2007 (5) TMI 438 - AT - Central Excise

Petroleum products - Deemed export - Supply to EOU - Notification No. 17/2004-C.E. (N.T.) - Board s clarification thereof in Circular No. 796/29/2004-CX, dt. 4-9-2004 followed by Circular No. 804/1/2005-CX, dt. 4-1-2005

Summary

Issues: Interpretation of Notification No. 17/2004-C.E. (N.T.) regarding duty on warehoused petroleum products, applicability of exemption Notification for removal to EOU, coordination of Board's circulars with the said Notification.

In this judgment by the Appellate Tribunal CESTAT, Chennai, the appellants, a Public Sector Undertaking engaged in the manufacture of petroleum products, faced a dispute regarding the duty on their warehoused petroleum products. The issue arose after the promulgation of Notification No. 17/2004-C.E. (N.T.) by the Central Government, which changed the rules for removal of goods from warehouses without payment of duty. The department contended that duty should have been paid on the stock of petroleum products in the appellant's warehouse as soon as the warehousing facility was withdrawn. The original authority, confirmed by the Commissioner (Appeals), demanded over Rs. 15 lakhs as duty along with penalties. The appellants argued that a similar case decided by the Bangalore Bench of the Tribunal favored their position, citing Final Order No. 1262-1264/06. They also referred to Board's circulars clarifying the Notification and the time frame for duty payment after withdrawal of warehousing facility.

Upon careful consideration, the Tribunal found that the interpretation given by the department would unjustly deny the appellants the benefit of a general exemption Notification applicable to the removal of excisable goods to EOUs without duty payment. The Tribunal emphasized that the appellants should not lose this benefit simply because the warehousing facility was withdrawn. They highlighted a similar case decided by the Bangalore Bench, where duty exemption was granted for petroleum products removed to a power plant under a different Notification. The Tribunal noted that the department had not obtained a stay on the previous order favoring the appellants. Therefore, based on the reasoning presented and in line with the previous decision by the coordinate Bench, the Tribunal set aside the impugned orders and allowed the appeals.

In conclusion, the Tribunal's judgment addressed the conflicting interpretations of Notification No. 17/2004-C.E. (N.T.) regarding duty on warehoused petroleum products, the applicability of exemption Notifications for removal to EOUs, and the coordination of Board's circulars with the said Notification. The decision provided clarity on the entitlement of the appellants to the duty exemption for their goods removed to an EOU, despite the withdrawal of the warehousing facility, based on the principles established in a previous case and the lack of a stay on the favorable order.