Custom, Excise & Service Tax Tribunal
M/S Indian Oil Corporation Ltd vs Cce, Meerut I on 25 February, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. III DATE OF HEARING : 25/02/2015. DATE OF DECISION : 25/02/2015. Excise Appeal Nos. 788-789 of 2007 alongwith Misc. Application Nos. 50330-50331 of 2015 [Arising out of the Order-in-Original No. 44-45/Commr/RP/2006 dated 28.12.2006 passed by The Commissioner of Central Excise, Rohtak.] For Approval and signature : Honble Shri Rakesh Kumar, Member (Technical) Honble Shri S.K. Mohanty, Member (Judicial) 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 would be released under Rule 27 of : the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair : copy of the order? 4. Whether order is to be circulated to the : Department Authorities? M/s Indian Oil Corporation Ltd. Appellant Versus CCE, Meerut I Respondent
Appearance Shri L.P. Asthana, Advocate for the Appellants.
Shri Pramod Kumar, Authorized Representative (DR) for the Respondent.
CORAM : Honble Shri Rakesh Kumar, Member (Technical) Honble Shri S.K. Mohanty, Member (Judicial) Final Order No. 50724-50725/2015 Dated : 25/02/2015 Per. Rakesh Kumar :-
The facts leading to filing of these appeals are, in brief, as under.
1.1 The appellant M/s Indian Oil Corporation Ltd. in their oil refinery at Panipat manufacture various petroleum products including Aviation Turbine Fuel. The period of dispute in this case is from 06/9/04 to 09/8/05. During period prior to 06/9/04 there were two notifications issued under Rule 20 of the Central Excise Rules. Notification No. 46/02-CE (NT) dated 26th June 2001 issued under Rule 20 (1) of the Central Excise Rules, 2001 permitted removal of all excisable goods from the factory of production or such other premises as may be approved by the Commissioner for intended for storage in a warehouse registered at such place as may be specified by the Board and for export there from under the provisions of Rule 19 of the Central Excise Rules by such exporter or class of exporters as may be specified by the said Board. Thus, in terms of this notification, a manufacturer of excisable goods could remove the excisable goods manufactured by him to a bonded warehouse located at the places specified by the Board under Rule 20 of the Central Excise Rules without payment of duty for the purpose of export of the goods under bond under Rule 19 of the Central Excise Rules from such warehouse. Another notification No. 47/01-CE (NT) dated 26/6/01 issued under Rule 20 (1) of the Central Excise Rules, 2001 permitted removal of certain excisable goods, as mentioned in the table to this notification, from the factory of production to a bonded warehouse or from one bonded warehouses to another warehouse without payment of duty. Serial No. 1 of this table covered the petroleum products falling under heading 27.07, 27.10, 27.11, 27.12, 27.13 (except sub-heading 2713.12), 2714 and 2715 of the First Schedule to the Central Excise Tariff Act, 1985 and also the goods namely benzene, toluene, xylene, propylene and tertiory amyl methylene ether falling Chapter 29 of the First Schedule to the Central Excise Tariff Act, 1985. Notification No. 47/01-CE (NT) was amended by Notification No. 17/04-CE (NT) dated 04/9/04 by which the Sl. No. 1 of the table to the Notification No. 47/01-CE (NT) pertaining to the petroleum products of Chapter 27 and benzene, toluene, xylene, propylene and tertiory amyl methylene ether etc. of Chapter 29 was deleted. The implications of this amendment was that w.e.f. 06/9/04, the petroleum products manufactured by an oil refinery could no longer be cleared from the Refinery without payment of duty for storage in a bonded warehouse and such products were required to be cleared only on payment of duty. However, Notification No. 46/01-CE (NT) dated 26/6/01 pertaining to the clearances of any goods by a factory to a bonded warehouses for export of those goods there from under Rule 19 continued.
