2011 (9) TMI 410 - AT - Central Excise

Tribunal grants duty exemption for petroleum products from refineries under specified notifications

The Tribunal ruled in favor of the appellants in a case concerning the exemption of excise duties for petroleum products cleared from specified refineries ... Extension of concessional rate of duty to clearances of petroleum products from specified refineries – Held that:- Notification No.29/02 amended by notification No.34/2002 dated 21-6-2002 is to the effect that petroleum products cleared under bond from any of the specified refineries and received under bond in a warehouse can be cleared on payment of duty at the concessional rate specified in the notification. There is nothing in the notification to deny the exemption if such goods are received under bond in one or more warehouses before they are received in the warehouse from which they are cleared on payment of duty. In the circumstances, we hold that the impugned demand raised for the reason that the LDO removed on payment of duty from the warehouse had not been received directly from the refinery under bond is not sustainable. Issues:1. Exemption of duties of excise for petroleum products cleared from specified refineries under Notification No.29/02-CH.2. Denial of exemption due to goods not being received directly from the refinery.3. Interpretation of Notification No.34/2002 regarding clearance under bond from refineries to warehouses.Analysis:The case involved a dispute regarding the exemption of duties of excise for petroleum products cleared from specified refineries under Notification No.29/02-CH. The issue arose when the goods were not received directly from the refinery, leading to the initiation of proceedings for recovery of the differential duty. The Tribunal considered the applicability of the exemption in such cases and referred to a previous decision where it was held that clearance from a bonded warehouse does not disqualify the benefit of the exemption. The Tribunal analyzed the relevant notifications and concluded that the exemption is available even if the goods are received under bond in one or more warehouses before final clearance on payment of duty. Therefore, the demand for duty based on the goods not being directly received from the refinery was deemed unsustainable.Furthermore, the Tribunal interpreted Notification No.34/2002, which allowed clearance under bond from refineries to warehouses for subsequent clearance on payment of duty at a concessional rate. The Tribunal emphasized the intention of the notification to grant exemption to petroleum products from specified refineries, including those originating from north-eastern refineries. The Tribunal found no provision in the notification to deny the exemption if goods are received under bond in multiple warehouses before reaching the final warehouse for duty payment. Consequently, the impugned duty demand was set aside, and the appeal was allowed with consequential relief to the appellants.In conclusion, the Tribunal clarified the interpretation of the notifications regarding the exemption of duties of excise for petroleum products cleared from specified refineries. The decision highlighted that goods received under bond in warehouses before final clearance do not disqualify the exemption benefits. The judgment provided a detailed analysis of the relevant provisions and upheld the appellants' entitlement to the exemption, ultimately setting aside the duty demand and granting them relief.