Commissioner, Central Excise and Service Tax Vs Gas Authority of India (CESTAT Delhi)
In , Large Taxpayer Unit, 3, NBCC Plaza, Pushp Vihar, Saket, New Delhi – 110017 v. M/s Gas Authority of India, GAIL Bhawan, 16, Bhikaji Cama Place, New Delhi EXCISE APPEAL NO. 55568 OF 2014, the Commissioner, Central Excise and Service Tax (“the Appellants”) filed the current appeal before the CESTAT for challenging the Order-in-Original dated September, 14, 2014 dropping the demand of Rs. 3,03,36,274/- as National Calamity Contingent Duty (“NCCD”) proposed in the six show cause notices issued to M/s Gas Authority of India, GAIL Bhawan (“the Respondents”) alongside penalty and interest imposed by the Appellants.
The Appellants contended that the mixture manufactured by the Respondents is Natural Gas Liquid (NGL) in contrast to which the Respondents submitted that the above is rather gas condensate on which NCCD should not be levied.
The Hon’ble CESTAT, Delhi upholding the Order in Original noted that the mixture of hydrocarbons, termed as NGL by the Appellants, is neither produced in the oil field nor supplied to the refineries by the Respondent.
Furthermore, accepting the contentions put forth by the Respondents that the ingredients in the product are volatile in nature which cannot be transported, the Hon’ble Tribunal held that there is no evidence led by the Appellants to provide that the product is marketable.
Therefore, no NCCD is recoverable on hydrocarbons from the Respondent as it is not marketable.
Dismissed the appeal.
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FULL TEXT OF THE CESTAT DELHI ORDER
The order dated 14.07.2014 passed by the Commissioner, Central Excise and Service Tax, LTU Delhi1, dropping the demand of Rs. 3,03,36,274/- proposed in the six show cause notices issued to the respondent, has been assailed in this appeal filed by the Commissioner.
2. The issue involved in this appeal relates to demand of National Calamity Contingent Duty2 on ‘heavier hydrocarbons’ that is alleged by the Department to have been manufactured by M/s. Gas Authority of India3 as an intermediate product in the manufacture of Mixed Fuel Oil/ Naphtha. The ‘heavier hydrocarbons’ have been described as Natural Gasoline Liquid4 by the Department and as ‘gas condensate’ by the respondent.
3. The respondent, it has been stated, manufactures products falling under Chapter 27 of the First Schedule to the Central Excise Tariff Act, 19855, including Liquified Petroleum Gas6 and Naphtha from natural gas at its plants situated at Gandhar, Vaghodia, Lakwa, Vijaipur & Pata and the process of manufacture has been described by the respondent in the following manner:
“Firstly, the natural gas is dried and filtered to remove impurities such as moisture and dust. Thereafter, dried and filtered natural gas is cooled in the course of which, the components of natural gas namely, ethane, propane, butane, pentane and higher hydrocarbons are liquefied, along with some traces of methane. This liquefied portion is subjected to further fractioning where the lighter hydrocarbons mainly C1 (methane), C2 (ethane) and C3 (propane) are removed and the heavier fractions containing C3+ hydrocarbons are sent to the next column viz. LPG column. In the LPG column, mixture of propane and butane is separated from the top and the remaining heavier factions composed of C5 and C6+ hydrocarbons are fed into the NGL fractioning column. From the top of this column, C5 (pentane) is separated and the bottom product which contains liquid hydrocarbons having carbon atoms ranging from C6 and C6+ and some amounts of C5 are stored in the tanks. This product stored in the tanks and cleared by the Respondent on payment of duty, is Naphtha.”
(emphasis supplied)
4. Investigations were initiated by the Department and periodical show cause notices were issued to the units of the respondent. The details of the six show cause notices are as follows:
