MANAGER (TERMINAL), INDIAN Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THIS appeal filed by M/s IOC Ltd (IOC) seeks to vacate the Order -in -Original No. 45/2000 -SP dated 23.10.2000 passed by the Commissioner of Central Excise, Vizag. demanding from the appellants an amount of Rs. 108,17,86,744/ - (Rupees one hundred and eight crores seventeen lakhs eightysix thousand and seven hundred and forty four). The brief facts of the case are that IOC had stored various petroleum products, such as High Speed Diesel Oil, Superior Kerosene Oil, Motor Spirit and Furnace Oil imported and indigenously manufactured in their mixed bonded tanks. Imported goods in the tanks had suffered the applicable duty and the indigenous goods were non duty paid. During the period 8/98 to 2/2000, the appellants had cleared various imported products on which customs duty had been paid, under cover of Rule 52A invoices and collected a total of Rs. 1,08,17,86,744/ - from as duty customers. The above amount was tentatively decided to be payable by IOC to the Central Government in terms of Section 11D of the Central Excise Act, 1944.

(2.) WHILE disposing the five Show Cause Notices issued in this regard, the Commissioner had found that the imported and indigenous products warehoused in mixed tanks on First -In First -Out basis had lost their respective identities and the mixed products had become different excisable goods. Moreover, the invoices under which the imported goods had been cleared had shown the value and duty as applicable to corresponding indigenous products. In deciding the goods cleared from bonded tanks to be excisable goods the Commissioner had relied on various case law defining goods. The Commissioner found the appellant's explanation of the entry "Customs/Excise Duty" in the 52A invoices as owing to their software problem to be a method of manipulation to recover higher amounts of duty than permitted under the Administered Pricing Mechanism and to allow the final user to avail Modvat credit of the said amount. He recorded a finding that the demand was had been proposed in terms of Section 11A(1) of the Central Excise Act, 1944 read with Section 11D(1) of the Act. Therefore, the excess amount collected by the appellants could be recovered even as excise duty legally. It was immaterial that the extra amount of duty had not been collected as representing excise duty. Accordingly he confirmed the demand proposed in the five Show Cause Notices as excess amount collected representing them as duty of excise on the sale of Superior Kerosene Oil, Motor Spirit, Furnace Oil, and High Speed Diesel Oil etc. under Section 11D(1) of the Act.

(3.) IN the appeal filed by the appellants, they have submitted that the adjudicating authority by finding the customs duty paid imported goods to be excisable goods had traversed beyond the scope of the Show Cause Notices and violated the principles of natural justice. The imported goods also had suffered various duties on import and that the amount collected by them from the customers was lower than what they had incurred, in view of the Administered Pricing Mechanism. As they were using the same software for preparing invoices to cover clearances of indigenous and imported goods, the invoices showed the description "Customs Duty/Excise duty" in the invoices for clearance of goods received from both the streams.