HARSHA DEVANI, J. - (1.) The petitioner, a Company is engaged in the extraction of crude oil falling under Chapter Heading 27090000 of the Central Excise Tariff Act, 1985. The petitioner is paying cess on the clearance of petroleum / crude oil under the provisions of section 15 of the Oil Industry (Development) Act, 1974 (hereinafter referred to as "the OID Act"). The petitioner entered into Production Sharing Contract with the Ministry of Petroleum and Natural Gas, Government of India for Dholka and Wavel fields for the purpose of carrying out exploration and production activity. In furtherance thereto, the petitioner entered into a Crude Offtake and Sales Agreement with Oil and Natural Gas Corporation, (hereinafter referred to as "ONGC" or "the custodian") and Indian Oil Corporation Limited (hereinafter referred to as "IOCL" or "buyer"). Under the said agreement, the petitioner supplies crude oil to the custodian, ONGC. On custody transfer of the crude oil, ONGC provides a custody report indicating the quantity of the crude oil received from the petitioner. The ONGC, then, supplies the crude oil to the buyer/IOCL.
(2.) The petitioner, at the end of the month, after receiving the crude receipt from ONGC, raises a tax invoice on IOCL containing the details of the quantity of crude oil supplied by ONGC and also charges Gujarat Value Added Tax (hereinafter referred to as "the GVAT") on the value of crude oil indicated in such tax invoices. After supplying crude oil to ONGC, the petitioner has paid Petroleum/Crude Oil Cess in terms of the provisions of section 15 of the OID Act for the period July, 2004 to April 30, 2014. The Crude Oil Cess is levied by the Ministry of Petroleum and Natural Gas and collected by the Department of Revenue, Ministry of Finance. It is the case of the petitioner that it paid Primary Education Cess (hereinafter referred to as the "Education Cess") and Secondary and Higher Secondary Education Cess on Crude Oil Cess for the aforesaid period amounting to Rs.73,60,061/ -. The Central Board of Direct Taxes issued a circular dated 07.01.2014 clarifying that the Education Cess and Secondary and Higher Secondary Education Cess are not to be calculated on cesses which are levied under the Acts administered by Department/Ministries other than Ministry of Finance (Department of Revenue) in terms of those Acts. In view of the above, the petitioner filed a letter dated 17.07.2014 requesting for refund of the amount of Rs.73,60,061/ - of Education Cess and Secondary and Higher Secondary Education Cess inadvertently paid by it for the aforesaid period in terms of the circular dated 07.01.2014. As per the understanding of the petitioner, its refund claim was sent to the concerned Range Superintendent vide letter dated 22.07.2014, who by letter dated 08.08.2014 and 16.09.2014, submitted his verification report with the recommendation of rejection of refund claim. In view of the above, a show cause notice dated 03.11.2014 came to be issued to the petitioner to show cause as to why the refund claim of Rs.73,60,061/ - filed by it should not be rejected under the provisions of section 11B of the Central Excise Act, 1944 (hereinafter referred to as the "Central Excise Act"). It is the case of the petitioner that it was granted personal hearing on 17.11.2014 and its authorized representative appeared before the second respondent and also submitted written submission dated 13.11.2014. During the course of personal hearing, it was submitted by the petitioner that the refund application for Education Cess and Secondary and Higher Secondary Education Cess was not filed by it under section 11B of the CE Act and hence, the provisions thereof would not apply. It was submitted that the Education Cess and Secondary and Higher Secondary Education Cess paid by the petitioner are not to be charged on cess which are levied under the OID Act administered by Petroleum Ministry other than Ministry of Finance (Department of Revenue). It is further the case of the petitioner that during the personal hearing, it was given to understand that the documents submitted by it for unjust enrichment are sufficient and the second respondent did not ask for any additional documents on the aspect of unjust enrichment in any of the communications. However, a certificate from IOCL had been submitted to the effect that IOCL does not pay Education Cess and Secondary and Higher Secondary Education Cess to the petitioner. It is the case of the petitioner that without considering the submissions advanced on behalf of the petitioner during the course of personal hearing and in the written submissions, by the impugned order dated 24.11.2014, the second respondent rejected the entire refund claim of Rs.73,60,061/ - under the provisions of section 11B of the Central Excise Act. Being aggrieved, the petitioner has filed the present petition challenging the order -in -original dated 24.11.2014 passed by the respondent No.2 and seeks a direction to the second respondent to forthwith sanction and grant the petitioner refund of Rs.73,60,061/ - along with interest at the rate of 18% per annum claimed vide application dated 21.07.2014.
