Customs, Excise and Gold Tribunal - Mumbai
Indian Oil Corporation Ltd. vs Commissioner Of Customs on 21 August, 2006
ORDER K.K. Agarwal, Member (T)
1. This is a stay application against the order of the Commissioner of Customs, Kandla demanding duty amounting to Rs. 332.93,95,779/-. The facts of the case are that the applicant is engaged in receipt/storage, stock transfer and sale of imported and indigenous petroleum products from their bonded warehouse at Kandla. The indigenous petroleum products were manufactured in their various refineries and were stock transferred to the Kandla warehouse without payment of duty under bond. Petroleum products were also imported and warehoused under bond without payment of duty at the time of clearance from the warehouse either for sale or for stock transfer to other locations. Duty, whether import duties comprising of Basic. Customs Duty, Special duty and Countervailing duty or Central Excise daty, was being paid. During the material time, the prices of major petroleum products were administered by the Ministry of Petroleum & Natural Gas wherein they were allowed to recover from the buyers the selling price as determined by Government of India as per the pricing formula. As per the policy decision of Government of India, the oil company has to adopt fixed selling price for the sale of these petroleum products, notwithstanding the fact, that, these may be manufactured out of indigenously procured or imported stocks. Thus the oil company's invoice for such sale to the customers was at uniformly fixed price and the duty was recovered at the same ad valorem rate for indigenous and imported stocks. The assessee at the time of removal from the tanks could not distinguish between imported and indigenous stocks removed from the same tank. Consequenely, the applicants prepare invoices for the same with the following description:
Excise/Custom Duty amount Rs.____________.
As per the applicants say this description conveyed that the duty collected should be taken as excise duty or customs duty, as the case may be depending upon the product under removal. However, since in respect of imported products the duty reflected in the invoice was the excise duty which was being charged at the rate at which CVD chargeable, it was presumed by the department that in all these cases the duty being recovered from the customers was the CVD duty and since this CVD duty reflected in the invoice as excise duty was more than the CVD duty actually paid at the time of clearance of imported petroleum products. Show cause notice was issued to the applicant demanding the differential excess CVD duty charged from the customers and not paid to the department. The same was confirmed by the Commissioner under Section 28B of the Customs Act, 1962.
2. The learned advocate for the applicants submits that in view of the Administered Price Mechanism, they were required to charge one uniform price from the buyers and since at the time of removal they could not distinguish as to whether the quantity cleared was out of imported stock or indigenously manufactured stock they used a common set of invoice showing the assessable value alongwith Custom/Excise duty. In case the material was imported the duty element recovered from the buyers represented the Custom duty which comprise of basic custom duty/special customs duty and the CVD and all these three taken together were invariably much more than the quantum of duty shown in the invoices and consequently there has been no extra recovery of the duty which can now be demanded. It was further submitted that whatever was recovered by them as duty was being deposited in the oil pool account maintained by the Government of India and therefore in any case the duty was paid to the Government only and therefore the question of any recovery does not arise. It was submitted that the Commissioner has erred in taking the entire duty as a CVD duty even though the expression used was Customs/Excise duty and as has been clarified by the Board, Customs duty includes Basic Customs Duty as well as Special Duty and CVD and this was much more than what has been recovered from the buyers.
3. It was further submitted that in identical circumstances the Commissioner of Customs, Vishakhapattnam has vide his Order No. 44/2003-04 dated 19.01.2004 dropped the proceedings initiated against HPCL, by holding that, what is required to be compared is the total duties of customs paid and amount of duty recovered from the buyers and not merely CVD paid. Similarly, Commissioner of Customs, Chennai vide his Order No. 847/03 dated 30.07.2003 has held that the basic customs duty plus the CVD taken together needs to be taken for comparison with the actual duty collected from the customers for determination under Section 28B of the Customs Act, 1962. He has further observed that due to pool mechanism followed by the Oil Industry, excess duty if any collected, is deposited with the Central Gevernment itself and therefore the provisions of Sections 28B of Castoms Act, 1962 are not applicable in this case. Further Commissioner of Central Excise (Appeals) vide his Order No. SDK(915)624/98 dated 14.07.1998 on similar issue under Section 11D of Central Excise Act, 1944 in the case of IOCL, Goa held that the decision of the lower authority of calculating the differential amount by taking the difference on the basis of CVD paid V/s collected is erroneous. In the said calculation for determination of excess duty collected, it is necessary to take the difference with reference to the total customs duties discharged on the imported stock and the duties shown in the invoices at the ex storage point. In the last it was submitted that in an identical case the Hon'ble Tribunal in the case of HPCL has granted unconditional stay vide his Stay Order No. 1008-1013/2001/WZB/C-II dated 19.04.2001. The relevant para 7 of which reads as under:
The third part of demand is of Rs. 8,81,87,937/-. This demand is made under Section 28B of the Customs Act, 1962 read with Section 11D of the Central Excise Act, 1944 Although neither side could throw light on the actual provision under which the demand was confirmed, the genesis appears to be as follows. In spite of the source of the product, the goods are sold at the prices determined under the administered prices scheme which is decided from time to time by a committee appointed by the Ministry. It appears that on the sale bills the duty collected is shown as the Central Excise duty. A comparison was made by the investigators of the valuation of the imported goods and of indigenously produced goods, It appears that the CVD paid on the goods imported was less than the duty collected from the buyers. This duty is sought to be collected under this paragraph.
4. CEGAT observed that the countervailing duty may not demanded as duty of excise in terms of Section 11D of the Central Excise Act. On the other hand the duty of excise collected may not subject itself to the coverage of Section 28B of the Customs Act. Considering this the Tribunal waive the condition of pre-deposit of this quantum of duty. In view of this it was submitted that their case was identical and therefore prayed for a complete waiver of pre-deposit of entire duty.
5. Learned D.R. on the other hand submits that since in this case the sale invoice was issued under Rule 52A, the duty reflected has to be taken as an excise duty only which is equivalent to countervailing duty and since the duty recovered is more than the CVD paid the same has been rightly demanded by the Commissioner.
6. We have considered the submissions. We find that there are a series of decisions of Commissioner and Commissioner (Appeals) which according to the applicants have not been appealed against on identical issues holding that no duty was recoverable in such circumstances on the ground that the duty reflected in invoice was less than the actual customs duty paid by the oil companies and in any case the duties have been paid to the oil pool account and therefore the provision of Section 28B of the Customs Act are not applicable. A similar view has been taken by the Tribunal in its stay order cited supra wherein the pre-deposit of the entire duty has been waived. Following the same, we also waive the pro-deposit of the entire duty and stay recovery thereof till disposal of the appeal.
(Pronounced in Court)