2015 (10) TMI 2075 - AT - Central Excise

Tribunal rules on duty liability for petroleum company post-withdrawal of facility under Central Excise rules

Indian Oil Corporation Ltd. Versus Commissioner of Central Excise, Goa

The Tribunal ruled in favor of the appellant, a petroleum refining company, regarding duty liability on clearances from warehouses post-withdrawal of ... Duty demand - EOU clearances - Appellants were required to pay duty on clearance from the warehouses at the time of such clearance from the warehouse - Held that:- Regarding the clearance of goods to EOU from the warehouse it is seen that the issue is squarely covered by the decision of Tribunal in the appellants own case (2007 (10) TMI 513 - CESTAT, CHENNAI). In the said decision it has been held that clearances to EOU availing full exemption can be made from stock available in the warehouses even after withdrawal of facility under rule 20. The decision cited by the learned AR in case of IBP (2009 (5) TMI 279 - CESTAT, KOLKATA) also supports the view in so much as duty liability is concerned the same arises on the due date of payment of duty as per rule 8 of Central Excise rules, on the 5th of the next month. Relying on the decision of Tribunal in the case of IOL (2007 (10) TMI 513 - CESTAT, CHENNAI) the appeal is allowed in respect of clearances made to EOU availing full exemption from duty. Regarding the interest on duty paid on clearance of goods from the warehouse in subsequent months, it is noticed that both, the decision cited by the revenue and as well as appellants, support the appellants case. In both the decision is it has been held that the clearances from the warehouses after withdrawal of the facility under the Rule 20 will be governed in terms of the rule 8 of Central Excise rules, in so much as the same will be payable on the 5th of next month. Once it is recognised that the duty liability after withdrawal of the benefit of Rule 20 will be governed by the Central Excise rules as a clearance from warehouse, in terms of Rule 8 of Central Excise rules, the question of payment of interest does not arise. Moreover of Central Excise rules only permitted clearance from the factory to the warehouse without payment of duty. After withdrawal of the facility, the clearance from the factory to the warehouse without payment of duty can be stopped. It does not change the treatment which has to be given to the goods already cleared in terms said rules and lying in the warehouse. Those goods will continue to be governed by the terms under which the same were cleared from the factory. - Decide din favour of assessee. Issues:1. Duty liability on clearance of petroleum products from warehouses after withdrawal of facility under Rule 20 of Central Excise rules.2. Applicability of interest on duty paid on clearances from warehouses in subsequent months.Analysis:1. The appellant, engaged in refining petroleum products, faced duty demands on clearance from warehouses post-amendment of the notification under Rule 20 of Central Excise rules, excluding petroleum products from the benefit. The issue revolved around whether duty became payable immediately on withdrawal of the facility, as per Circular No.796/09/2004, or if duty liability arose on the due date of payment under Rule 8 of Central Excise rules. The appellant cited a Tribunal decision in their favor and argued that duty is not leviable on clearances to EOUs post-withdrawal of the facility. The Tribunal agreed, allowing clearances to EOUs from stock in warehouses even after the withdrawal of the facility, aligning with the due date of payment of duty under Rule 8 for duty liability.2. Regarding interest on duty paid on clearances from warehouses in subsequent months, both appellant and revenue cited Tribunal decisions supporting the appellant's case. The Tribunal emphasized that duty liability post-withdrawal of the facility would be governed by Rule 8 of Central Excise rules, payable on the 5th of the next month. The Tribunal highlighted that the treatment of goods already cleared and lying in the warehouse would remain unchanged, governed by the terms under which they were initially cleared. The Tribunal referenced a case involving HPCL to support the view that duty liability could be discharged as per Rule 8, indicating that interest on duty paid goods cleared in subsequent months was not applicable. Consequently, the appeal on this count was also allowed, entitling the appellant to consequential benefits, including any refund of pre-deposit.This detailed analysis of the legal judgment highlights the key issues, arguments presented, Tribunal decisions cited, and the final decision rendered by the Tribunal, providing a comprehensive understanding of the case.