Custom, Excise & Service Tax Tribunal
M/S I. O. C. L vs Commissioner Of Central Excise, Haldia on 26 June, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL,
EAST REGIONAL BENCH : KOLKATA
SP-820/12
& Ex. Appeal No.490/12
Arising out of Order-in-Original No.27/Commissioner/CE/Haldia/Adjn/2012 dated 30th March, 2012 passed by Commr. of Central Excise, Haldia.
For approval and signature:
DR. D. M. MISRA, HONBLE JUDICIAL MEMBER
DR. I. P. LAL, HONBLE TECHNICAL MEMBER
1. Whether Press Reporters may be allowed to see
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
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not? :
3. Whether His Lordship wishes to see the fair copy
of the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
M/s I. O. C. L.
APPELLANT(S)
VERSUS
Commissioner of Central Excise, Haldia
RESPONDENT (S)
APPEARANCE Shri Sanjay Kaushal, Dy. General Manager (Finance) for the Appellant (s) Shri S. P. Pal, Appraiser (A.R.) for the Department CORAM:
DR. D. M. MISRA, HONBLE JUDICIAL MEMBER DR. I. P. LAL, HONBLE TECHNICAL MEMBER DATE OF HEARING & PRONOUNCEMENT : 26. 06. 2014 ORDER NO.FO/A/75487/2014 Per Dr. D. M. Misra :
This appeal is filed against the Order-in-Original 27/Commissioner/CE/Haldia/Adjn/2012 dated 30th March, 2012 passed by Commr. of Central Excise, Haldia.
2. Briefly stated the facts of the case are that the Appellant, M/s Indian Oil Corpn. Ltd. (M/s I. O. C. L.), having their Refinery Division at Haldia, are engaged in the manufacture of excisable goods, namely, various petroleum products falling under Chapter 27 of CETA, 1985, along with other products, namely, JET A1 (ATF), Furnace Oil, SKO (Non-PDS), Naptha and HSD BS-II etc. A show-cause notice was issued to the Appellant on 1st November, 2010 alleging that the Appellant had contravened the provisions of Rule 20 of Central Excise Rules, 2002, read with CBEC Circular Nos.581/18/2001-CX dated 29.06.2001 and 579/16/2001-CX dated 26.06.2001 and Para 4.1 of Part I of Chapter 10 of the CBECs Excise Manual with intent to evade payment of duty in as much as, the Appellant had cleared the petroleum products without payment of duty under cover of ARE-3 Certificates from their factory for the purpose of export warehousing, without coverage of any CT-2 or CT-3 Certificates issued by the Superintendent-in-Charge of the consignee, without any intimation to the jurisdictional Superintendent of Central Excise within 24 hours of removal of the consignment and without submitting the required warehousing Certificate against such ARE-3s within the stipulated period of 90 days of removal of goods and also had not paid duty on short quantity of goods, received at the consignees end. Consequently, the duty totaling to Rs.102,22,60,023.00, was demanded from the Appellant. During the course of adjudication proceedings, the Appellant had submitted CT-2 Certificate and other documents reconciling dispatch made under ARE 3 Certificates against respective CT-2 issued and verified from the Range Office. On the basis of re-conciliation, the ld. Commissioner had dropped the demand to the tune of Rs.86,10,52,256/-. However, he has confirmed the duty of Rs.16,12,07,767/- and imposed equal amount of penalty under Section 11AC of the Central Excise Act, 1944. Hence, the present Appeal.
3.1 The ld.Authorized Representative appearing for the Appellant, has submitted that the ld. Commissioner had confirmed the demand of duty amounting to Rs.1,51,41,503/- on the ground of short receipt of various petroleum products at the consignees end, without accepting their plea for condonation of transit losses during the course of transportation of the said goods. He has further submitted that the ld. Adjudicating Authority confirmed the demand of Rs.14,60,66,263.00 on the ground that the Appellant failed to adduce evidences that the goods cleared at nil rate of duty under exemption Notification No.64/95-CE dated 16.03.1995 as amended, were used for consumption on board a vessel of Indian Navy or Coast Guard. He has submitted that the Appellant had discharged duty on shortages more than the condonable limit involving duty of Rs.95,00,348/- along with interest of Rs.48,98,770/- before passing the adjudication order, which amount has been appropriated by the ld.Commissioner in the impugned order. It is his grievance that the ld. Commissioner has not dealt their submissions that losses incurred during transit of the petroleum products, has been allowed upto 1% in view of the Circular issued by the CBEC from time to time, vide CBEC (amended upto Oct.85) vide its letter F. No.26/23/CXM/54 dated 01.06.56, 8/7/57-CXIII dated 27.03.57, IIA/25/70-CX-8 dated 12.01.72, DO CCE F.No.503/59/78 dated 29.07.82, F.No.11-A/6/70/CX-8 dated 30.04.71 & 261/6/20/82-CX-8 dated 30.10.85.
