TaxTMI 
TaxTMI 
2013 (2) TMI 37
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.... off Andhra Pradesh Coast called "the Ravva Field". While, the Oil and Natural Gas Commission ("ONGC") holds 40% interest, Petrocon India Limited holds 25% interest, Ravva Oil (Singapore) Pte Limited holds 12.5% and the petitioner herein holds 22.5% interest in the Ravva JV. The petitioner acts as an operator on behalf of Ravva JV to run its operations. It obtained a Central Excise Registration in its name, it being the seller's representative. 3. Ravva JV produces crude oil from the Ravva Field and sells it on F.O.B. basis exclusively to the Hindustan Petroleum Corporation Limited ("HPCL") at Visakhapatnam and Bongaigaon Refineries and Petrochemicals Limited ("BRPL") at Bongaigaon, Assam. The said two refineries were nominated by the Government of India as per the above contract. The crude oil, after its extraction, is stored for a while in the adjoining on shore facilities and after separation of water and sediments is taken back to a sea point through pipe line from where it is shipped out periodically, to the two refineries through the marine tankers deployed by them. 4. The crude oil produced from Ravva field is subject to "cess" under section 15 of the Oil Industry (Dev....
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....the refineries. The petitioner contends that despite requests by it, the actual quantities received by the refineries were not given to it and therefore, its payments were higher than the quantities which the refineries would have actually received on account of evaporation and loss in transit of the Crude oil. 7. Differences arose between the petitioner and the Central Excise Department in respect of the quantities of the crude oil on which cess was payable. Against certain orders passed by the officers of the said department unilaterally assessing the quantities of certain shipments in the years 2002 and 2003, the petitioner filed appeals before the Commissioner (Appeals), Central Excise at Visakhapatnam and while they were pending, the 2nd respondent issued a letter dated 12.12.2003 directing the petitioner to follow the procedure prescribed in the trade notice no.13/2001 dated 14.3.2001 referred to above. 8. In view of this, the petitioner convinced both the refineries on the need to furnish the received quantities in a time bound manner. While HPCL agreed to furnish such figures on the basis of the quantities received at their refinery, BRPL expressed that it is impossib....
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....erating that 5th of the following month is the due date and while making payment in the Personal Ledger Account by the 5th, the petitioner on receipt of the quantity data from the refineries shall carry out reconciliation. On such reconciliation, if any excess amount is payable, the same shall be paid within a month thereof with interest on the delayed payment. If any excess payment is made, the petitioner is entitled to adjust the same in the next month against the cess payable. The petitioner expressed its disappointment by a letter dated 12.7.2004 to the 2nd respondent. 13. Thereafter, the petitioner received another demand for the period October 2003 to February 2004 vide letter OC No.338 dated 1.6.2004 for a sum of Rs.96,18,789/- directing the petitioner to show any material evidence and legal provision in its knowledge against the said demand. 14. The petitioner replied vide letter dated 18.6.2004 questioning the jurisdiction of the department to levy interest on the alleged delayed payment and also disputing taking 5th of the following month as the due date. 15. The petitioner also sought intervention of the first respondent which is the Apex Body for Central Exc....
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....be paid by the 5th of the following month; that the cess paid under the OID Act on refinery receipt quantities of crude oil is not paid under the Central Excise Act on removal of goods from the factory or ware house; that the cess under the OID Act is not within the ambit of the term "duty" defined under Section 3 of the Central Excise Act and therefore the due date for duty payable under the Central Excise Act is not applicable for payment of cess on crude oil under the OID Act; (b) The trade notice No.13/2001 dt.14-03-2001 issued by the 2nd respondent reproduces the Government of India notification No.18/88 dt.20-05-1988 ipsissima verba and prescribes a date (20th of the following month) for filing returns by the oil producing company and payment of cess on crude oil shall be made immediately on receipt of the information relating to the actual quantity of net crude oil received by the refinery or factory determined after test results; that the oil company shall debit the amount of cess in the PLA and therefore the 2nd respondent has no jurisdiction or power vested in him to amend the Government of India notification dt.20-05-1988 by issuing Circular No.C.No.V/30/253/2003-Tech....
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.... for interest, the provisions of the OID Act are not amended correspondingly; that in the absence of amendment of the provisions of the OID Act, which had never contemplated payment of interest and which alone is the charging Act, the amended provisions of the Central Excise Act and the Central Excise Rules cannot be applied against the petitioner. The petitioner relied upon the judgments in Khemka & Co. (Agencies) Pvt. Ltd. Vs. State of Maharastra AIR 1975 SC 1549, India Carbon Limited Vs. State of Assam AIR 1997 SC 3054 and Devidas Gopal Krishan Ltd. Vs. Union of India and Others (2002) 140 ELT 56 (P&H). 22. The respondents filed a counter affidavit contending as follows: (a) As per sub section (2) of the OID Act, cess on petroleum crude is payable by the persons by whom it is produced on the quantity received in a refinery; under the said Act, the person liable to pay the cess on crude is the producer company on the self-assessment basis and it is their responsibility to ascertain the receipt quantities against the dispatches made; nowhere does the law cast any responsibility on the refinery and as such the department cannot approach the refineries in this matt....
