The Ahmedabad bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) has rejected the refund claim for interest on delayed payment due to post-clearance oil price variations, citing the pending Show Cause Notice and noting that there was no merit in the appellant’s claim, which was unsupported by the evidence and arguments presented.
M/s. Savita Oil Technologies Limited ( the appellant ) has filed an appeal against the denial of a refund claim. The refund was claimed following an audit and subsequent issuance of supplementary invoices.
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During an EA-2000 audit for the period from November 2013 to May 2015, it was noted that the appellant had issued supplementary invoices amounting to Rs. 40,51,034/- for transformer oil supplies due to post-clearance price variations. The appellant paid interest of Rs. 55,94,700/- related to these supplementary invoices under protest. Subsequent show cause notices demanded further interest on delayed payments, which the appellant paid under protest.
A show cause notice was issued to deny the refund claim on the grounds of limitation and the pending adjudication of interest demands. The original Adjudicating Authority rejected the refund claim, citing limitations and unjust enrichment. The decision relied on the Apex Court’s ruling in the Steel Authority of India case ,which noted that issues regarding interest liability due to price revisions were unsettled and pending a larger bench’s decision. Additionally, pending show cause notices concerning interest were cited as reasons for denying the refund claim.
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The Commissioner (Appeal) upheld the original authority’s decision, referencing the Steel Authority of India case and concluding that the appellant failed to prove that the burden of interest had not been passed on, thus failing to meet the unjust enrichment criteria. The Commissioner did not address the issues of limitation or the pendency of interest liability demands.
Mr Mehul Jivani, representing the assessee argued that the impugned order exceeded the scope of the show cause notice, as the issue of unjust enrichment was not initially raised. They contended that the principle of unjust enrichment was inapplicable since the interest was paid under protest and not recovered from customers. They also argued that the refund claim was not barred by limitation and that the interest liability had been waived under the SVLDRS Scheme. A discharge certificate under SVLDRS indicated a zero payable amount, implying a waiver of interest.
The respondent, represented by Ajay Kumar, argued that the Order-In-Original No. 07/AC/SLV-VII-DEM-1920, which confirmed the interest demand, was settled under the SVLDRS Scheme. Therefore, the interest should be refunded as per the discharge certificate issued on 06.12.2019.
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The bench, consisting of Ramesh Nair ( Judicial Member ) and Raju ( Technical Member ), found the appellant’s claim misleading. They noted that the SVLDRS Scheme aimed to settle unpaid dues rather than refunding legally paid dues. As the show cause notice demanding interest was confirmed and settled under SVLDRS, the refund claim related to this interest could not be upheld. The tribunal also observed that addressing unjust enrichment was superfluous at this stage since the primary decision was that the refund was not admissible.
The tribunal dismissed the appeal, finding no merit in the appellant’s claim for refund. The claim for refund was not supported by the evidence and arguments presented.
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