interest. Therefore, the relief prayed for in the petition regarding interest could not be granted.

Conclusion:
The court quashed the order-in-original dated 24th November 2014 and directed the second respondent to forthwith sanction and grant the petitioner a refund of ?73,60,061 as claimed. The request for a stay of the judgment was declined.

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