Customs, Excise and Gold Tribunal - Tamil Nadu
The Manager (Terminal), Indian Oil ... vs Commissioner Of Central Excise on 9 February, 2007
Equivalent citations: 2007(116)ECC462, 2007ECR462(TRI.-CHENNAI), 2007(211)ELT590(TRI-CHENNAI)
ORDER P. Karthikeyan, Member (T)
1. This appeal filed by M/s IOC Ltd (IOC) seeks to vacate the Order-in-Original No. 45/2000-SP dated 23.10.2000 passed by the Commissioner of Central Excise, Vizag. demanding from the appellants an amount of Rs. 108,17,86,744/- (Rupees one hundred and eight crores seventeen lakhs eightysix thousand and seven hundred and forty four). The brief facts of the case are that IOC had stored various petroleum products, such as High Speed Diesel Oil, Superior Kerosene Oil, Motor Spirit and Furnace Oil imported and indigenously manufactured in their mixed bonded tanks. Imported goods in the tanks had suffered the applicable duty and the indigenous goods were non duty paid. During the period 8/98 to 2/2000, the appellants had cleared various imported products on which customs duty had been paid, under cover of Rule 52A invoices and collected a total of Rs. 1,08,17,86,744/- from as duty customers. The above amount was tentatively decided to be payable by IOC to the Central Government in terms of Section 11D of the Central Excise Act, 1944.
2. While disposing the five Show Cause Notices issued in this regard, the Commissioner had found that the imported and indigenous products warehoused in mixed tanks on First-In First-Out basis had lost their respective identities and the mixed products had become different excisable goods. Moreover, the invoices under which the imported goods had been cleared had shown the value and duty as applicable to corresponding indigenous products. In deciding the goods cleared from bonded tanks to be excisable goods the Commissioner had relied on various case law defining goods. The Commissioner found the appellant's explanation of the entry "Customs/Excise Duty" in the 52A invoices as owing to their software problem to be a method of manipulation to recover higher amounts of duty than permitted under the Administered Pricing Mechanism and to allow the final user to avail Modvat credit of the said amount. He recorded a finding that the demand was had been proposed in terms of Section 11A(1) of the Central Excise Act, 1944 read with Section 11D(1) of the Act. Therefore, the excess amount collected by the appellants could be recovered even as excise duty legally. It was immaterial that the extra amount of duty had not been collected as representing excise duty. Accordingly he confirmed the demand proposed in the five Show Cause Notices as excess amount collected representing them as duty of excise on the sale of Superior Kerosene Oil, Motor Spirit, Furnace Oil, and High Speed Diesel Oil etc. under Section 11D(1) of the Act.
3. In the appeal filed by the appellants, they have submitted that the adjudicating authority by finding the customs duty paid imported goods to be excisable goods had traversed beyond the scope of the Show Cause Notices and violated the principles of natural justice. The imported goods also had suffered various duties on import and that the amount collected by them from the customers was lower than what they had incurred, in view of the Administered Pricing Mechanism. As they were using the same software for preparing invoices to cover clearances of indigenous and imported goods, the invoices showed the description "Customs Duty/Excise duty" in the invoices for clearance of goods received from both the streams.
4. The appellants invited our attention to the salient provisions of Section 11D of the Act which laid down that "every person liable to pay duty under this Act or the Rules made thereunder, and has collected any amount in excess of the duty assessed or determined and paid on any excisable goods under this Act or the Rules made thereunder from the buyer of such goods" shall pay the amount so collected to the Central Government. It was argued that Section 11D applied only to excisable goods and did not cover imported goods. During the hearing the representative of the appellants cited various case law in support of the argument that Section 11D was not applicable in case of amounts collected on sale of imported goods. He cited the decision of the Tribunal in the case of Hindustan Petroleum Corporation Ltd. v. CCE, Hyderabad 2002 (149) ELT 1294 (Tri. Chennai) and CCE, Mangaore v. Indian Oil Corporation Ltd. 2005 (191 ELT 356 (Tri. Bang) both of which had dealt with the same issue as in the impugned order and had decided that petroleum products imported by the appellants being not excisable goods, provisions of Section 11D ibid were not applicable in respect of amounts collected in excess of countervailing duty paid in respect of such goods. It was also submitted that the Revenue's appeal against the order cited first was dismissed by the Supreme Court. Ld. Sr. Counsel representing the Revenue argued that the appellants had collected the amounts as representing excise duty and also enabled their customers to avail credit of Central Excise duty not paid by the appellants to the Central Government.
5. We have examined the records and considered the submissions made by both sides. The appellants had been permitted to store customs duty paid imported goods along with such goods produced indigenously on which duty was not paid in their storage tanks as per Board's Circular F. No. 261/6/5/84-CX dated 17.7.84. While clearing goods of both streams the appellants used clearance documents with the same format which showed an amount paid towards "CUS.DUTY/CX. DUTY". The appellants explained that this was owing to the common software they had used. In respect of the impugned goods they had passed on a lower amount than the actual incidence of tax on the goods they had borne.
6. We find that Section 11D(1) of the Central Excise Act reads as follows:
(1) Notwithstanding anything to contrary contained in any order or direction of the Appellate Tribunal or any Court or in any other provision of this Act or the rules made thereunder, [every person who is liable to pay duty under this Act or the rules made thereunder, and has collected any amount in excess of the duty assessed or determined and paid on any excisable goods under this Act or the rules made thereunder from the buyer of such goods] in any manner representing duty of excise, shall forthwith pay the amount so collected to the credit of the Central Government.
In terms of the above provisions amount collected in excess of the duty assessed or determined and paid on any excisable goods alone is required to be paid to the Central Government. We find that the finding of the Commissioner that the impugned goods are excisable goods is totally misconceived and incorrect. From the unambiguous wording of the above sub section the impugned demand of amounts collected as duty on clearances of imported petroleum products is not sustainable. This is the settled position in law evidenced by the following judicial authorities cited.
i. Hindustan Peytroleum Corporation Ltd. v. CCE, Hyderabad 2002 (149) ELT 1294 (Tri. Chennai) ii. CCE, Mangaore v. Indian Oil Corporation Ltd. 2005 (191 ELT 356 (Tri. Bang) The ratio of the first decision has the approval of the apex Court, as the appeal against the same had been dismissed.
7. In the circumstances, the impugned order is not sustainable. Accordingly we set aside the impugned order and allow the appeal.
(Operative portion of the order pronounced in open Court on 9.2.2007)