Custom, Excise & Service Tax Tribunal
M/S. Bharat Petroleum Corporation Ltd vs Cc, Visakhapatnam on 19 August, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Bench DB Court I Appeal No.C/132-133/2003 (Arising out of Order-in-original No.108-109/2002-RP dt. 27/02/2003 passed by CC, Visakhapatnam) For approval and signature: Honble Ms. Sulekha Beevi, C.S., Member(Judicial) Honble Shri Madhu Mohan Damodhar, Member(Technical) 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 their Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? M/s. Bharat Petroleum Corporation Ltd. ..Appellant(s) Vs. CC, Visakhapatnam ..Respondent(s)
Appearance Shri Karan Talwar, Advocate for the appellant.
Shri Nagraj Naik, Deputy Commissioner(AR) for the respondent.
Coram:
Honble Ms. Sulekha Beevi, C.S., Member(Judicial) Honble Shri Madhu Mohan Damodhar, Member(Technical) Date of Hearing:19/08/2016 Date of decision:19/08/2016 FINAL ORDER No._______________________ [Order per: Sulekha Beevi, C.S.] Facts are as below:
i. The Appellants are a Government of India Undertaking engaged in the business of refining and marketing of petroleum products. At Visakhapatnam, the Appellants have an installation, which is registered as a warehouse under the Central Excise rules and receives petroleum products viz. Motor Spirit (MS), High Speed Diesel (HSD) etc. under bond from M/s. Hindustan Petroleum Corporation Limited (HPCL) Visakha Refinery through pipeline. The aforesaid petroleum products are also imported as per the demand and supply position within the country.
ii. During the material period, i.e. November 1997 to December 1999 and April 1997 to April 2000 which is covered in the two SCNs dated 01.06.2001 and 30.04.2002 respectively, the appellants had declared certain tanks as mixed bonded warehouses under the Customs Act, 1962 in which the imported petroleum products were stored. From these mixed bonded tanks clearances were made after payment of the applicable Customs Duties as assessed in terms of Ex-Bond Bills of Entries filed from time to time. During the material period, the prices of the aforesaid petroleum products were determined by the Ministry of Petroleum & Natural Gas (MOP&NG) and conveyed through the Oil Coordination Committee (OCC) under the Administered Price Mechanism (APM). The Appellants, as well as other Oil Marketing Companies were bound to implement such prices as directed by the OCC, and the oil companies had no volition to charge any other prices than those fixed under APM. The Appellants had maintained during the material period statutory records for accountal of receipts/withdrawals from the mixed bonded tanks and the quantity accountal was submitted through the monthly RT12 returns filed regularly. During the material period, November 1997 to December 1999, the Appellants had imported MS and HSD and the applicable customs duties were paid prior to the removal of these products from the mix bonded tanks. While making sales out of these imported products to the customers, the Appellants had used the same format of invoices, which was being used for making resale of indigenous products purchased from HPCL, Visakhapatnam Refinery. In the computer generated invoices certain details viz. Assessable Value, Duty etc. were being disclosed.
iii. Against the above background, they were issued show Cause Notices (SCN)dated 01.06.2001 and 30.04.2002 alleging that they have collected amounts representing duty of customs (countervailing duty) in the guise of excise duties in excess of countervailing duty paid on the imported petroleum. Adjudicating authority passed the impugned order dated 27.02.2003 inter alia demanding an amount of Rs.14,15,13,934/- and 4,55,72,849/- in terms of Section 28 B of the Customs Act, 1962. Hence these appeals.
2. The foremost contention put forward by the Ld. Counsel Mr. Karan Talwar, appearing for the appellants is that appellants have not collected any duty representing it to be duty of Customs as alleged by the Department. He adverted to the Section 28B of the Customs Act and further submitted that the appellants have not indicated duty of customs in the invoices. That therefore appellants having not collected any amount as customs duty the demand is unsustainable.
3. It is also submitted that the issue stands covered in favour of appellants in the following cases:
i. HPCC V/s CCE, Aurangabad 2003 (162) ELT 391 (Tri-Mum) ii. BPCL Vs. CCE, Kandla [Final Order No.A/577/WZB/05-CII dated 07.07.2005]