3.2 Regarding confirmation of duty against the clearances to Indian Navy availing exemption Notification 64/95-CE dated 16.03.95 as amended, the ld. Authorized Representative for the Appellant, submitted that after removal of warehousing procedure on petroleum products vide Notification No.17/2004-CE dated 04.09.2004, the duty was required to be paid at the time of removal of the goods from the factory. However, the amendment was made in the original Notification vide Notification No.37/2007-CE dated 01.11.2007, so as to meet exigency of supply to Indian Navy and Coast Guard through marketing depots of M/s I. O. C. L., whereby, M/s I. O. C. L.s marketing locations were granted permission to procure the goods from any manufacturer for supplies made to Indian Navy and Coast Guard subject to the condition of registration and accountal etc.. He submitted that in the present case, there has been no direct supply of petroleum products from the Appellants Haldia Refinery Unit to Indian Navy and Coast Guard, but the goods were removed to its marketing locations at nil rate of duty on the basis of indent received, hence, if any accountal is required to be given for these supplies, it is the responsibility of the respective I.O.C.L. marketing locations to their jurisdictional Commissionerate, where they have obtained specific registration in this regard. It is his submission that at the most, jurisdictional Commissionerate of M/s I. O. C. L., Hadia Refinery, can demand indents of marketing locations for these supplies. Further, he submitted that in order to avoid further complication, they have collected from their marketing locations at Willingdon Island Terminal, Port Blair Terminal, Visakhapatnam Terminal, etc. evidences of supplies to Indian Navy and Coast Guard under Notification No.64/95-CE dated 16.03.95 as amended, which they could produce for verification.
4. Per contra, the ld. A.R. for the Department, has submitted that the Appellant, before the ld.Adjudicating Authority, could not place any evidences about the consumption of petroleum products cleared on board of the vessels, belonging to Indian Navy/Coast Guard. He has accepted that even though the Appellant advanced the plea of condonation of losses upto 1% incurred during transit of the petroleum products, in view of the Circulars issued by the CBEC from time to time, no finding has been recorded by the ld.Adjudicating Authority. However, he has no objection in remanding the case to the ld.Commissioner for deciding the issue afresh after taking into consideration the evidences, now produced by the Appellants, before this Tribunal.
5. Heard both sides and perused the records. We find that the adjudicating authority has confirmed demand relating to clearances of petroleum products from the Refinery Division at Haldia to various marketing locations availing exemption Notification No.64/95-CE dated 16.03.1995, meant for consumption on board of the vessels belonging to Indian Navy/Coast Guard. The said demand was confirmed on the ground that the Appellant could not able to produce the evidences to show that the petroleum products cleared by them, was in fact used for consumption on board of a vessel of Indian Navy/Coast Guard. It is the claim of the Appellant that even though they are not required to place such evidences in view of the Notification No.37/2007-CE dated 01.11.2007, which rests on their marketing division, however, now, they have procured the necessary Certificates from their marketing division to show the goods cleared by them against indents issued by the Marketing Division, were, in fact, consumed on board of a vessel of Indian Navy/Coast Guard. Regarding the other issues, we find that the Appellant had submitted before the adjudicating authority that in view of the various CBECs Circulars issued from time to time, the transit losses up to 1% could be condoned, which has not been dealt with by the adjudicating authority in the impugned order. We find from the record that the Appellant had discharged duty against shortages in excess of condonable limit and also paid interest on this count. We are of the view that in the interest of justice, the ld. Commissioner ought to have examined the issue of condonable limit of transit losses to the extent of 1% as prescribed by the CBEC in the aforesaid Circulars before confirmation of demand on this count. In the result, in our opinion, both the issues are required to be examined afresh by the ld.Commissioner after taking into consideration of the evidences on record and pass an appropriate order accordingly. Consequently, we set aside the impugned order and remit the matter to the ld.Commissioner for deciding both the issues afresh. Needless to mention, a reasonable opportunity of hearing be granted to the Appellant to present their case. All issues are kept open and both sides are at liberty to produce evidences in their support.
6. The appeal is allowed by way of remand. Stay petition is disposed off.
(Pronounced in the open Court)
Sd/ Sd/
(DR. I.P.LAL) (DR. D.M.MISRA)
MEMBER (TECHNICAL) MEMBER (JUDICIAL)
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Ex. Appeal No.490/12