2017 (8) TMI 1157 - AT - Central Excise

Tribunal upholds duty demands on excess excise duty payments for fuel products

Senior Terminal Manager, IOCL Versus Commissioner of Central Excise, Chennai-I

The Tribunal dismissed the appeal, affirming duty demands under Section 11D for the recovery of excess excise duty collected by the oil corporation ... Price escalation clause - Valuation - stock transfer - Motor Spirit (MS) - High Speed Diesel Oil (HSD) - demand of differential duty - Section 11D - Held that: - The Oil Coordination Committee has revised the administrative price of MS and HSD, to take into account the increased duties as above. Hence in respect of stocks lying in the depots on 1.3.2001 and 12.1.2002 and sold thereafter, it is evident that the appellant has recovered extra amounts attributable to increased excise duty which are liable to be paid to the government in terms of provisions of Section 11D - the demand of duty is not from depots but from Korukkupet terminal who have stock transferred the petroleum products to the depots. The collections are accounted against the Korukkupet terminal and hence we are of the view that appellant is liable to pay the differential excise duty recovered in terms of Section 11D. The duty demands under Section 11D along with payment of interest upheld - appeal dismissed - decided against appellant. Issues:1. Recovery of excess excise duty under Section 11D of the Central Excise Act, 1944.Analysis:The case involved the Appellant, an oil corporation, holding Central Excise Registration for petroleum products. The duty structure for Motor Spirit (MS) and High Speed Diesel Oil (HSD) was revised on specific dates. A Show Cause Notice claimed excess excise duty payment of Rs. 21,84,271 on stock at certain depots. The issue revolved around Section 11D, which mandates the refund of any duty collected in excess. The original authority confirmed a demand of Rs. 12,71,673, which was upheld on appeal.The Appellant argued they operated under government pricing control, had no control over price changes, and collected prices inclusive of excise duty. They contended no differential duty could be demanded without proving specific conditions. The Appellant cited a Tribunal decision in a similar case to support their stance.The Department argued that the increased prices post-duty revisions constituted extra excise duty collected, falling under Section 11D liability. The Tribunal noted the revisions and concluded that the Appellant had indeed collected excess duty, which must be refunded to the government. They distinguished a cited case where increased prices didn't imply excess duty collection, unlike the present scenario. Consequently, the duty demands under Section 11D were upheld, including interest payment.In summary, the Tribunal dismissed the appeal, affirming the duty demands under Section 11D due to the collection of excess excise duty post-duty revisions. The decision was pronounced on 14.06.2017.