2018 (7) TMI 2306 - HC - Central Excise

Refund of excess amount paid - monthly netting - refund was rejected finding no provision to net the quantity transferred on a monthly basis - HELD THAT - On the basis of an audit report by the Comptroller and Auditor General the Ministry has taken a decision to permit monthly netting which permission was granted only after the impugned orders in the above appeals by the Customs Excise Service Tax Appellate Tribunal CESTAT ; which confirmed the orders of the first appellate authority - the subsequent appeals were remanded by the CESTAT itself to the original authority resting on the decision taken by the concerned Ministry. It is deemed fit that the questions raised herein be left open and the matter remanded back to the original authority for re-working the issue as per the permission granted in the clarification issued by the Ministry - appeal disposed off.

Summary

Issues:
1. Interpretation of Circular issued by Ministry of Finance regarding pipeline transfers of petroleum products.
2. Calculation of duty liability based on net quantity received at terminals of Oil Marketing Companies.
3. Rejection of refund for deficiency in quantity transferred.
4. Impact of audit report by Comptroller and Auditor General on Ministry's decision.
5. Remand of appeals by Customs, Excise & Service Tax Appellate Tribunal [CESTAT] to original authority.

Analysis:
The judgment revolves around the interpretation of a Circular issued by the Ministry of Finance concerning pipeline transfers of petroleum products. The Refinery, the appellant, faced issues related to losses and gains during transmission to oil marketing companies. The Refinery paid duty amounts based on dispatches but voluntarily paid additional amounts for excess received by marketing companies. However, the refund for deficiencies was rejected due to a lack of provision for monthly netting. The Ministry's decision, based on an audit report by the Comptroller and Auditor General, allowed for monthly netting of quantities, leading to the remand of appeals by CESTAT to the original authority.

The Ministry's decision emphasized considering the net quantity after adjusting gains and losses for duty liability calculation. The duty on excess quantities was to be paid based on the net quantity received at the end of Oil Marketing Companies, as per Joint Certification. Following the Ministry's decision, the judgment directed adherence to the new calculation method and remanded the matter to the original authority for reworking the issue in line with the permission granted in the Ministry's clarification.

In conclusion, the judgment disposed of the appeals, allowing the appellant to present materials to the original authority for reconciling net losses and gains. Each party was left to bear their respective costs. The decision highlighted the importance of following the Ministry's directive on duty payments based on the net quantity received, as per the new calculation method permitted.