4. The learned AR, Sri Nagaraj fairly conceded that the issue is covered in the above judgements.
5. We find that the matter has indeed been settled in the case laws placed by appellant. The same view has been reiterated in IOCL V/s CCE, Guntur [2007 (201) ELT 543 (Tri Bang)] where the Tribunal noted the following:
3.?Shri G. Shivadass, learned Advocate informed the Bench that all these cases relate to the period when the prices of petroleum products were subjected to the Administered Pricing Mechanism (APM) formulated by the Government of India and implemented through the Ministry of Petroleum and Natural Gas. Under the APM, the Oil Coordination Committee, a Wing of the Ministry of Petroleum and Natural Gas were fixing the prices of all the petroleum products and gas at refinery level. The Committee also fixed the retail commission to be enjoyed by retail outlets or the dealers. Uniformity in consumer pricing was ensured by the Oil Coordinating Committee by fixing an uniform ex-refinery and uniform ex-storage point price and by fixing the uniform retail margin. The duty was paid by the appellants on the ex-storage point price on the basis of the price fixed under the APM. The price so fixed under the APM was the same in respect of the indigenous and imported products. In terms of the price fixed under APM, the appellants received Product Rate Advices (Internal Price Circulars) which showed the breakup of the ex-storage price and the duty to be charged on from the customers. The duty so indicated was always the Central Excise duty and not Customs duty. The invoice raised by the appellants at the time of the sale of the goods from the terminal also did not indicate the Customs duty separately though the origin of the goods is indicated in the invoice as Customs duty paid, stock, etc. In and around 2000, the DGCEI conducted enquiries about the manner of calculation and collection of duty in respect of petroleum products cleared by the appellants from their Vijayawada terminal. The Department issued show cause notice dated 18-5-2001 alleging that the appellants had violated the provisions of Section 28B of the Customs Act, 1962 inasmuch as they had collected duty in excess of the CVD paid at the time of the import of the goods from their customers and consequently proposed to recover the excess duty allegedly collected under section 28B of the Customs Act, 1962. The Commissioner passed the impugned order dated 14-2-2006 demanding an amount of Rs. 4,68,60,471/-under Section 28B of the Customs Act, 1962. The learned Counsel also submitted that in view of the Mechanism of the Administered Price, sometimes there will be excess collection of duty. The Oil Coordination Committee has formulated detailed guidelines and procedure in this regard. The procedure is as follows. Whenever the duty paid by the appellants is more than the duty collected by them for a particular period from their customers, the appellants make a claim on the Government through the oil pool account for reimbursement of the excess duty paid. On the contrary whenever, the appellants had collected more duty than what is paid by them during the particular period, they surrender the same to the Government through the oil pool account. In the present appeal for the period from July 1998 to December 1998, the appellants had surrendered a total amount of Rs. 4,58,63,157/-. A similar practice was also being followed by the appellants in respect of their Chennai terminal and Visakhapatnam terminal. After taking note of this factual position, the Commissioner of Customs, Chennai and the Commissioner of Customs, Visakhapatnam have held that ingredients of Section 28B have been satisfied. Show cause notice issued by the DGCEI was dropped by the Commissioner of Customs, Chennai vide Order-in-Original No. 847/2003 dated 30-7-2003/6-8-2003 holding that the provisions of Section 28 cannot be invoked to confirm the demand. Similarly, the Commissioner of Customs, Visakhapatnam in his Order-in-Original No. 44/2003-04 (RP) dated 19-1-2004 has dropped the demand by following the Order-in-Original passed by the Commissioner of Customs, Chennai. The Department has not filed any appeal against the two Orders-in-Original. Therefore, the same have reached finality. As the Department has accepted the above decision, the same dispute cannot be raised as held by the Supreme Court in the case of CCE v. Bigen Industries Ltd. reported in 2006 (197) 305 (S.C.). As the Invoices raised by the appellants did not indicate collection of Customs duty, the provision of Section 28B cannot be invoked. The Tribunal in the case of appellants themselves as reported in 2003 (162) 391 has held that since the appellants have charged a price fixed under the APM, no amount representing duty can be said to have been collected from the customers. The CESTAT vide Final Order No. S/435/2005/WZB-C-II dated 7-7-2006 in the case of BPCL has set aside a similar demand and held that as CVD was not shown separately in the invoice, no demand for CVD can be raised.
4.?In respect of the appeals of M/s. IOC Ltd. and M/s. BPCL, the demands under Section 11D of the Central Excise Act, 1944 have been made for the period mentioned above. In these cases also, it has been urged that the excess amounts collected have been surrendered to the oil pool account.
5.?We have heard the learned Departmental Representative who re-iterated the findings of the Commissioner.
6.?We have gone through the records of the case carefully. It is seen that during the relevant periods, the prices of the petroleum products were fixed under the Administered Price Mechanism (APM). The appellants have explained that whenever there is excess collection of duty, the same is surrendered to the oil pool account. In the Commissioners of Customs, Visakhapatnam and Chennai have already decided the issue in favour of the appellants. These orders have not been appealed against by the Department. Therefore, in terms of the Apex Court judgment in the case of CCE v. Bigen Industries Ltd. reported in 2006 (197) 305 (S.C.), the Department cannot be permitted to again raise the same dispute as the issue has reached finality between the appellants and the Department. The issue is also covered by the Tribunals decision cited supra. In these circumstances, the impugned Orders-in-Original are set aside and the appeals are allowed.
6. In the case of IOCL V/s Commissioner of Cus, Kandla [2008 (227) ELT 263 (Tri-Ahmd)], the Tribunal made the following observations:
7.?We have considered the submissions. There are a series of decisions of the Commissioners, Commissioner (Appeals) and the Tribunal holding that there is no excess collection of duty from the customers and therefore, demand is not sustainable. We also find merit in the appellants contention that as per the Administered Price Mechanism Scheme any excess recovery has to be deposited in the oil pool account and any deficiency is made good by oil pool account, and therefore, it cannot be said that there is excess collection of duty. It may not be exactly fit into the scheme of Section 28B of Customs Act, 1962 or Section 11D of the Central Excise Act, 1944 but it has to be accepted that the purpose of legislation of these sections is fulfilled by this provision in the Administered Price Mechanism Scheme. Another point which goes in favour of the appellants is that while fixing the price of petroleum products, the Government gives the final price and oil companies do not have any freedom to change this. This is the reason that there is a system of adjustment of duty paid by the oil pool account. Therefore, we allow the appeal and set aside the order of the Commissioner of Customs, Kandla.
7. In view of the above, we are of the considered opinion that the impugned order is unsustainable and is liable to be set aside, which we hereby do. In the result, the appeal is allowed with consequential relies.
(Operative part of this order was pronounced in court on conclusion of the hearing) MADHU MOHAN DAMODHAR MEMBER(TECHNICAL) SULEKHA BEEVI C.S. MEMBER(JUDICIAL) Raja.
9