Indian Oil Corporation Ltd vs Commissioner Of Central Excise

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI

COURT No. II

APPEAL No.E/564/07

(Arising out of Order-in-Appeal No.GOA/CEX/SB/135/2006 dated 28/12/2006 passed by Commissioner of Central Excise & Customs (Appeals), Goa)

For approval and signature:

Honble Mr. Anil Choudhary, Member (Judicial) Honble Mr. Raju, Member (Technical)

1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the :Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy :Seen of the Order?

4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================

Indian Oil Corporation Ltd., Appellant Vs. Commissioner of Central Excise, Respondent Goa

Appearance:

Ms.Padmavati Patil, Advocate for appellant Shri.Ashutosh Nath, Asst. Comm. (AR), for respondent

CORAM:

Honble Mr.Anil Choudhary, Member (Judicial) Honble Mr. Raju, Member (Technical)

Date of Hearing : 09/09/2015 Date of Decision : 09/09/2015

ORDER NO

Per: Raju

1. The appellant are engaged in the business of refining petroleum products, which were cleared on payment of Central Excise duty. A notification under Rule 20 of the Central Excise rules permitted clearance of petroleum products from the manufacturing premises to warehouses without payment of duty. The appellants were required to pay duty on clearance from the warehouses at the time of such clearance from the warehouse. The notification issued under rule 20was amended on 6.9.2004 and petroleum products, which were hitherto included, were excluded from the benefit of rule 20 of Central Excise rules. When the benefit was withdrawn the appellants had some quantity of petroleum products in the stock and in transit.

2. Subsequent to 6.9.2004, some of this quantity in stock was cleared to various EOU from the warehouses without payment of Central Excise duty against CT3 certificates. The balance quantity was cleared during subsequent months on payment of duty. A show cause notice was issued to the appellants demanding duty on the ground that as soon as the warehousing benefit under Rule 20 was withdrawn the entire duty on the material in stock in the warehouses became payable. For this they relied on the Circular No.796/09/2004 dated 4.9.2004 issued by CBEC. The said circular clarified that Since no stocks on or after 6th September, 2004 can remain bonded/warehoused, the excise duty is liable to be paid on the stocks of petroleum products lying in the warehouses on the midnight of 5th/6th September, 2004. In the circumstances it was held that the goods cannot be cleared to EOU without payment of duty from warehouses on the subsequent date as the duty became due on the date of withdrawal of the facility under rule 20. On this ground interest was also demanded on the material cleared subsequently in later months on payment of duty made at the time of clearance from the warehouses.

3. Learned Counsel for the appellant relied on the decision of Tribunal in their own case (2008(230)ELT177) where on the identical facts it has been held that duty is not leviable on clearance made to EOUs from the stock lying at the warehouses subsequent to the withdrawal of facility under Rule 20. The revenue had filed appeal against the said order before Honble Madras High Court, however the said appeal was dismissed as revenue did not press for the same. On the issue of interest on the clearances learned counsel relied on the decision of Tribunal in case of HPCL (2010 (262) ELT 842). In the said decision it has been held that in respect of goods lying in stock in warehouses, the duty liability on clearance of the same from the warehouses would be on the same terms which existed at the time of clearance from factory.

4. Learned AR argued that the circular issued by the board is very clear and in terms of the said circular the duty liability on the stocks lying in the warehouses, arises immediately on withdrawal of the facility under Rule 20. In view of above, he argued that the duty is payable on the stock available in the warehouses at the time of the withdrawal of the facility. It does not matter when the goods are clear and if any exemption is otherwise available to the goods. He relied on the decision of Tribunal in case of IBP 2009(243)ELT620. In this division in similar circumstances it has been held that no interest is payable on clearances from warehouses if the same is made before 5.10.2004, the due date under rule 8 of Central Excise rules in the circumstances.

5. We have gone through the arguments and documents presented before us. Regarding the clearance of goods to EOU from the warehouse it is seen that the issue is squarely covered by the decision of Tribunal in the appellants own case (2008 (230) ELT177). In the said decision it has been held that clearances to EOU availing full exemption can be made from stock available in the warehouses even after withdrawal of facility under rule 20. The decision cited by the learned AR in case of IBP (2009(243)ELT620) also supports the view in so much as duty liability is concerned the same arises on the due date of payment of duty as per rule 8 of Central Excise rules, on the 5th of the next month. Relying on the decision of Tribunal in the case of IOL (2008 (230) ELT 177) the appeal is allowed in respect of clearances made to EOU availing full exemption from duty.

6. Regarding the interest on duty paid on clearance of goods from the warehouse in subsequent months, it is noticed that both, the decision cited by the revenue and as well as appellants, support the appellants case. In both the decision is it has been held that the clearances from the warehouses after withdrawal of the facility under the Rule 20 will be governed in terms of the rule 8 of Central Excise rules, in so much as the same will be payable on the 5th of next month. Once it is recognised that the duty liability after withdrawal of the benefit of Rule 20 will be governed by the Central Excise rules as a clearance from warehouse, in terms of Rule 8 of Central Excise rules, the question of payment of interest does not arise. Moreover of Central Excise rules only permitted clearance from the factory to the warehouse without payment of duty. After withdrawal of the facility, the clearance from the factory to the warehouse without payment of duty can be stopped. It does not change the treatment which has to be given to the goods already cleared in terms said rules and lying in the warehouse. Those goods will continue to be governed by the terms under which the same were cleared from the factory. Tribunal in case of HPCL (2010 (262) ELT 842) has observed as follows:

7.1?It can be seen from the above reproduced Circular that the duty liability on the goods in the warehouses after the withdrawal of warehousing facility could be discharged in terms of provisions of Rule 8 of the Central Excise Rules, 2002 could indicate that duty liability can be paid by the appellant on 5th of the following month. Such determination of the duty can arise only when the goods are cleared from the warehouses. We also find that in the appellants own case in respect of other Commissionerates i.e. Guntur, Hyderabad-III and Visakhapatnam, the Revenue authorities have been taking a similar view. It was submitted by the learned Counsel that the said orders are not appealed by the Revenue and has been accepted by them. Learned Counsel would also rely upon the various other orders passed by other Commissionerates in respect of other oil companies in an identical situation, accepting the transaction value of the warehoused goods cleared during the period 6-9-2004 to 30-9-2004. On perusal of the said orders, we find strong force in the contentions raised by the learned Counsel. If the Revenue authorities of all over India are accepting the fact that the transaction value of the petroleum goods consequent to withdrawal of the warehousing facility has to be on the transaction value on the date of clearance, we do not find any reason for non-application of the said procedure in this case.

Once this principle is recognised there is no question of interest on duty paid goods cleared in subsequent months. Accordingly, the appeal on this count is also allowed.

7. The appellant shall be entitled to consequential benefit, if any, including the refund of pre-deposit to be disbursed within a period of 30 days, on receipt of this order, with interest as per Rules.

(Pronounced in Court)

(Anil Choudhary) Member (Judicial) (Raju) Member (Technical)

pj

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Appeal No.E/564/07