2023 (12) TMI 600 - AT - Central Excise

Levy of oil cess under section 15(1) of the Oil Industry (Development) Act, 1974 - condensate - period from March 2016 to September 2016 - HELD THAT - The Joint Commissioner, by order dated March 09, 2018, has confirmed the demand with interest and penalty but the Commissioner (Appeals), following the order of the Tribunal rendered in the case of the respondent itself M/S FOCUS ENERGY LTD. OTHERS VERSUS C.C.E. JAIPUR 2018 (12) TMI 1168 - CESTAT NEW DELHI for an earlier period, has dropped the demand holding that condensate emerging out during the processing of natural gas is not crude oil and, therefore, not chargeable to oil cess. In the said decision, the order dated December 29, 2014 passed by the adjudicating authority was set aside and the appeal was allowed. This decision in the case of the respondent was followed by the Tribunal in another case for a different period, in M/S FOCUS ENERGY LIMITED VERSUS COMMISSIONER OF CENTRAL GOODS SERVICE TAX AND CENTRAL EXCISE 2019 (7) TMI 900 - CESTAT NEW DELHI . The impugned order has relied upon three decisions of the Tribunal which have not been set aside - there are no merit in this appeal - appeal dismissed.

Summary

Issues:
The issue involved in this case is whether the product "condensate" would be leviable to oil cess under section 15(1) of the Oil Industry (Development) Act, 1974.

Summary:
The Appellate Tribunal CESTAT NEW DELHI considered an appeal filed by the Department against the order passed by the Commissioner (Appeals) setting aside the order of the Joint Commissioner. The dispute pertained to the levy of oil cess on "condensate" emerging during the processing of natural gas. The Commissioner (Appeals) dropped the demand based on a previous Tribunal decision in the case of M/s Focus Energy Ltd. & Others vs CCE, Jaipur, which held that condensate is not chargeable to oil cess as it is not crude oil. The Tribunal referred to the definitions of "condensate" and "crude oil" under relevant Acts to support its decision.

In subsequent cases involving the same respondent, the Tribunal consistently followed the decision regarding the non-leviability of oil cess on condensate. The Department contested the reliance on these decisions in the present case. However, the Tribunal noted that the impugned order was based on valid precedents and dismissed the appeal. The Supreme Court's dismissal of a related appeal due to low tax effect was also mentioned in the proceedings.

In conclusion, the Tribunal upheld the decision of the Commissioner (Appeals) and dismissed the Department's appeal, as the issue of oil cess on condensate had been settled in previous cases and the impugned order was in line with established precedents.