CA Certificate is Sufficient to Discharge Obligation that Incidence of Excise Duty has not Passed on: CESTAT Grants Relief to IOC [Read Order]

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), granted relief to Indian Oil Corporation Ltd (IOC), and noted that Chartered Accountant (CA) Certificate is sufficient to discharge obligation that incidence of excise duty has not passed on.

The issue in the dispute of M/s Indian Oil Corporation Ltd, against order of Commissioner of Central Excise (Appeals), Mumbai-II which, on appeal at the behest of jurisdictional Commissioner of Central Excise, set aside the sanction of refund allowed by the competent authority under section 11B of Central Excise Act, 1944, is the applicability of test of ‘unjust enrichment’ on claim for return of ‘deposits’ made during investigation.

The appellant had been availing Modvat credit on ‘tin cans’ used for packing and sale of ‘lubricants’ manufactured by them and proceedings were initiated for denial of the credit as the inputs had not been deployed at the factory of manufacture but in their filling facility. The confirmation of recovery of Rs 2,46,84,459, contested by them before the Tribunal, was set aside following which application for refund of the amount deposited in the run up to adjudication was filed and sanctioned.

It was argued by the counsel for the appellant that the debit of ‘personal ledger account (PLA)’ was tantamount to reversal of cenvat credit already utilized and not against clearance of any goods and that, as the claim was established and was realized in the same year, it found reflection in the books of accounts as ‘income’ in 2011-12. Reliance was placed on the certificate of the Chartered Accountant.

A Two-Member Bench comprising CJ Mathew, Technical Member and Ajay Sharma, Judicial Member observed that “Without evaluation of the pricing practice of the appellant for ‘lubricant’, discard of the certification on supposition of it having been treated as ‘expense’ and, therefore, built into the manufacturing cost of products cleared after 2000 is neither logical nor consistent with obligation of appellate authorities to restrict fact finding only upon evidence.”

“In a departmental appeal, that should have been preferred as a ground of appeal on the basis of computation; a finding without such factual evaluation, in circumstances of that onus resting on the reviewing authority, cannot sustain. The certification by Chartered Accountant, considering the contents therein, suffice for discharging obligation to demonstrate that incidence of such duty has not been passed on” the Tribunal concluded.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates