In a recent ruling, the Chandigarh bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) granted relief to Ambuja Cement by allowing Cenvat Credit adjustment for captively consumed clinker, acknowledging the appellants’ fair submission to the original authority to deduct the Cenvat credit availed on inputs used in clinker manufacturing during the period from the refund claimed.
The appellants, ACC Ltd and Ambuja Cement Ltd. engaged in the manufacture of clinker used in cement production, claimed excise duty exemptions under Notification No.50/2003-CE dated June 10, 2003, and Notification No.67/95-CE dated March 16, 1995. These exemptions were initially denied by the Department, leading to the appellants being directed to pay the full amount as a pre-deposit under Section 35F, following an order from the Commissioner (Appeals). The appellants complied and subsequently appealed to the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), which rejected their stay applications and dismissed their appeals.
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The appellants then filed Civil Appeals before the Supreme Court, which admitted the appeal but did not grant an interim stay. Consequently, the appellants continued paying duty on clinker during the appeal’s pendency. The Supreme Court ultimately ruled in favor of the appellants on August 21, 2015.
M/s Ambuja Cement Ltd filed a refund claim for the period from February 2005 to February 2013 on November 2, 2015. However, the Adjudicating Authority rejected these claims in September 2016, citing unjust enrichment under Section 11B of the Central Excise Act, 1944, as the appellants had recorded the duty paid as an expense in their Profit and Loss Account. The appellants, dissatisfied with these decisions, appealed to the Commissioner (Appeals), who upheld the original orders, leading to the current appeals.
J.C. Patel and Ankit Awal, representing the appellants, argued that Section 11B is not applicable in this case, asserting that the refund of the pre-deposit under Section 35F is not subject to the unjust enrichment bar. They contended that the payment was made under protest to pursue their appeals and was not a duty payment but a pre-deposit that should be refunded upon a favorable appeal decision.
On the other hand, Sourabh Goyal, Senior Standing Counsel for the CBIC, argued that the appellants had not made a deposit under Section 35F but had paid the duty following the Tribunal’s order on June 24, 2005, under Section 35N. He maintained that the payment under Section 35N constitutes duty, not a pre-deposit, and since the appellants claimed Cenvat credit on inputs used in clinker manufacture, the refund claim was contradictory.
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The Tribunal, comprising S.S Garg (Judicial Member) and P. Anjani Kumar (Technical Member), held that the amounts paid during the appeal process should be treated as deposits under Section 35F, and therefore, the refunds should be processed according to CBEC/CBIC Circulars without applying Section 11B. The bench further ruled that even if unjust enrichment principles were applied, the appellants had rebutted this presumption with their evidence, and the revenue had not provided any contrary evidence. The appellants had already agreed that the Cenvat credit availed on inputs during the relevant period should be deducted from their refund claim.
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