2010 (2) TMI 841 - CGOVT - Central Excise

Warehousing - cumulative loss statement - Levy of interest under Section 11AB - Held that - there is no provision for adjusting of the loss in storage tank of the refinery against the storage gain in the terminal, so the applicant request to adjust them is not acceptable. - liability to pay excise duty, which has arisen on account of manufacture of excisable goods is only postponed under warehousing provisions and once any of the associated conditions for warehousing are not complied with, the proper authority is required to take steps to recover the duty along with interest under Rule 160 of the Central Excise Rules, 1944. order-in-appeal upheld and revision application rejected being devoid of merit.

Summary

Issues:
1. Demand of Central Excise duty on deficient quantity
2. Imposition of penalty under Central Excise Rules
3. Demand of interest under Central Excise Rules

Issue 1: The case involved a demand for Central Excise duty amounting to Rs. 24,067 on a deficient quantity of mineral Turpentine Oil by the Assistant Commissioner of Central Excise. The assessee, a petroleum products manufacturer, had not satisfactorily accounted for the said quantity, leading to the issuance of a Show Cause Notice. The Asstt. Commissioner confirmed the duty demand of Rs. 15,369 along with interest payable. The applicant appealed this decision, which was rejected by the Commissioner (Appeals).

Issue 2: The applicant filed a revision application on the grounds that the losses in storage were due to natural causes and human errors, requesting condonation of losses in excess of guiding percentages. They cited the rationale of losses in similar cases and emphasized the error in recording the receipt at the Visakha Terminal, leading to operational gain. Referring to relevant case laws, the applicant argued for the condonation of losses based on material facts and requested reconsideration of the condonable limit for levy of interest under Section 11AB.

Issue 3: The Government, after considering oral and written submissions, observed that the original adjudicating authority had already condoned losses up to 0.5% as per Board's Circulars. The request to adjust losses in the refinery against gains in the terminal was deemed unacceptable. The Government also noted that the Board's Circular from 1981 did not prescribe a condonation limit for petroleum products. Regarding the charging of interest, it was clarified that the liability to pay excise duty arises upon non-compliance with warehousing conditions, leading to recovery of duty along with interest. The Government upheld the order-in-appeal, rejecting the revision application for lacking merit.

In conclusion, the Government upheld the decision of the lower authorities, emphasizing the lack of special circumstances warranting condonation of losses beyond prescribed limits and clarifying the liability for payment of excise duty and interest under Central Excise Rules.