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....23. Heard Sri S.Ravi, learned Senior Counsel for the petitioner and Sri A.Rajasekhar Redy, learned Senior Standing Counsel for the Central Government for the respondents. 24. Before we deal with the respective contentions, it is pertinent to note that the OID Act was enacted by Parliament to provide for the establishment of an Oil Industry Development Board for the development of the oil industry and for that purpose to levy a duty of excise on crude oil and natural gas and for other matters connected therewith. Section 15 of the said Act deals with the levy and collection of a cess in the nature of a duty of excise and states as follows: "s. 15. (1) There shall be levied and collected, as a cess for the purposes of this Act, on every item specified in column 2 of the schedule, which is produced in India (including the continental shelf thereof) and- (a) removed to a refinery or factory; or (b) transferred by the person by whom such item is produced to another person, a duty of excise at such rate not exceeding the rate set forth in the corresponding entry in column 3 of the Schedule, as the Central Government may, by notification in the Official Gazetee, specify: Pr....
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.... close of each month the producer (oil producing company) shall file with the proper officer in quadruplicate a monthly return in form D (specimen form enclosed) showing separately for each refinery or factory the quantity of crude oil produced, the quantity dispatched and received at the refinery or factory, the particulars of delivery tickets under which such quantity was removed and amount of cess paid during the month together with original and duplicate copies of PLA receipted treasury challans on which deposit in the account current were made by payment into the Government Treasury and delivery tickets. (iv) On receipt of monthly return and copy of PLA register from the oil producing company, the proper officer shall finalize the assessment of cess of the crude oil received by the refinery or factory after scrutiny of the relevant records. If the amount due has not already been paid, the proper officer shall cause a notice to be served upon the oil producing company requiring them to make payment of the amount assessed within ten days of the service of the notice. (v) In case of oil company extracting oil in places situated in different Collectorates and sending crude o....
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....the petitioner for the period between May 2001 and March 2003? 28. The petitioner contends that the provisions of the OID Act do not provide for payment of interest; though under Section 15 (4) of the OID Act, the provisions of the Central Excise Act and the Rules made thereunder as far as may be are made applicable, they cannot be applied mechanically without reference to the particular situation existing with respect to the crude oil qua payment of cess; that if the 5th of the following month is not taken as the due date, there is no delay in making payment and therefore the petitioner is not liable to pay interest; Even otherwise, the 3rd and 4th respondents have no authority to levy interest since OID Act, which is the charging and substantive statute does not prescribe payment of interest; that the 3rd and 4th respondents have been levying interest on the basis of the amendment effective from 01-04-2003 to Rule 8 (3) of the Central Excise Rules; that when the OID Act was enacted, the provisions of Section 11AB of the Central Excise Act and Rule 8 (3) of the Central Excise Rules providing for payment of interest did not exist and after the said amended provisions in the Cent....
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....), no interest can be charged for the delayed payment of cess. 31. In Khemka & Co.'s case (AIR 1975 SC 1549), the Supreme Court was considering the question whether an assessee under the Central Sales Tax Act, 1956 (Central Act) could be made liable for penalty under the provisions of a State Sales Tax Act (State Act) for default in payment of taxes within the prescribed time. The assessee contended that there is no provision in the Central Act for imposition of penalty for delay or default in payment of tax, and therefore, imposition of penalty under the provisions of the State Act for delay or default in payment of tax is illegal. The rival contention on behalf of the Revenue was that the provision for penalty for default in payment of tax as enacted in the State Act is applicable to the payment and collection of the tax under the Central Act and is incidental to and part of the process of such payment and collection. It relied upon Section 9 (2) of the Central Act which stated as follows: "S.9 (2): Subject to the other provisions of this Act and the Rules made thereunder, the authorities for the time being empowered to assess, re-assess, collect and enforce payment of any ....
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....y sanction. It is not merely adjunct to assessment. It is not merely consequential to assessment. It is not merely machinery. Penalty is in addition to tax and is a liability under the Act.............. 26. ..........The mere fact that there is machinery for assessment, collection and enforcement of tax and penalty in the State Act does not mean that the provision for penalty in the State Act is treated as penalty under the Central Act. The meaning of penalty under the Central Act cannot be enlarged by the provisions of machinery of the State Act incorporated for working out the Central Act. 28. For the foregoing reasons we are of opinion that the provision in the State Act imposing penalty for non-payment of income-tax within the prescribed time is not attracted to impose penalty on dealers under the Central Act in respect of tax and penalty payable under the Central Act. There is no lack of sanction for payment of tax. Any dealer who would not comply with the provisions for payment of tax, would be subjected to recovery proceedings under the Public Demands Recovery Act. A penalty is a statutory liability. The Central Act contains specific provisions for penalty. Thos....
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....ollection of duties of excise on any produce specified in the schedule to the said Act (the 1966 Act) as they apply in relation to levy and collection of duty payable to the Central Government under that Act (the Central Excise Act). A Division Bench of the Punjab & Haryana High Court following India Carbon's case (AIR 1997 SC 3054) held at para 14 as follows: "When the 1966 Act was enacted by the Parliament, the Central Excise and Salt Act (now known as Central Excise Act, 1944) was in force. Therefore, instead of separately incorporating the provisions relating to levy and recovery of duty under the 1944 Act and the rules made thereunder, including those relating to the refund and exemption from duty, the provisions of the 1944 Act were made applicable for levy and collection of duties of excise on any produce specified in the second schedule to the 1966 Act. A similar provision was embodied in the 1983 Act in the form of Section 3(4). However, there is nothing in the language of Section 15(2) of the 1966 Act or Section 3(4) of the 1983 Act from which it can be inferred that it authorises the Central Government to charge interest on the delayed payment of cess. Section 11AA wa....