TMI Blog2021 (8) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... they ruled in favour of the refund to the extent of supplies made from tank no 5. From the circular No 804/1/2005-CX dated 04.01.2005, it is quite evident post withdrawal of the facility of warehousing, all the petroleum products cleared from refinery are cleared on the payment of duty and hence there cannot be any issue of intermixing of duty paid and non duty paid petroleum products. The circular very categorically states that all the goods stored in the warehouse from 06.09.2004, are to be duty paid. Since all the goods stored in warehouse are duty paid as per the board circular 2004, the ground on which Assistant Commissioner has proceeded is clearly contrary to this clarification issued by the board. Appellant has supplied the goods to Indian Navy under claim of exemption out of the duty paid stock. In case where the entire stock is deemed to be duty paid, then whether the supply is made from tank 3 or 5 is irrelevant. Assistant Commissioner stating that goods received from M/s BPCL were stored only in tank 5 is of no significance as the goods stored in tank 3 also are duty paid. Irrespective of the tank from which supply has been made Assistant Commissioner did not find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drop linkage was required to be established. When all other facts of supply to Indian Navy and the receipt of duty paid goods is not in dispute, the order denying the refund claim on sole ground of drop by drop correlation cannot be sustained. Commissioner (Appeal) has vide order in appeal No AT/346/M-II/2006 dated 23.05.2006, in identical circumstances allowed the appeal filed by them and granted the refund claim of ₹ 9.50 crores. Committee of Disputes, did not permitted for filing the appeal against the said order. CESTAT Ahmedabad in case of Indian Oil Corporation Limited [2008 (229) ELT 100 (T)] has on the issue of refund pertaining to supplies of duty paid goods to Indian Navy, held that unit to unit co-relation is not required as long as the receipt of goods on payment of duty and supplies to Indian Navy are not in dispute. Commissioner (Appeal) has in order in appeal No. AT/ 737/ M-II/2006 dated 1.12.2006 in identical situation has held in their favour and allowed the refund claim of ₹ 45,43,578/-. This order was not challenged by the revenue and has acquired finality. In view of the above appeal should be allowed in their favour. 3.3 Arguing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 11 B(1) and there is no unjust enrichment. In support, they have submitted a certificate from Indian Navy dated 24.9.07 certifying that Navy is eligible for purchasing LSHFHSD on ail duty basis for consumption on board Naval ship vide excise Notification No. 64/95 dt. 16.3.95. As per the Notification IOC is supplying the LSHFHSD for Naval ship against Naval indent invoices are being raised on 'Nil' duty basis. The Notification grants full exemption from payment of duty to All goods other than Cigarettes , if supplied as stores for consumption on board a vessel on Indian Navy. There is no condition or procedure prescribed in this regard. The law is settled that if the exemption could not be claimed at the time of supply of goods, it could be claimed later by way of a refund claim. In this connection, I rely on the judgment in case of Bharat Earth Movers Ltd. v/s. Collector {1991(52)ELT 600 (T)}; CCE V/S ITC [1993(67)ELT 852(T)}. The supply to Indian Navy is not in dispute and is also confirmed by Indian Navy through the letters of Deputy Controller Warehousing/Naval Stores Officer. The duty reflected in the clearance invoices of M/s. BPCL and the same ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CL from tank nos.3 5 (as per the refund claim of the appellants). Out of the total duty paid quantity of 1470.54 KL received and stored in tank no.5 only 86.01 KL was cleared to Navy from tank no.5. As per the despatch outturn Reports 1384.529 KL was cleared from Tank No.3. Thus the quantity cleared from tank no.3 was not out of the duty paid quantity received from M/s. BPCL. The refund was claimed for goods received under receipt outturn No.104/31.05.06 stored in Tank No.5. The lower authority had rightly restricted the refund to the quantity cleared from Tank No.5. Following the withdrawal of warehousing facility, CBEC vide Circular No.804/1/2005-CX dated 04.01.05 has clarified that in case at the time of removal of petroleum products, the refinery is unable to identify the consignment which would ultimately be received by an eligible end-user, they can opt for provisional assessment indicating appropriate reasons before the Deputy / Assistant Commissioner. It is not known from the records whether the appellants have resorted to provisional assessment, or otherwise as instructed by the Board. It is true that Hon'ble CESTAT in Order No. A/851-852/WZB/AHD dated 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of duty, allowed vide notification No 47/2001-CE(NT) dated 26.06.2001 were withdrawn with effect from 06.09.2004. At the time of withdrawing the said facilities CBEC vide circular No 796/29/2004-CX dated 04.09.2004 clarified as follow: The implications of withdrawal of warehousing facility are explained below: (i) Consequent on the withdrawal of the facility of removal of petroleum products without payment of duty for warehousing purposes, the excise duty is liable to be paid by the refineries at the time of removal w.e.f. 6th September, 2004. The refineries are to pay