(3.) Mr. Sujit Ghosh, learned advocate for the petitioner vehemently assailed the impugned order by submitting that the same is non est, void and ex -facie erroneous and bad in law. It was submitted that the second respondent has invoked the provisions of section 11B of the CE Act which is not applicable in the facts of the present case. It was submitted that the impugned order passed by the second respondent suffers from a fallacy, inasmuch as, the crude oil cess is not a central excise duty. Elaborating upon the said submission, it was submitted that as per section 15(1) of the OID Act, there shall be levied and collected, as a cess, for the purpose of the OID Act, on every specified item which is produced in India and removed to a refinery or factory or transferred by the person by whom such item is produced to another person, a duty of excise at a specified rate. It was pointed out that the levy of duty of excise as a cess on removal or transfer of crude oil is provided under the OID Act which is administered by the Ministry of Petroleum and Natural Gas, Government of India. Also, the power to levy cess on crude oil is with the Ministry of Petroleum and Natural Gas and not with Ministry of Finance. It was submitted that the cess on crude oil is neither levied under the Central Excise Act, nor by the Ministry of Finance, Government of India. 3.1 The attention of the court was invited to the provisions of section 91 of the Finance Act, 2004 and sections 136 and 138(1) of the Finance Act, 2007, to submit that on a plain reading of the said statutory provisions, it becomes clear that education cess is levied on the aggregate of all duties of excise which are levied and collected by the Central Government in the Ministry of Finance (Department of Revenue) under the provisions of the CE Act. However, the crude oil cess paid by the petitioner is levied by the Ministry of Petroleum and Natural Gas and is neither levied under the Central Excise Act, 1944 nor levied by the Ministry of Finance (Department of Revenue) but under the OID Act. It was submitted that the petroleum / crude oil cess stands levied by virtue of section 15 of the OID Act and the same is merely collected as excise duty by the Ministry of Finance (Department of Revenue). It was submitted that the education cess is to be collected on the aggregate dues of excise duty levied and collected by the Department of Revenue, and only such dues which are (a) levied and collected dues of excise, and (b) are both levied and collected by Department of Revenue, should be taken into account for calculating the education cess. It was contended that the crude oil cess is levied by the Central Government in the Ministry of Petroleum as established under the OID Act and the same cannot be held as levied by the Ministry of Finance. For the purpose of levying Education Cess on any kind of duty of excise, the latter should be leviable and recoverable by the Central Government in the Ministry of Finance. However, as Crude Oil Cess is not levied by the Ministry of Finance, Education Cess cannot be levied on the same. , 3.2 In support of his submissions, the learned counsel placed reliance upon the decision of this court in the case of Commissioner v. Sahakari Khand Udyog Mandli Ltd., 2011 (263) ELT 34 (Guj.) wherein, the court in the context of the Sugar Cess Act, 1982 which contained similar provisions, held that the provisions of levy and collection of cess under the Central Excise Act and the rules thereunder have been incorporated and are to be read as part and parcel of the Cess Act. By adopting this legislative procedure, the legislature has used a well known legislative tool, but from the said exercise, it cannot be inferred or stated that the sugar cess imposed under the provisions of the Cess Act assume the characteristic of central excise duty so as to warrant calculation of education cess on the amount of cess so collected. The court held that the sugar cess levied and collected cannot be equated with duty of central excise and therefore, cannot be treated to be part and parcel of the amount on which the education cess has to be calculated. It was submitted that the above decision was squarely applicable to the facts of the present case and that the second respondent, in gross violation of the judicial discipline, has ignored the said order. 3.3 It was submitted that the fact that the education cess is not leviable upon the crude oil cess as the same is not the duty of excise, though collected by the Department of Revenue, has also been stated by the CBEC in its circulars dated 10.08.2004 as well as 17.01.2014. It was submitted that the above circulars are binding upon the second respondent and hence, the second respondent has erred in not following the departmental clarifications. It was submitted that when the Department itself considers the crude oil cess as a cess which is different from the central excise duty, the second respondent is not justified in holding that the same is in the nature of central excise duty and hence, amenable to education cess. 3.4 It was further submitted that the refund claimed under section 11B of the CE Act is limited for the purpose of claiming refund of any duty of excise and interest, if any, paid thereon. It was submitted that crude oil cess paid by the petitioner is not in the nature of duty of excise and therefore, the second respondent was not justified in rejecting the claim of refund of the above amount in terms of section 11B of the CE Act. It was submitted that the petitioner had filed an application for refund of the amount paid under mistake of law and