2016 (7) TMI 720 - CGOVT - Central Excise

Demand of duty on account of either transferred losses or on failure to furnish re-warehousing certificate - business of refining of crude and marketing various petroleum products thereof. - Held that - Government notes that the original authority and Commissioner (Appeals) has given detailed findings with regard to factual aspect of submission of re-warehousing certificate and observed that the same were not submitted by the applicant in the prescribed manner and also failed to account for the impugned goods. Such detailed factual findings have not been controverted in grounds of Revision Application by means of any factual submission, duly supported by any relevant documentary evidences. Under such circumstances, the conclusion of appellate authority, based on such incontrovertible factual observations requires to be acceded to. Government thus holds that the applicant has clearly failed to duly account for the impugned goods and to submit the prescribed proof of their receipt/re-warehousing despite several opportunities given to them in remand proceedings from time to time. - Revision application rejected - demand confirmed.

Issues Involved:
1. Demand of duty on transferred losses and failure to furnish re-warehousing certificates.
2. Validity of re-warehousing certificates for specific shipments.
3. Computation and condonation of storage and handling losses.
4. Imposition of penalty and interest on duty demand.
5. Admissibility of claims based on case laws and precedents.

Detailed Analysis:

1. Demand of Duty on Transferred Losses and Failure to Furnish Re-warehousing Certificates:
The applicant, a public sector undertaking, faced 12 Show Cause Notices for duty payment due to transferred losses and failure to furnish re-warehousing certificates for kerosene, LOBS, ATF, etc., transferred from their Mahul Refinery to up-country warehouses. The Deputy Commissioner confirmed a duty demand of ?2,42,09,911/- after allowing condonation losses. The Commissioner (Appeals) upheld this computation and remanded the cases related to re-warehousing certificates back to the Deputy/Assistant Commissioner for reconsideration.

2. Validity of Re-warehousing Certificates for Specific Shipments:
The Joint Commissioner, in a subsequent order, confirmed duty demands for specific Show Cause Notices, allowing condonable losses and considering submitted re-warehousing certificates. However, the dispute persisted for Show Cause Notices at serial numbers 1, 10, and 11. The applicant argued that the cargo was returned to their refinery due to technical issues and duly accounted for, but the adjudicating authority did not consider the relevant documents. The Additional Commissioner later confirmed a duty of ?1,41,94,512/- for these cases, which was upheld by the Commissioner (Appeals).

3. Computation and Condonation of Storage and Handling Losses:
The applicant contested the duty demand for specific serial numbers, arguing that the Board circular allowed for condonation of losses for the entire volume handled, not just the production quantity. They claimed that the condonable loss should include quantities received from outside, reducing the chargeable loss to ?72,579/-.

4. Imposition of Penalty and Interest on Duty Demand:
The Joint Commissioner imposed a penalty of ?50,00,000/-, which was later set aside by the Commissioner (Appeals), stating that no penalty was imposed in the first adjudication order. The applicant also argued that the duty confirmed by the first Order-in-Original had been paid as a pre-deposit, negating the need for interest. The original order did not impose any interest on the duty demand.

5. Admissibility of Claims Based on Case Laws and Precedents:
The applicant cited several case laws to support their claims, including decisions by the High Court of Orissa and the Tribunal in Ahmedabad. However, the department representative argued that there was no evidence of goods being received back at the refinery, and proper procedures were not followed by the applicant.

Conclusion:
The Government, after reviewing the case records, oral and written submissions, and the impugned orders, observed that the applicant failed to submit re-warehousing certificates in the prescribed manner and did not account for the impugned goods despite several opportunities. The detailed factual findings by the original authority and Commissioner (Appeals) were not effectively countered by the applicant. Consequently, the Government upheld the Order-in-Appeal, finding no merit in the Revision Application, and rejected it.

Order:
The Revision Application is rejected for lack of merits.

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