Savita Oil Technologies Ltd VERSUS  C.C.E. & S.T.-Vapi

Excise Appeal No. 10145 of 2013- DB

 

(Arising out of OIA-SRP/85/VAPI/2012-13 dated 26/10/2012 passed by Commissioner of Central Excise-VAPI)

 

Savita Oil Technologies Ltd

VERSUS 

C.C.E. & S.T.-Vapi

 

APPEARANCE:

Shri Manoj Chauhan, Chartered Accountant for the Appellant Shri Rajesh K Agarwal, Superintendent (AR) for the Respondent

 

CORAM: HON’BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON’BLE MEMBER (TECHNICAL), MR. RAJU

 

Final Order No. A/ 10473 /2023

 

 

RAMESHNAIR

DATE OF HEARING: 21.11.2022 DATE OF DECISION: 17.03.2023

 

The brief facts of the case are that the appellants are manufacturer of lubricating oil falling under Central Excise Tariff Heading 27101980 of the Central Excise Tariff Act, 1975 at its factory located at Silvassa. The appellant have various depots located in multiple locations in India. The Lubricating Oil is removed to its depot on payment of Central Excise duty following the provisions of Rule 7 of the Central Excise Valuation Rules, 2002. On the basis of actual sale at depot comparable statements was made  for computation  of duty  between the value  adopted for

 

clearance of goods from the factory and the value at which it was sold from depot and on the computation it was found that the appellant have paid the excess excise duty amount of Rs. 1,19,802/-. The said excess payment was on account of various discounts passed on from the depot as under:

1. SpecialDiscount

 

1. CashDiscount

 

1. Trade Discount

 

1. Freeoil Discount (quantity discount)

 

1.2 The above discounts were known to the appellants at the time of removal of goods from the factory. There were instances where such value was not available immediately at the time of removal. Therefore, the appellant removed the goods without considering the said discount and paid the excise duty. Thereafter the appellant filed the refund claim of the said amount on 18.11.2009 on the ground that they have paid excess excise duty under Rule 7 of Central Excise valuation ( Determination of Price of Excisable Goods) Rules, 2000. The appellant was issued show cause notice dated 13.02.2010 proposing to reject the refund claim on the ground that the appellant has not provided various documents such as Chartered Accountant Certificate , Balance Sheet, Excise Invoice, Discount Policies, Refund on free samples. The Adjudicating Authority vide Order-In- Original rejected the refund claim on the ground that the appellant have not opted for provisional assessment. Being aggrieved by the Order-In- Original, the appellant filed the appeal before the Commissioner (Appeals) who vide Order-In-Appeal dated 17.11.2012 rejected the appeal on the ground that the appellant have not opted for provisional assessment and documents relating to cash discount, quantity discount , co-relation of goods

 

removed from the factory and depot was not provided. Therefore, the present appeal filed by the appellant.

2. Shri Manoj Chauhan, Learned Chartered Accountant appearing on behalf of the Appellant submits thatboth the lower authorities have rejected the refund claim merely on the ground that the appellant have not opted for the provisional  He submits that this is not an allegation made in the show cause notice, therefore, on this ground refund could not have been rejected. He in support that the order should not travel beyond the scope of the show cause notice, relied on the following judgments:-

• BallarpurIndustries Ltd – 2007 (215) ELT 489 (SC)
• STElectricals  Ltd. – 2019 (20) GSTL 273 (Tri.- Mumbai)
• Dow ChemicalsInternational  Ltd – 2019 (370) ELT 1302 (Tri.- Ahmd)
  • Without prejudice, he also submits that the refund ofexcess payment of duty cannot be rejected merely for the reason that assessee has not opted for the provisional assessment. He placed reliance on the following judgments:-
    • M/s.Godrej Consumers Products Ltd – 2019 (5) TMI 222- MP
    • AndhraPradesh Paper Mills Ltd – 2010 (8) TMI 300- Andhra
    • KrishnaElectrical Industries Ltd – 2017 (352) ELT 67 (Tri. Del)
    • D.Fine –Chem Ltd – 2015 (324 ) ELT 181 (Tri. Ahmd)

