Nayara Energy Ltd Vs C.C.E. & S.T.- Rajkot (CESTAT Ahmedabad)
CESTAT Ahmedabad held that remission of duty available as variation in KL is only due to density of the goods that due to different temperature at the time of loading and unloading.
Facts- The appellant stored HSD of 77061.703 K15/78603.629 KL/64030.568 MT in a vessel without payment of duty pursuant to permission granted by the Commissioner. The said HSD was returned to appellant’s factory premises however, the quantity received back in the storage tanks was 77087.208 K15/78247.414 KL/64029.721 MT was found.
The appellant’s explanation to the said difference was that this is on account of reduction in temperature between the months of October, 2018 and November, 2018 which resulted in contraction in the volume of HSD, the same was not on account of any actual or real loss. The appellant paid the excise duty of Rs. 49,26,453/- on the said volume difference of 356.215 KL between the loaded and unloaded HSD, the same was intimated to the jurisdictional Deputy Commissioner. Thereafter, the appellant filed the refund claim for the amount of Rs. 49,26,453/- erroneously paid on the ground that there was no actual loss of quantity of goods.
The appellant was issued a show cause notice dated 05.02.2019 proposing rejection of refund claim on the ground that as per para 2(v) of the Commissioner’s letter dated 03.10.2018, no remission of duty was permitted. The Assistant Commissioner rejected the refund claim. Commissioner (Appeals) dismissed the appeal of the appellant. Accordingly, the present appeal is filed.
Conclusion- Held that it is clear that if there is physical loss due to handling, transit, storage or in case of accident or natural calamity or whatsoever, no remission shall be permitted. In the present case, as discussed above the quantity of goods in weight stand intact therefore, in fact there is no loss of the goods, para 2(v) shall apply only in a case where there is actual loss in the quantity. In the present case, the quantity remains the same, the variation in KL is only due to density of the goods that due to different temperature at the time of loading and unloading therefore, it cannot be said that there is any loss of quantity of the goods consequently, there is no violation of para 2(v) of the Commissioner’s letter dated 03.10.2018.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The brief facts of the case are that the appellant owns a refinery at Vadinar, Gujarat with the capacity of 20 Million Metric Tons per Annum with a complexity of 11.8, capable of processing some of the toughest crudes to produce high quality products such as MS, HSD, Naptha, Aviation Turbine Fuel, etc. Due to shut down for 35 to 40 days for maintenance and upgradation of plant and machinery of its refinery, the MS and HSD usually stored in storage tanks and within the refinery premises. Since the storage tanks did not have the capacity to store finished goods required for supply in domestic market therefore, such MS and HSD was required to store outside the refinery premises for which the appellant have obtained permission from the Commissioner to store HSD and MS outside the refinery premises on fulfillment of certain conditions. One of the conditions inter alia in Para 2(v) thereof was that no remission of duty shall be permitted against loss of HSD and MS during handing, transit, storage or in the case of accident or natural calamity or whatsoever. The appellant stored HSD of 77061.703 K15/78603.629 KL/64030.568 MT in a vessel without payment of duty pursuant to permission granted by the Commissioner. The said HSD was returned to appellant’s factory premises however, the quantity received back in the storage tanks was 77087.208 K15/78247.414 KL/64029.721 MT was found. The appellant’s explanation to the said difference was that this is on account of reduction in temperature between the months of October, 2018 and November, 2018 which resulted in contraction in the volume of HSD, the same was not on account of any actual or real loss. The appellant paid the excise duty of Rs. 49,26,453/- on the said volume difference of 356.215 KL between the loaded and unloaded HSD, the same was intimated to the jurisdictional Deputy Commissioner. Thereafter, the appellant filed the refund claim for the amount of Rs. 49,26,453/- erroneously paid on the ground that there was no actual loss of quantity of goods. The appellant was issued a show cause notice dated 05.02.2019 proposing rejection of refund claim on the ground that as per para 2(v) of the Commissioner’s letter dated 03.10.2018, no remission of duty was permitted. The Assistant Commissioner rejected the refund claim and held that the word ‘whatsoever’ in condition 2(v) of the Commissioner’s letter dated 03.10.2018 was much enough to cover the expansion and contraction of the hydrocarbon fuels which was natural/scientific phenomenon. Aggrieved by the Order-In-Original passed by the Assistant Commissioner, the appellant have filed an appeal before the Commissioner (Appeals) who supporting the order of the original authority upheld the same and dismissed the appeal of the appellant therefore, the appellant filed the present appeal.
2. Ms. Dimple Gohil, learned counsel appearing on behalf of the appellant submits that there is no actual physical difference in the quantity of loading and unloading, the difference is only due to contraction which is due to temperature difference which is normal phenomenon of the petroleum product which gets support from the Board Circular No. 367/83/97 dated 19.12.1997. She also invited the reference to Board Circular No. 778/11/2004-CX dated 11.03.2004. She submits that there is no violation of para 2(v) of the Commissioner’s order for the reason that firstly, there is no reduction in the quantity therefore, there is no difference in the quantity hence para 2(v) is not violated. Both the lower authorities have misinterpreted para 2(v) of the Commissioner’s order therefore, the duty was not payable on the quantity which was construed as the difference between loading and unloading quantity. As a result, the appellant is entitle for the refund. She placed reliance on the following judgments:-
