Customs, Excise and Gold Tribunal - Bangalore
Indian Oil Corporation Ltd. vs Commissioner Of C. Ex. on 1 November, 2006
ORDER T.K. Jayaraman, Member (T)
1. As the issue involved in these appeals are common, they are taken up together for the disposal as per law. The allegation against the appellants is that they had collected amounts representing duty which is in excess of the amount paid by the appellants to the Government. The amounts have been demanded under Section 11D of the Central Excise Act, 1944/28(b) of the Customs Act, 1962. The duty demands confirmed and the period involved in these appeals are given herein below:
S/No. Appeal No. Appellants Duty demand (Rs.) Period involved
1. C/123/2006 M/s. HPCL 4,68,60,471/- June 1998 to
March 1999
2. E/941/2003 M/s. IOC Ltd. 31,25,82,805/- January 1993 to
December 1997
3. E/374/2003 M/s. IOC Ltd. 6,00,50,076/- January 1998 to
August 2001
4. E/6/2004 M/s. BPCL 23,31,375/- July 1996 to
September 2000
2. Shri G. Shivadass, learned Advocate appeared for M/s. Indian Oil Corporation Ltd. and M/s. Hindustan Petroleum Corporation Ltd. Shri Anoop K.G., Assistant Manager (Taxation) appeared on behalf of M/s. Bharat Petroleum Corporation Ltd. S/Shri K. Sambi Reddi and Anil Kumar, learned Departmental Representatives appeared on behalf of the Revenue.
C/123/2006
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) E.L.T. 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 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 reiterated 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) E.L.T. 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 Tribunal's decision cited supra. In these circumstances, the impugned Orders-in-Original are set aside and the appeals are allowed.
(Operative portion of the order has been pronounced in the open court on completion of hearing)