 

 

 

• He furthersubmits that the Rule 7 of the Central Excise Valuation Rules, 2007 provided that the price of goods sold from the depot nearest to the time of  removal  of goods  from factory  shall be  the assessable

 

value of the goods removed from the factory. Therefore, once the said value of the goods at the depot is determined, it is assessable value for the purpose of making payment of the duty on the goods removed from the factory to the depot. He placed reliance on the judgment of this Tribunal in the case of M/s. Nahar SPG. & WVG. Mills Ltd – 2009 (247) ELT 708 (Tri.- Del).

• Hefurther submits that in case of present refund, principle of unjust enrichment does not apply. However, he submitted  that the appellant have submitted the Chartered Accountant Certificate and JV entries substantiating the incidence of duty was not passed on by the appellant to any other person. He also referred to one Order-In-Original  Belapur/Bel-IV/R-l/01/SAVITA/AC/HP/15-16 dated 30.07.2015 passed by the Assistant Commissioner C. Ex. Belapur-lV Division, Belapur Commisssionerate in identical case of another unit of the appellant wherein held that the principle of unjust enrichment does not apply. He submits that the issue has been settled in the appellant’s own case and in their sister unit . he further  submits that the  judgment  relied upon by the Revenue in the case of M/s. MRF Limited – 1997 (92) ELT -309 (SC) is clearly distinguishable and hence not applicable.

3. Shri Rajesh K Agarwal, Learned Superintendent (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order .
4. Wehave carefully considered the submission made by both sides and perused the records. We find that the appellant have made excess payment of duty  on account of   The discount was given at the time of sale of the goods from the depot. There is no dispute about the nature and quantum of  discount. The  removal of  goods from the factory  is  on

 

presumptive value and the transaction value  is finalized only at the time of sale of goods from the depot. Therefore, in our considered view the discount given by the appellant at the time of sale of goods from the depot is legal and correct and the same shall not be includible in the assessable value. Accordingly, if there is any excess payment of duty in comparison with the value at which the goods were cleared from the factory and the same goods sold from the depot , the appellant is prima- facie entitled for the refund.

• As regardthe reason given by both the lower authorities that the appellant have not opted for the provisional assessment, we find that firstly the same was not made charge in the show cause notice therefore the order travels beyond the scope of show cause notice which is not permissible under the law as settled in various judgments cited by the appellant. Secondly, merely because the appellant has not opted for the provisional assessment the legal provision for valuation will not get  The duty is payable in accordance with the Section 4 of Central Excise Valuation Rules , 2000. In terms of Rule 7  the excise  duty is payable at on the value at the time of sale of goods from depot after removal from the factory. Therefore, on the differential excise duty  due to the difference between the clearance value from the factory and the sale value from the depot is refundable to the appellant. It is settled by the Hon’ble High Court of Madhya Pradesh in the case of M/s. Godrej Consumers Products Ltd – 2019 (5) TMI 222 that merely because the appellant have not followed the provisional assessment, the methodology adopted  for adjustment of excess payment of duty cannot be questioned. Therefore, even though the appellant have not opted for the

 

provisional assessment , the admitted excess payment of duty has to be refunded to them.

• As regard the principle of unjust enrichment the appellanthave submitted the Chartered Accountant Certificate and JV Entries whereby it is established that the incidence of duty for which the refund was sought for has not been passed 

5. In view ofour discussion and finding the appellant is prima facie entitled for the refund subject to verification of the documents. Accordingly, we set aside the impugned order and remand the matter to the Adjudicating Authority for passing a fresh order after considering the above observation. The appeal is allowed by way of remand to the Adjudicating

(Pronounced in the open court on 17.03.2023 )

 

 

RAMESH NAIR MEMBER (JUDICIAL)

 

 

 

RAJU MEMBER (TECHNICAL)