The Ahmedabad Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT) has held that demand of interest cannot be quashed merely on the basis of discharge certificate under Sabka Vishwas – (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS Scheme).
The bench of Ramesh Nair (Judicial Member) and Raju (Technical Member) has observed that SVLDRS Scheme is intended to recover dues not paid. It is not intended to refund legally paid dues.
The appellant/assessee Savita Oil Technologies Limited has appealed against denial of a refund claimed. During EA-2000 audit was conducted for the period November 2013 to May, 2015. It was observed that the appellant had issued supplementary invoices in respect of supplies of transformer oil made to various parties. These supplementary invoices were issued on account of post clearance variation in the price of oil. On being pointed out by the audit team, the appellant paid an interest for the same period in respect of supplementary invoices issued by them for such variation of price. Three different show cause notices were issued to the appellant demanding interest on such delayed payments. The appellant paid the amount of interest under protest the show cause notices.
The matter was decided by the original Adjudicating Authority. The original Adjudicating Authority rejected the claim on the ground of limitation treating the payment made by the appellant as payment not made under protest. It was argued that no proper protest was lodged while paying the said amount.
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The original Adjudicating Authority rejected it on the ground of unjust enrichment and he observed that no documentary evidence has been submitted to discharge the onus put on the claimed by the law relating to unjust enrichment.
The order relied on the decision of the Apex Court in the case of Steel Authority of India 2015 (326) ELT 450 SC to hold that the issue regarding liability of interest on account of payment of duty due to revision of prices have not been finally settled and the matter has been referred to the larger bench. The order also relies on the fact that show cause notices demanding the interest were pending and not decided and therefore, the issue of refund of interest cannot be decided.
The assessee argued that appellant argued that the impugned order has travelled beyond the show cause notice as the issue regarding unjust enrichment was not invoked in the show cause notice. The principle of unjust enrichment is not applicable to the present case. The interest paid by the appellant under protest has not been recovered from the customer and therefore, the principle of unjust enrichment is not applicable. Since interest has been paid under protest after being pointed out by the revenue in the audit, the same could not have been passed on by the appellant to the customer at the time of clearance of the goods. The issue of unjust enrichment cannot be made applicable to payments made under protest during pendency of adjudication proceeding or investigation. The refund claim is not barred by limitation. The interest liability has been waived in terms of SVLDRS Scheme.
The tribunal while dismissing the appeal held that the lower Authority has gone into the question of unjust enrichment which was superfluous at the stage when the same authorities have held that refund is not admissible. The question of unjust enrichment would only arise when the authorities come to the conclusion that refund is admissible to the appellant on merits. Once the lower authority comes to the conclusion that refund is admissible on merits only then they can go into the question of unjust enrichment. No order under unjust enrichment can be issued rejecting the refund claim, the only order which can be issued under unjust enrichment is sanctioning the refund claim and transferring the amount to the Consumer Welfare Fund.
Case Title: Savita Oil Technologies Ltd Versus C.C.E. & S.T.-Daman
Case No.: EXCISE Appeal No. 12878 of 2018-DB
Date: 05.09.2024
Counsel For Appellant: Mehul Jivani
Counsel For Respondent: Ajay Kumar Samota