not the refund claim for excise duty under section 11B of the CE Act. In support of his submissions, the learned counsel placed reliance upon the decision of this High Court in the case of Union of India v. Alstom India Limited, 2014 (301) ELT 446 (Guj.), for the proposition that it is now well settled law that a citizen, even after making payment of tax on demand by either misinterpretation of the statutory provision or under unconstitutional provision or under mistake of law, can subsequently challenge the inherent lack of jurisdiction on the part of the State authority to demand tax, and if such a citizen succeeds, the court can, in an appropriate case, direct refund of the amount which had been collected by the State authority having no jurisdiction. Reliance was also placed upon the decision of the Bombay High Court in the case of ITC Ltd. v. M. K. Chipkar and others, 1985 (19) ELT 373 (Bom.), wherein it has been held that the time limit laid down under rule 11 of the Central Excise Rules, 1944 (corresponding to section 11B of the Central Excise and Salt Act) shall not be applicable on an amount paid under mistake of law. The decision of this court in the case of Swastik Sanitarywares Ltd. v. Union of India, 2013 (296) ELT 321 (Guj.), was cited for the proposition that a deposit of amount paid under a mistake does not amount to deposit of excise duty and was a pure mistaken deposit of an amount with the Government which the revenue cannot retain or withhold. Such claim, therefore, would not fall within the ambit of section 11B of the Act. It was, accordingly, urged that since the provisions of section 11B of the CE Act are not applicable to the facts of the present case, the question of unjust enrichment, limitation etc. shall not apply for the purpose of claiming refund of the Education Cess and Secondary and Higher Secondary Education Cess. 3.5 The attention of the court was invited to paragraph 4.8(vi) of the affidavit -in -reply filed on behalf of the second respondent, wherein, it has been stated thus: "[vi] Further the conference of the all Chief Commissioner was held in Bangalore on 26th and 27th Nov.2014 and the instant issue was discussed whether the Education cess and SHE cess on Oil cess is payable or otherwise. The minutes of the meeting of the said conference has been circulated vide F.No.96/79/2014 - CX1(Pt.11) dated 09.02.2015 wherein it is admitted at point No.1 -9 of Annexure -A (page.08) that the Oil Cess is administered under Act administered by different ministries, it was further clarified that no cesses are leviable on oil cess. In light of this clarification, the instant issue may be considered as settled and no further demand notices may be required to be issued and decision for pending issues may be decided accordingly." It was submitted that refund claimed under section 11B of the Central Excise Act, 1944 is limited for the purpose of claiming refund of any duty of excise and interest, if any, paid thereon. It was submitted that Crude Oil Cess paid by the petitioner is not in the nature of duty of excise and hence, section 11B of the Act would not be applicable in respect thereof. Referring to section 3 of the Central Excise Act, it was pointed out that the cess paid by the petitioner does not fall within the scope or ambit of sub -section (1) thereof. Reference was made to rule 2(e) of the Central Excise Rules, 2002, which defines duty to mean duty payable under section 3 of the Central Excise Act, to submit that the cess paid by the petitioner is not a duty payable under section 3 of the Central Excise Act and hence is not a duty within the meaning of such expression as envisaged under rule 2(e) of the rules. It was submitted that for the period from July 2004 to April 2014, till the CBEC circular dated 07.01.2014 came to be issued, the position was not at all clear. It was pointed out that the CBEC circular came to be issued on 07.01.2014 and the petitioner filed claim for refund on 17.07.2014. Reference was made to the provisions of section 17 of the Limitation Act, 1963, to submit that in case where a suit or application for which a period of limitation is prescribed by the Act and the suit or application is for relief from the consequences of a mistake, the period of limitation shall not begin to run until the plaintiff or applicant has discovered the fraud or mistake or could, with reasonable diligence, have discovered it. It was submitted that thus, in case where the amount is paid under a mistake, the limitation is three years from the date of discovery of such mistake. It was submitted that the petitioner came to know about its mistake only after issuance of the CBEC circular dated 07.01.2014 and hence, the limitation would start to run only thereafter. Accordingly, the claim filed by the petitioner for refund on 17th July, 2014 was well within the prescribed period of limitation. 3.6 As regards the existence of an efficacious alternative statutory remedy it was submitted that since this is not a case of duty of excise, the petitioner need not go to the authority under the CE Act. In support of his submission, the learned counsel placed reliance upon the decision of the Supreme Court in the case of State of Rajasthan v. Hindustan Copper Ltd., (1998) 9 SCC 708. It was, accordingly, urged that the impugned order being contrary to the statutory provisions and therefore, bad in law, deserves to be quashed and set aside and that the petition deserves to be allowed by directing the respondents to forthwith sanction and grant the petitioner refund of Rs.73,60,061/ - as sought for vide application dated 21.07.2014. ;