2008 (4) TMI 93 - AT - Customs

Sale of imported and indigenous petroleum products Allegation that duty reflected in the invoice in respect of imported products was higher than the CVD actually paid in petroleum products oil companies have to accept price fixed by govt. as per Administered Price Mechanism Scheme so there is system of adjustment of duty paid by oil pool account duty collected was not retained by the appellants but deposited with Central Govt. - so allegation of excess collection of duty is not correct

Summary

Issues:
- Demand of duty by Commissioner of Customs, Kandla
- Differential excess CVD charged from customers
- Comparison of actual duty collected with basic customs duty + CVD
- Interpretation of Administered Price Mechanism Scheme
- Applicability of Section 28B of Customs Act, 1962 and Section 11D of Central Excise Act, 1944
- Precedents and judgments supporting appellant's case

Analysis:
The appeal before the Appellate Tribunal CESTAT, Ahmedabad was filed against the demand of duty by the Commissioner of Customs, Kandla amounting to Rs. 332,93,95,779. The appellants were engaged in the receipt, storage, and sale of imported and indigenous petroleum products stored in a bonded warehouse without payment of customs or excise duty, with duty being paid at the time of sale or transfer. The issue arose when a show cause notice was issued demanding differential excess CVD charged from customers, alleging that duty reflected in the invoice for imported products was higher than the CVD actually paid. The Commissioner confirmed the demand under Section 28B of the Customs Act, 1962.

During the proceedings, the appellants argued that the recovery from buyers included customs duty, not just CVD, hence no extra recovery occurred. They cited precedents where similar stands were accepted by other Commissioners. Moreover, they emphasized the Administered Price Mechanism Scheme, stating that any excess duty collected was deposited in the oil pool account, ensuring no retention by the appellants. The Tribunal noted a series of decisions supporting the appellant's position, highlighting that excess duty collection was not sustainable. They recognized that the scheme aligned with the legislative purpose of Sections 28B and 11D, as any deficiency was covered by the oil pool account. Additionally, the lack of pricing autonomy for oil companies further supported the appellant's case, leading to the appeal being allowed and the Commissioner's order set aside.

In conclusion, the Tribunal's analysis focused on the interpretation of the Administered Price Mechanism Scheme, the comparison of duty collections, and the legislative intent behind relevant sections of the Customs and Central Excise Acts. Precedents and judgments favoring the appellant's arguments were crucial in determining that the demand for duty was not justified, ultimately resulting in the appeal being allowed and the Commissioner's order being set aside.