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TMI Blog2010 (7) TMI 961X X X X Extracts X X X X X X X X Extracts X X X X ..... is in accordance with law - Right course for the assessee would have been to follow provisional assessment. Notwithstanding the discrepancy between quantities ascertained by the assessee and the buyer, then the transaction 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. X X X X Extracts X X X X X X X X Extracts X X X X ..... 9/08 OIA No. 88/2007, dated 23-11-2007 6/2005 2,38,675 15. E/150/08 OIA No. 89/2007, dated 23-11-2007 7/2005 9,68,353 16. E/151/08 OIA No. 90/2007, dated 23-11-2007 8/2005 21,77,028 17. E/152/08 OIA No. 91/2007, dated 23-11-2007 1/2006 6,71,912 2. Facts common to all the cases are that the assessee/appellant, a refinery engaged in production of various petroleum products from crude oil removed consignments of its finished goods by pipelines to the oil marketing companies (OMCs). Duty was paid on removal of petroleum products at the applicable rate on the quantity dispatched ascertained by dip measurements of its storage tanks. The respective consignee OMC determined the quantity received by dip measurements of its own tanks before and after receipt of each consignment. Discrepancies were noticed between the quantity despatched by the refinery and the quantity received by the OMCs. On a monthly basis, the excess receipts and short receipts were reconciled and the net consideration due to the refinery settled. In case of net difference (NED for short) compared to invoices issued by the Refinery being excess receipt, the assessee raised debit notes on the conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner worked out the aggregate differential duty due towards excess in all such clearances made in a particular month and demanded the same along with interest for the period beyond the due date prescribed in the rules. While determining the net liability, the Commissioner allowed adjustment of amounts paid by the assessee for NED being excess ascertained on its own earlier. In making the demand, the Commissioner relied on the statutory provisions contained in Rule 11 of the Central Excise Rules, 2002 (CER) requiring issuance of an invoice at the time of removal covering the excisable goods cleared and Rule 8 ibid prescribing payment of the duty due for clearances in a month by 5th of the following month. Penalty is imposed on the assessee for violations of the CER involved. 4. In the appeal filed before the Tribunal, it is submitted that the practice followed by BPCL-KRL was in vogue since September, 2002 and that the department was aware of the same. The refinery effected transfers by pipelines which was an efficient mode of transfer of petroleum products. However, the quantity determined at the time of removal was found to be at variance with the quantity received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the appeals with the following findings. ".... CESTAT in a very recent order has dealt with this issue elaborately and with reference to the Supreme Court judgments (Dutron Plastics, 2006 (199) E.L.T. 289 (Tri.-Mumbai). I am quoting from the order : "The refund claim of the appellant arising out of the year ending turnover discount has been rejected by the authorities below on the ground of unjust enrichment by observing that where credit notes are issued to the customers, subsequent to clearance of the goods, the same are not sufficient to hold that the burden of duty has not been passed on to the customers at the time of clearance of the goods." 2. After hearing both sides, I find that the issue stands decided by the Larger Bench of this Tribunal reported in S. Kumar Ltd. v. CCE - 2003 (153) E.L.T. 217 (L.B.) as also in the case of Grasim Industries (Chemical Division) Ltd. v. CCE, Bhopal - 2003 (153) E.L.T. 694 (Tri.-L.B.) ............the Larger Bench in S. Kumars Ltd. and Grasim Industries Ltd. vide Order No. 794/04/NB dated 25-11-2004. Appeal against the above order filed by Hindustan Processors Ltd. was dismissed by the Hon'ble Supreme Court with the order that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f excess duty paid. The agreement between the parties concerned to settle the payment based on the quantity received according to the buyer's quantification can only be treated as terms for the commercial settlement of the transaction. This cannot be a ground to reopen the assessment of duty paid on the goods cleared." He also followed the observations of the Commissioner of Central Excise in Order-in-Original Nos. 59 & 60/2006, dated 17-4-2006 to the effect that "when the removal is made on payment of duty, the department is not in a position to consider the case of the short receipt at the receiving end as it is not the concern of the department as to what happened to the goods subsequently as to where the loss, damage or so." (text as in the order). 7. In the second category of cases, the orders impugned follow the reasoning of the original authority narrated under (a).These are listed at Sl. Nos. 1 to 10 of the Table II Refunds. For instance, in Order-in-Appeal Nos. 406-409/2006, dated 14-11-2006 impugned in Appeal No. E/299/2007, the Commissioner (Appeals) sustained denial of separate claims for refund made for the period February to May, 2005 for a total of above ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, Madras [1997 (92) E.L.T. 309 (S.C.)], the Apex Court had held that such post- removal adjustment in duty liability is not permissible. As regards the duty demand on excess removals, we find that the demand of duty and interest is in accordance with law. 9.1 Considering the facts of the case that the assessee had only continued a long standing procedure in the impugned transactions, no dishonest motive or mala fide can be attributed to the assessee in engaging in such transactions. Therefore in the absence of contumacious conduct in defiance of law on the part of the assessee, it is not liable to penalty though rules provide for the same in view of the Apex Court's judgment holding such a view in the Hindustan Steel Ltd. v. State of Orissa [1978 (2) E.L.T. (J159) (S.C.)J case. We set aside the penalties. 10. As regards applicability of unjust enrichment principle, in cases of issue of credit notes after removal, we find that in the following decisions, the dispute was settled against the assessee :- (i) Sangam Processors (Bhilwara) v. CCE [1994 (71) E.L.T. 989 (T)]. (ii) Grasim Industries v. CCE [2003 (153) E.L.T. 694 (Tri-LB)]. We find that in the instant case the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 86 (25) E.L.T. 69 (T)] : "Once the assessee has cleared the goods on the classification and price indicated by him at the time of the removal of the goods from the factory gate, the assessee becomes liable to payment of duty on that date and time and subsequent reduction in prices for whatever reason cannot be a matter of concern to the Central Excise Department insofar as the liability to payment of excise duty was concerned." Apex Court observed that the view that duty was chargeable at the rate and price when the commodity was cleared at the factory gate and not on the price reduced at a subsequent date was unexceptionable. As rightly observed by the Tribunal the subsequent fluctuation in the prices of the commodity had no relevance whatsoever so far as the liability to pay excise duty was concerned, it was held. We find that the impugned clearances took place post 30-6-2000. The assessee is required to pay duty on the transaction value in respect of each removal. The transaction value adopted at the time of clearance cannot be reduced for whatever reason and refund allowed to the assessee in the light of the above judgment of the Apex Court. 11.1 In the impugned cases t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignment. However we have found these adjustments not proper in view of case laws cited. The assessee had also argued before the lower authorities in some cases that the ratio was relevant and applied. 15. We note that the appellant has sought refund of excess payment or adjustment of the payment against demand for short payment with the following argument. "The lower authorities ought to have found that the department itself had on earlier occasion sanctioned refund to the appellant based on credit notes evidencing refund of excess duty collected from the buyer back to the buyer. Order-in-Original No. 3/05, dated 22-2-2005 of the Asst. Commissioner of Central Excise, Ernakulam-II division and order in Appeal No. 234/04, dated 14-4-2004 of the Commissioner (Appeals), Cochin have not been further appealed against by the department and hence have attained finality. The department cannot now take a contrary stand while deciding the merits of the refund applications preferred by the appellant." The finding referred to in Order-in-Appeal No. 234/2004, dated 14-10-2004 reads as follows : "5. I have gone through the order, grounds of review and the submissions made at the tim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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