Concessional exemption for refinery-origin petroleum products remained available despite movement through intermediate warehouses.

Petroleum products cleared under bond from the specified refinery remained eligible for concessional exemption even when routed through one or more intermediate warehouses before clearance from the assessee's warehouse on payment of duty. The notification was interpreted to extend relief to goods originating from the specified refineries, and it did not require direct transfer to the final warehouse without any intervening warehouse movement. The Revenue's restrictive reading would defeat the object of the exemption, so the duty demand, interest and penalty were unsustainable.

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Issues: Whether petroleum products cleared on payment of concessional duty remained eligible for exemption when, after removal under bond from the specified refinery, they passed through one or more warehouses before being cleared from the warehouse of the assessee; and whether the duty demand, interest and penalty could be sustained on the ground that the goods were not received directly from the refinery under bond.

Analysis: Notification No. 29/2002-C.E., as amended by Notification No. 34/2002-C.E., provided concessional duty on petroleum products removed under bond from the specified refineries to a warehouse and thereafter cleared on payment of 50% of duty. The amended explanation declared that the exemption would apply where the goods were removed under bond from the specified refineries to a warehouse and subsequently removed from that warehouse on payment of duty. The object of the notification was to extend relief to petroleum products originating from the specified refineries, and nothing in the notification excluded goods that had been transferred through intermediate warehouses before reaching the warehouse from which clearance was made on payment of duty. The restrictive interpretation adopted by the Revenue would defeat the purpose of the notification.

Conclusion: The exemption remained available despite movement through intermediate warehouses, and the demand of duty, interest and penalty was unsustainable.

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