duty on monthly basis. (ii) Since no stocks on or after 6th September, 2004 can remain bonded/ warehoused, the excise duty is liable to be paid on the stocks of petroleum products lying in the warehouses on the midnight of 5th/ 6th September, 2004. The jurisdictional officers should ascertain such stocks of each petroleum product lying in the warehouses and ensure that appropriate duty is paid by the warehouses on such stocks immediately. (iii) Since the warehousing provisions stand withdrawn w.e.f. 6.9.2004, the refineries are required to discharge the excise duty on petroleum product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the earliest clearance under Provisional Assessment under an end-use based exemption. (ii) The refinery shall supply the complete and relevant information latest within a fortnight of delivery of the goods to a prescribed end user. (iii) The refinery shall be liable to discharge the duty on the quantity cleared from the refinery itself. Hence, there will be no question of any abatement with regard to any losses subsequent to removal from refinery. Accordingly, the duty shall be paid on any differential quantity between the quantity cleared and actually received by the eligible end user. However, while allowing such procedure, the following aspects should be adequately taken care of: (i) The quantities of Petroleum products for which such Provisional Assessment are applied, should be reasonable and supported by some collateral evidence of the requirement of the end user and their decision to acquire the same from a particular oil company. (ii) The instructions contained in the CBEC's Excise Manual for Provisional Assessment and for execution of Bond as applicable, should be followed. (iii) The jurisdictional Commissioners shall closely mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid, then whether the supply is made from tank 3 or 5 is irrelevant. Assistant Commissioner stating that goods received from M/s BPCL were stored only in tank 5 is of no significance as the goods stored in tank 3 also are duty paid. Irrespective of the tank from which supply has been made Assistant Commissioner did not find any reason to restrict the refund claim. Thus we are in complete agreement with the findings recorded by the Commissioner (Appeal) in order in appeal No AT/346/M-II/2006 dated 23.05.2006. 4.10 This order in appeal was approved by CESTAT Ahmedabad, in the decision referred to by the counsel for the appellants. CESTAT stated as follows: 5. We find that the order in appeal passed by the Commissioner (Appeals) dated 23-5-2006 cited above against which the Department was not allowed to file appeal by the COD and has attained finality is very relevant and is similar to this case. In that case, the same appellant had supplied LSHF -HS diesel purchased by them from BPCL and HPCL to Indian Navy from their registered warehouse. The supply was made from duty paid stock and the refund claim was filed. The observations of Commissioner (Appeals) in this case are releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a deeming provision. Thus the finding of the lower authority contrary to the Board Circular issued in this regard. 6. The CBEC approached the COD for filing appeal, the COD has observed : The Committee heard the parties to dispute at considerable length. As the impugned goods were directly supplied to the Navy/Naval ships and the IOC had been maintaining the same practice for past many years, the Committee did not find any merit in the appeal of CBEC and accordingly, declined to give permission to CBEC to pursue the same. The COD is a Committee of Secretaries and the fact that they did not allow the department to file appeal but allowed the IOCL to file appeal clearly shows that on the one hand, the order of the Commissioner (Appeals) attains finality and on the other hand, the Government intends that this facility should be extended to IOCL. We also agree that there is no dispute as regards the exemption and the only difficulty is that the supply has not been made directly from the manufacturer to the Navy which at best be said to be a procedural omission. 4.11 Assistant Commissioner has Annexed three charts as Annexure A, B C to his order in original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s decision following is observed: 5.4 In the IOCL case (supra) relied upon by the appellant, the facts were that IOCL purchased duty paid HSD-LSHS from M/s. Reliance Industries and supplied the same to naval ships of the Indian Navy. Since clearance of the goods to naval vessels were exempt from duty under Notification 64/95, the appellant filed refund claims seeking refund of duty paid by Reliance the incidence of which has been borne by them (IOCL) which was rejected by the department. In appeal, the Tribunal held that IOCL would be eligible for refund even though the supply has not been made directly from the manufacturer to the Indian Navy by treating the same as a procedural omission. In the case before us, the facts are different. It is not IOCL who is claiming the refund but HPCL who has supplied the goods to IOCL. HPCL is not the supplier of the goods to the Indian Navy but IOCL. Therefore, HPCL cannot acquire the status of supplier of stores to the Indian Navy which is the requirement of the notification. Further, the said decision has also not considered the decision of the Hon ble Apex Court in the Leader Engg. Works case (cited supra). Therefore, the said decision ..... 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