By TIOL News Service

MUMBAI, MAY 18, 2017: ONGC sold scrap to the appellants without payment of duty. The department initiated proceedings for recovery of excise duty from ONGC. Consequently, ONGC took bank guarantee from the appellants in lieu of excise duty demanded from them.

The demand was confirmed against ONGC. Pursuant thereto, ONGCencashed the bank guarantee and paid the excise duty for an amount of Rs.8,44,550/-.

They also did not file any appeal against the confirmed demand.

However, the appellants filed appeal before the Tribunal. This appeal was disposed with an observation that the appellants have no locus standi to file the appeal as the order was passed against ONGC.

In appeal, the High Court held that the appellants have a locus standi to pursue the case before the appellate authority. Accordingly, the appeal was entertained by the Tribunal and the demand was dropped.

Consequently, the refund of duty paid by ONGC by encashing the bank guarantee of appellants arose.

The appellants filed a refund claim but the same was rejected by the Dy. Commr. on the ground that the appellants have not produced any original duty paying document to evidence the appellant's payment of duty and no further evidence that the incidence of duty was borne by them and that the principles of unjust enrichment is not attracted.

The Commissioner (Appeals) held that there is no evidence that the appellants have borne the incidence of duty paid by ONGC and, therefore, rejected the appeal.

The appellant is before the CESTAT and justifies their claim of refund of duty. Case laws were also cited in support.

The AR stuck to the stand taken by the lower authorities.

The Bench took note of the certificate issued by ONGC and observed -

++ The appellants as a buyer is entitled for refund of duty on the goods purchased by them, therefore, appellants are legally entitled for claiming the refund. In such case, the appellants cannot be insisted to provide the original duty paying document in their name as the proof of payment of duty.

++ From the certificate (issued by ONGC) it is clear that the excise duty discharged by ONGC is from the amount which was encashed from the bank guarantee of the appellants.

++ As regards unjust enrichment, we find force in the argument of the counsel that the goods were produced and sold without payment of duty in the year 1999 whereas the excise duty was paid in 2002 due to the demand proceedings initiated by the department. There is no question of passing of the said duty by the appellants to the buyer of such goods.

++ The accounting treatment given by the appellants to this amount of Rs.8,44,500/- as ONGC (excise duty received) under the head of loans advances in the balance sheet of the appellants clearly shows that this amount was not passed on to any other person. In this regard, the appellants also gave an affidavit wherein they have stated that the amount of Rs.8,44,500/- was not recovered from the customer or any other person.

Concluding that there is no dispute regarding the proof of payment of duty as well as to the fact that the incidence of such duty has not been passed on to any person, the impugned order was set aside and the appeal was allowed.

In passing: Also see 2004-TIOL-1181-CESTAT-DEL & 2008-TIOL-54-CESTAT-DEL .

(See 2017-TIOL-1657-CESTAT-MUM)