TaxTMI 
TaxTMI 
2018 (12) TMI 1168
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....se notice was issued against the appellant asking them to pay the various taxes as under; (a) The Central Excise duties including NCCD, E.C. AND SHE amounting to Rs. 1,02,90,987/- be recovered in terms of Section 11A (1) of the Central Excise Act, 1944(for short 'Act') read with section 15 of the Oil Industries(Development) Act, 1974('OIDA' for short); (b) Interest thereon in terms of section 11AA of the Act, 1944 read with section 15 of the OIDA; 3. The case was adjudicated upon and the demand was confirmed against the appellant. 4. It was submitted by the Ld. Advocate on behalf of the appellant that the oil cess is not leviable on the "condensate", which emerges out during the processing of natural gas on the following grounds: (1) Ld. Commissioner, while deciding the case failed to understand that impugned order is beyond the scope of Show Cause Notice as the petroleum oil product obtained from bituminous mineral, crude is classifiable under Central Excise Tariff Act (herein after referred to as 'Tariff Act') No. 2709 00 00 of the First Schedule to Tariff Act and attracts levy of 'oil' cess as per the Schedule 15 of (OIDA) and is silent on the actual allegation ma....
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....nd per tonne. 2. Natural gas [email protected] three hundred per Thousand cubic meters (a) As amended in Finance Bill 1987(clause 108) Actual rate of cess on crude oil. 60 w.e.f. 23.07.1974 100 w.e.f. 13.07.1981 300 w.e.f. 15.02.1983 600 w.e.f. 01.03.1987 900 w.e.f. 01.02.1989 1800 w.e.f. 01.03.2002 2500 w.e.f. 01.03.2006 4500 w.e.f. 17.03.2012 20% ad-valorem w.e.f. 01.03.2016 7. As per the said definition, the crude oil means un-refined, un-treating petroleum in its natural from which water and foreign substances has been extracted. But in the 'condensate' the water and foreign substances remains therein. 8. It was also submitted that the Commissioner has erred in relying in the definition of 'condensate' as provided by the Ministry of Petroleum and Natural Gas dated 29.11.2017, issued order F.No. Expt-13012(12)/368/2017-EXPL-PNG on the definition of 'condensate' as per classification, which in the concluding part categorically states that "the provisions of this contract shall apply on such condensate as if they were crude oil. This classification is for tr....
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....004 (170) ELT 75 (Tri-Del) is also regarding the classification of condensate in the Tariff Act has not relevant in the present matter. 10. The Ld. Advocate relied upon the decision of Grass land India Ltd. Vs Union of India 2011(173) ELT (SC), Bajaj Auto Ltd vs. Commissioner of Central Excise Aurangabad, 2015(322) ELT 0419 (SC) regarding the fact that the product 'condensate' is not manufactured by the appellant but is coming as the by-product of the processing of natural gas, and therefore, it cannot be treated as manufactured product. Thus the condition manufactures viz. 2(f) 2(d) are not specified in this case. 11. Ld. Commissioner has also erred in holding that of NCCD along with education cess and Secondary and higher Secondary Cess can be demanded in this case. The reliance was placed by the Hon'ble Tribunal's decision in case of Karial India ltd. vs CCE Jaipur, 2015 (315) ELT 612 Gujarat High Court in the case of sahakari khand udyog 2008 (232) ELT 61(Tri), wherein it is held that there is no question of charging of interest under Section 15 of the OIDA Act. 12. On the other hand Ld. AR reiterated the findings of impugned order. 13. We have heard parties and per....
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....atural Gas Processing Plant at surface after the gas so received from the earth's surface is passed through pressure control valves and Gas Coolers. Though the term "condensate" is not defined under 1974 Act but, the same is defined under Rule 3(ac) of the Petroleum and Natural Gas Rules, 1951(herein referred to as "1951 Rules") which were made by the Central Government in exercise of the powers conferred by sections 5 and 6 of the Oilfields (Regulation and Development) Act, 1948 which is reproduced hereunder, for ready reference:- 3(ac) "Condensate" means those low vapour pressure hydrocarbons obtained from natural gas through condensation of extraction which are in the form of liquid at normal surface temperature and pressure conditions;" Thus, the terms "condensate" refers to those low vapour pressure hydrocarbons in the form of liquid at the normal surface temperature and pressure conditions, obtained from natural gas through condensation of extraction. It is pertinent to mention that the condensation so received in the Natural Gas Processing Plant is first and foremost received while processing the Natural Gas in the Gas Processing Plant. It is vehemently submitted that ....
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.... under the OIDA Act. Depending on the rule 3 (ac) of the Petroleum and Natural Gas Rules, 1951, which defines the "condensate" as mentions (supra), similarly the Adjudicating Authority has relied upon the decision in the case of Oil India vs. CCE Shillong referred (supra) along with the judgment of Hon'ble Adjudicating Authority on M/s Oil India vs. Dibrugarh 2012 (296) ELT 4. In these judgments the Hon'ble High Courts and Supreme Court have confirmed the classification of condensate under CITH heading 2790 00 00 but with reference to their classification for Central Excise Tariff. In these judgments the applicability of the oil cess under OIDA Act on the "condensate" was not the question before the courts. Ld. Adjudicating Authority has erred in coming to the conclusion that condensate is crude oil and as such consequently the appellants are liable to pay oil cess. We find that Section 15 of OIDA Act imposes oil cess only on two products namely crude oil or natural gas as referred above. The term petroleum product is very very wide and within its ambit covers all the hydrocarbons. If the conclusion of Revenue, is accepted it will create lot of anomaly and imposition of oil cess ev....
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....Apex Body under the Ministry of Petroleum & Natural Gas has treated the "condensate" as crude oil for the payment of Royalty equally applicable in case of levy of oil cess on the "condensate". We are afraid that this conclusion by the Adjudicating Authority is not correct. We have seen the letter issued by the DG Hydrocarbons to the ONGC, and letter is with reference to the charging of Royalty on the 'condensate' treating them as crude oil. It is seen from the letter dated 29.11.2017 the copy of which is marked to the DG Hydrocarbon stating that the condensate produced from SGL field is not wellhead, casing head, crude state but during the subsequent cooling and separation process, thus Royalty paid by the ONGC at the time of 10 per cent as per the Notification dated 16/12/2004, is in line with the technical finding. This clarification nowhere mention that the "condensate" is to be given the same treatment under OIDA Act, which is an independent Act passed by the legislature for the development of oil industry. Accordingly, we are of the opinion that the reliance placed on this letter for purpose of levy of oil cess under the OIDA Act is erroneous. We also find that to much of reli....