THIRD MEMBER ON REFERENCE : SHRI M.V. RAVINDRAN, MEMBER (J) INDIAN OIL CORPORATION LTD. Vs. COMMISSIONER OF C. EX., AHMEDABAD

JUDGEMENT

(1.) M /s. Indian Oil Corporation Ltd. (appellant) was receiving non -duty paid petroleum products from M/s. Reliance Petroleum Ltd./M/s. Reliance Industries Ltd., Jamnagar (M/s. RPL/RIL for short) through underground pipelines in their bonded warehouse. On comparison of invoices under which the petroleum products were received and the invoices under which the same were sold, it was found that the appellants were collecting certain sums as other charges - LTEU of LIET = 21.6% of the price + sales tax charged by RIL. While the appellant paid 21.6% towards sales tax to RIL, appellant collected additional amount because of adoption of cum sales tax value of the petroleum products received by them to calculate sales tax amount recoverable under heading other charges. Consequently, it was found that the appellant was liable to pay Rs. 1,94,98,643/ - during the period from April 2002 to September 2004. The entire amount of duty was paid by the appellant on 3 -1 -2006 and thereafter, show cause notice was issued to the appellant requiring them to show cause as to why they should not be required to pay interest as applicable and why penalty should not be imposed on them under Section 11AC of Central Excise Act, 1944. The Commissioner, in his impugned order, upheld the liability of interest and imposed penalty equal to the duty paid by the appellant. Hence the present appeal.

(2.) LEARNED advocate on behalf of the appellants submitted that in the case of Public Section Undertakings, the question of suppression does not arise. In this case, it was a bona fide mistake on the part of the appellant and there was no intention to evade duty. Therefore, suppression of facts and mis -declaration could not have been alleged. Further, in support of his contention that the extended period could not have been imposed, he submitted that in terms of decision of Honble Supreme Court in the case of Baroda Electric Meters Ltd., 1997 (94) E.L.T. 13 (S.C.), admissible deduction recovered in excess of actuals, cannot be included in the assessable value and therefore the appellants were entitled to entertain a bona fide belief regarding the fact that the Excise duty was not payable on excess collection of other charges.

(3.) WE have considered the submissions made by the learned advocate. In this case, the appellant had collected excess amount till September 2004 and the statement of Senior Terminal Manager was recorded on 19 -12 -2005. Very fact that till the same was detected by the department, the appellant did not pay the tax goes against the appellant. A company like IOCL cannot be said to be ignorant of the law and therefore, has to abide by the law. No explanation has been offered as to how this happens and what steps they had taken. No evidence has been shown that collection of other charges was declared to the department, to show the bona fide of the appellant. The procedure presently available for collection of Excise duty reposes tremendous freight on the assessee and they are expected to know the law and assess the goods correctly. Under these circumstances, we find that the extended period has been rightly invoked and just because the appellant is a PSU, they cannot be exempted from cost of suppression of facts. Therefore, we hold that the extended period has been rightly invoked and penalty has been rightly imposed and appellant is liable to pay duty as well as interest. However, we take note of the fact that in the impugned order, the Commissioner has not given option to pay the interest and penalty to the extent of 25% within 30 days of receipt of the order. Therefore, such option is to be extended now in terms of this Tribunals decision in the case of Swati Chemicals and Others as reported in 2009 (94) RLT 684 (CESTAT) = 2009 (248) E.L.T. 421 (Tri.). Accordingly, if the appellants deposit interest and penalty to the extent of 25% within 30 days of the receipt of this order, the appellants would not be required to pay balance 75% penalty. It is made clear that if either penalty or interest is not paid within 30 days, the appellant shall be liable to pay penalty equal to duty. (Pronounced in Court on _________________) Sd/ - (B.S.V. Murthy) Member (Technical)