1.2 At the time of amendment to Notification No. 47/01-CE (NT) by Notification No. 17/04-CE (NT) dated 04/9/04, the Board also issued a Circular No. 798/31/2004-CX dated 08/9/04 clarifying that the facility of removal of petroleum products without payment of duty for export warehousing continues to be available vide Notification No. 46/2001-CE (NT) dated 26/6/01. Board vide Circular No. 581/18/2001-CX. dated 29th June, 2001 has inter alia, specified conditions, procedure, class of exporters and places of warehouses under sub-Rule (2) of Rule 20 of Central Excise Rules, 2002 for warehousing of excisable goods for the purpose of export. There is no dispute that the place where the warehouses, in question, from where the Aviation Turbine Fuel is supplied are notified under Rule 20 (2) of the Central Excise Rules.
1.3 The appellant during period prior to 06/9/04 were clearing Aviation Turbine Fuel to the bonded warehouses of IOCL, BPCL as well as HPCL at Shakur Basti under bond without payment of duty and from these warehouses, the Aviation Turbine Fuel (ATF) was being supplied to foreign going aircrafts of various airlines under shipping bills. These clearances were being made by the appellant company under ARE-1s. After withdrawal of warehousing facility in respect of petroleum products by amendment to Notification No. 47/01-CE (NT), the appellant under their letter dated 13/9/04 addressed to the Commissioner, Central Excise, new Delhi requested the conversion of their existing warehouse at Shakur Basi into export warehouse in terms of Boards Circular No. 798/31/2004-CE dated 08/9/04. Thereafter since there was no response, a reminder letter was also sent to the Commissioner on 28/6/05. Department responded to the Appellant in July, 2005 and the concerned Deputy Commissioner under his letter dated 18/7/95 informed the Senior Terminal Manager of the warehouses of the appellant company at Shakur Basti as under :-
Subject : Registration of IOCL, SSB Terminal as Intermediate Export Warehouse reg.
Please refer to your letter dated 28/06/05 on the subjected matter.
In this matter your attention is invited to the fact that you are holding Central Excise Registration No. AAAC 116814XM001 with our Division and the same number will be used for Intermediate Export Warehouse for clearances.
You are advised to follow the procedure as laid down under Boards Circular No. 798/31/2004-CX. dated September 8, 2004 as an intermediate station for clearances for export of goods. A copy of the referred Boards Circular is enclosed for your reference.
1.4 Accordingly, the appellant continued to make clearances of the Aviation Turbine Fuel under ARE-1s for supply to foreign going aircrafts of various airlines.
1.5 Subsequently, the Department issued a show cause notice dated 10/10/05 for demand of duty amounting to Rs. 12,37,99,089/- in respect of clearances of ATF to Shakur Basti Warehouses during the period from 06/9/04 to 31/3/05 and another show cause notice dated 14/3/06 for demand of Rs. 7,76,30,771/- in respect of clearances of ATF under ARE-1s during the period from 01/8/05 to 09/8/05. In both the show cause notices, beside the demand of duty, interest on it under Section 11AB was also sought to be recovered besides imposition of penalty under Rule 25 of the Central Excise Rules. In both the show cause notices, it was alleged that the Shakur Basti warehouse of the appellant company is not registered export warehouse and, therefore, is not entitled to receive duty free ATF from the appellant companys refinery at Panipat.
1.6 In both the show cause notices, duty was also demanded in respect of clearances of ATF by the appellant companys refinery at Panipat to the similar warehouses at Shakur Basti of BPCL and HPCL.
1.7 Both the show cause notices were adjudicated by the Commissioner vide order-in-original No. 44-45/Commr/RP/2006 dated 28/12/06 by which the above-mentioned duty demands totalling Rs. 20,14,29,960/- were confirmed under Section 11A (1) of Central Excise Act, 1944 alongwith interest on it under Section 11AB and penalty of Rs. 1,00,00,000/- was imposed on the appellant company under Rule 25 of Central Excise Rules, 2002. Against this order of the Commissioner, these two appeals have been filed.
