2008 (2) TMI 671 - AT - Central Excise

Summary

Issues Involved:
Interpretation of CBEC's Order No. 11/93-CX 8 and its clarification in 2005 regarding the status of a refinery as a warehouse for Furnace Oil under Central Excise Rules, 2002.

Analysis:

The judgment by the Appellate Tribunal CESTAT, Chennai revolves around the issue of whether a particular refinery qualified as a warehouse for Furnace Oil under Central Excise Rules, 2002. The case involved Chennai Petroleum Corporation Ltd. (CPCL) clearing Furnace Oil to their sister refinery at Nagapattinam without duty payment, under the movement under bond procedure. The crux of the matter was the department's demand for duty, contending that the Nagapattinam Refinery was not a warehouse for Furnace Oil as per Rule 20 of the Central Excise Rules.

Upon examining the records and hearing both sides, the Tribunal noted that the Nagapattinam Refinery had been certified as a warehouse for crude oil, a fact confirmed by the Central Board of Excise and Customs (CBEC). However, a subsequent clarification from CBEC stated that the Nagapattinam Refinery was not a warehouse for Furnace Oil. This clarification formed the basis of the department's demand for duty on the commodity.

The Tribunal emphasized the importance of interpreting CBEC's Order No. 11/93-CX 8 and its clarification in 2005 to determine the applicability of the warehouse status to Furnace Oil. It highlighted that prior to this clarification, there had been no dispute regarding the clearance of Furnace Oil between CPCL and the department, despite the Nagapattinam Refinery being declared a warehouse in 1993.

Considering the legal issue at hand and the significant stake involved, the Tribunal decided to grant a waiver of pre-deposit and stay of recovery for the duty and penalty amounts. The Tribunal scheduled the appeal for further hearing to delve deeper into the interpretation of CBEC's order and requested evidence of duty payment at the Nagapattinam end for all petroleum products derived from the processed Furnace Oil. The aim was to resolve the appeal promptly and conclusively.

In conclusion, the judgment focused on the correct interpretation of CBEC's orders to determine the warehouse status of the Nagapattinam Refinery for Furnace Oil, highlighting the necessity for thorough examination and evidence presentation to reach a definitive decision on the matter.