2008 (6) TMI 29 - AT - Central Excise

Whether refinery can be treated both as factory of production & warehouse - Rule 20 of CER 2001 didn t authorize removal of any petroleum product within the refinery with out payment of duty for captive consumption Continuance of refinery activities as deemed warehouse in terms of the old Rule 143A is inconsistent with the new rules so as per Rule 140 of CER 1944 refinery lost its deemed warehouse status on 1-7-01 held that decision of COD have no precedent value for tribunal

Summary

Issues Involved:
(a) Continuation of special provisions for refineries under the Central Excise Rules, 1944 into the Central Excise (No. 2) Rules, 2001 and Central Excise Rules, 2002.
(b) Entitlement of the respondents to the benefit of the special scheme for refineries under Rule 143A of the erstwhile Central Excise Rules, 1944 after 30-6-2001.

Detailed Analysis:

Issue (a): Continuation of Special Provisions for Refineries
The Tribunal examined whether the special provisions for refineries under Chapter VII of the Central Excise Rules, 1944 continued under the new rules of 2001 and 2002. The Tribunal noted that the self-contained code for refineries under the old rules did not have a saving clause in the new rules. With the supersession of the old rules, the Central Government's order dated 3-6-1969, which conferred "deemed warehouse" status on the refinery, ceased to have force. Rule 32 of the new rules, which dealt with transitional provisions, did not protect this order. The Tribunal also noted that the new warehousing provisions under Rule 20 did not facilitate removal of any petroleum product within the refinery without payment of duty for captive consumption. Therefore, the special provisions for refineries under the old rules did not continue under the new rules.

Issue (b): Entitlement to the Benefit of Rule 143A After 30-6-2001
The Tribunal considered whether the respondents were entitled to the benefit of Rule 143A of the old rules after 30-6-2001. The Tribunal observed that the statutory scheme for refineries under Chapter VII of the old rules came to an end with the supersession of those rules on 1-7-2001. From this date, petroleum products produced in refineries were on par with other excisable goods under the new rules. The Tribunal held that the respondents could not claim the benefits of the old rules beyond 30-6-2001 by virtue of Rule 32 of the new rules. The Tribunal endorsed the view that the decision in CPCL's earlier case [2005 (192) E.L.T. 973] did not lay down the correct law.

Conclusion:
The Tribunal concluded that the special provisions for refineries under the old Central Excise Rules, 1944 did not continue under the Central Excise (No. 2) Rules, 2001 and Central Excise Rules, 2002. Consequently, the respondents were not entitled to the benefits of Rule 143A of the old rules after 30-6-2001. The referred issues were answered accordingly, and the case was directed to the regular Bench for final disposal.