2. Heard both the sides.
3. Shri L.P. Asthana, Advocate, the learned Counsel for the appellant, pleaded that the supplies of ATF to the warehouses at Shakur Basti for onward supply to the foreign going aircrafts had been made in terms of Notification No. 46/02-CE (NT) which had not been withdrawn or amended, that this notification permitted the clearances of any excisable goods by a manufacturer from his factory to export warehouses approved under Rule 20 of the Central Excise Rules for export there from of the goods under Rule 19 of the Central Excise Rules, that Notification No. 47/01-CE (NT) dated 26/6/01 which had been amended by Notification No. 17/04-CE (NT) dated 04/9/04 so as to remove the petroleum products from its purview, was only in respect of removal without payment of duty of certain specified excisable goods from a factory to a bonded warehouse or from one bonded warehouses to another bonded warehouses and not for export, that removal of goods without payment of duty to a bonded warehouse for export from that warehouse was covered under Notification No. 46/01-CE (NT) and that notification was not affected at all by amendment to the Notification No. 47/01-CE (NT), that in this regard the Board vide Circular No. 798/31/04-CX. dated 08/9/04 has clarified that even after amendment to Notification No. 47/01-CE (NT) by Notification No. 17/04-CE (NT) dated 04/9/04, the facility of removal of petroleum products without payment of duty for export warehousing continues to be available under Notification No. 46/01-CE (NT) dated 26/6/01 and that export of petroleum products through export warehouses can be undertaken by any exporter and export warehouse can be established in any part of the country, that this clarification was subsequently reiterated by the Board in its Circular No. 804/1/2005-CX. dated 04/1/2005 wherein it was again clarified that facility of removal of petroleum products without payment of duty for export warehousing vide Notification No. 46/01-CE (NT) dated 26/06/01 continues to be available, that in this Circular, it was also clarified that in view of difficulties in installing separate tanks at the airport, mixed storage of duty paid and non duty paid goods at Aviation Fuel Station (AFS) at Airports may be allowed subject to the condition that a tankwise account shall be maintained about receipt and discharge of duty paid and non duty paid stock of ATF, that in this case re-conciliation statement regarding the quantity of ATF cleared under ARE-1 and the quantity exported under shipping bills has been given, that immediately on amendment to Notification No. 47/01-CE (NT) by Notification No. 17/04-CE (NT) dated 04/9/04, the appellant company had addressed a letter dated 13/9/04 to the Commissioner requesting for conversion of their existing warehouse at Shakur Basti Terminal into export warehouses, that in response to this letter, the Deputy Commissioner under his letter dated 18/7/05 replied that the appellant company are already holding a Central Excise registration with their division and the same registration number may be used for intermediate export warehouses, and that in view of this, no separate registration as intermediate export warehouse was required and, hence, the demand of duty by alleging that the Shakur Basti Warehouse is not a registered warehouse for export is without any basis, that in respect of clearances of ATF for export under ARE-1s, duty can be demanded only if there is evidence of diversion of the goods cleared, backed by evidence on record, but in this case there is neither any allegation, nor any such any evidence has been produced, and that in view of the above submissions, the impugned order is not sustainable.
4. Shri Pramod Kumar, learned Jt. CDR, defended the impugned order by reiterating the findings of the Commissioner and pleaded that the appellant did not obtain separate registration in respect of their Shakur Basti Warehouse as intermediate export warehouse and, hence, the warehouse at Shakur Basti cannot be treated as a premises approved by the Commissioner for storage of non-duty paid goods for export, that in terms of Notification No. 46/01-CE (NT) dated 26/6/01 removal of any excisable goods by a manufacturer without payment of duty to a bonded warehouse for the purpose of export is permissible only when the warehouse for storage of non-duty paid goods has been approved by the Commissioner and is located at a place specified by the Board, that the appellant company had applied to the Commissioner for approval of export warehouse for the purpose of export in respect of its Aviation Fuel Station, Palam and the same had been specifically granted by the Commissioner vide letter dated 11/10/04 and that since the required approval from the Commissioner in the Shakur Basi Warehouse was not obtained, the clearances of ATF under ARE-1s, without payment of duty to Shakur Basti Warehouse were not permissible. He, therefore, pleaded that there is no infirmity in the impugned order.
