Great Eastern Energy Corporation Limited Vs Commissioner of C.G.S.T. and Central Excise (CESTAT Kolkata)
CESTAT Kolkata allowed appeals filed by Great Eastern Energy Corporation Ltd. (GEECL) and its Chairman-CEO against excise demands arising from compression of natural gas for transportation. GEECL extracts Natural Gas from Coal Bed Methane wells and transports it through underground pipelines to its factory, where it compresses the gas into cascades/cylinders. While CNG cleared in cylinders to Indian Oil Corporation Ltd. was subjected to Central Excise Duty, the dispute concerned gas cleared in cascades to customers’ premises, where Pressure Reducing Skids were installed to decompress the gas before delivery as Natural Gas. The Department treated the compressed gas as dutiable and confirmed total duty demand of Rs.8,97,80,202, with interest and penalties. The Commissioner (Appeals) affirmed the demands.
The appellant submitted that compression was undertaken solely to facilitate transportation and that the gas was ultimately sold to customers as Natural Gas, not CNG. It relied upon an earlier decision of the Tribunal involving the same appellant and similar facts, where the activity was held not to amount to manufacture under Section 2(f) of the Central Excise Act, 1944. Reliance was also placed on Bhushan Steel Ltd. v. Commissioner of Commercial Taxes.