5. We have considered the submissions from both the sides and perused the records.
6. The appellant have a warehouse for storage of various petroleum products including ATF at Shakur Basti. Beside this, BPCL and HPCL also have similar warehouses at Shakur Basti for the purpose of export. During period prior to 06/9/04, non-duty paid petroleum products including Aviation Turbine Fuel were being received in these warehouses and while the Aviation Turbine Fuel was being supplied as export under bond under Rule 19 to Foreign going aircrafts, other petroleum products were being cleared on payment of duty. During the period prior to 6/9/04 Notification No. 46/01-CE dated 26/6/01 permitted clearances of any excisable goods by a manufacturer without payment of duty to a bonded warehouse for export there from there under Rule 19 subject to condition that the warehouse is located at the approved station and the same has been approved by the Commissioner. This notification issued under Rule 20 (1) of the Central Excise Rules, 2001 was applicable to all excisable goods including the petroleum products and the same is still in force and has not been amended. Notification No. 47/01-CE (NT)dated 26/6/01 also issued under Rule 20 (1) of the Central Excise Rules, 2001 permitted removal of only certain excisable goods mentioned in the table annexed to this notification, without payment of duty to a bonded warehouse or from one bonded warehouse to another bonded warehouse. Sl. No. 1 of this table covered certain petroleum products of Chapter 27 and 29. By amending Notification No. 17/04-CE (NT) dated 04/9/04 Sl. No. 1 of the table to the Notification No. 47/01-CE (NT) was deleted as a result of which w.e.f. 06/9/04 the petroleum products manufactured by refinery could no longer be cleared without payment of duty to a bonded warehouses. However, as mentioned above, Notification No. 46/01-CE (NT) still continued and has not been amended in any manner. In other words w.e.f. 06/9/04, while the oil refineries could no longer clear the petroleum products without payment of duty to a bonded warehouses for storage there, they could still clear the petroleum products for the purpose of export to a bonded warehouse for export from that warehouse. It is for this reason that the Board vide Circular No. 798/31/04-CX dated 08/9/04 clarified that while the facility of removal of petroleum products without payment of duty from a Refinery to a bonded warehouse or from one bonded warehouse to another bonded warehouse has been withdrawn w.e.f. 06/9/04 vide Notification No. 17/04-CE (NT) dated 04/9/04, the facility of removal of petroleum products without payment of duty for export warehousing continues to be available under Notification No. 46/01-CE (NT). This position was reiterated again in the Boards Circular No. 804/1/2005-CX. dated 04/1/05 and in this Circular the Board also clarified that for the purpose of exports, separate storage of the duty paid and non-duty paid petroleum products is not required subject to condition that tankwise account is maintained about the receipt and discharge of duty paid and non-duty paid petroleum products. The only objection of the Department in this case is that the Shakur Basti Warehouse is not approved by the Commissioner and separate registration as intermediate warehouse has not been obtained. In our view this objection is without any basis, as we find that immediately after amendment to Notification No. 47/01-CE (NT) by Notification dated 04/9/04, the appellant under their letter dated 13/9/04 addressed to the Commissioner and had requested for converting the existing bonded warehouse at Shakur Basti as export warehouse under Rule 20 for export of ATF and in response to this Circular, the Department had clarified that since they are already holding a Central Excise registration No. AAAC 116814XM001 with the Division, the same registration number would be used for intermediate export warehouse for export clearances. Thus this letter clearly shows that the required registration as intermediate export warehouse has already been granted to the Shakur Basti Warehouse. In view of this, the allegation in the show cause notice that Indian Oil Corporation, Shakur Basti, New Delhi is not a registered export warehouse and therefore is not entitled to receive duty free ATF from IOCs Refinery at Panipat is absolutely without any basis. In view of this, we hold that the impugned order is not sustainable. The same is set aside. The appeals are allowed. The miscellaneous applications for early hearing stand disposed of.
(Dictated and pronounced in open court.) (Rakesh Kumar) Member (Technical) (S.K. Mohanty) Member (Judicial) PK ??
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