2001 (2) TMI 216 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 101 (E), dated 1-2-1989 for cess on Crude oil.
2. Legality of show-cause notices issued by the Central Excise Department.
3. Authority of Central Excise Officers to collect cess under the Oil Industry (Development) Act, 1974.

Analysis:

Issue 1: Interpretation of Notification No. 101 (E), dated 1-2-1989 for cess on Crude oil
The case involved a dispute regarding the payment of cess on Crude oil by M/s. Geo Enpro Petroleum Ltd. The appellants argued that they paid the cess at a rate of Rs. 853/- per M.T. based on a directive from the Ministry of Petroleum, which they believed was lawful. However, the Assistant Commissioner confirmed the demand for the differential amount based on Notification No. 101 (E), dated 1-2-1989. The Commissioner (Appeals) set aside the Orders-in-Original, citing doubts about the legality of the show-cause notices under the Central Excise Act. The Tribunal disagreed, stating that the Ministry's directive did not have statutory backing, and any variation in the cess rate required an amendment to the Notification. Therefore, the payment made by the appellants was unauthorized by law, and they were liable to pay the differential amount.

Issue 2: Legality of show-cause notices issued by the Central Excise Department
The Revenue argued that under Section 15(4) of the Oil Industry (Development) Act, 1974, the Central Excise Act and Rules could be invoked for the levy and collection of cess on Crude oil. The Department issued show-cause notices under Section 11A of the Central Excises Act, 1944, for recovery of the cess. The Tribunal agreed with the Revenue, emphasizing that the Central Excise Officers had the legal authority to collect the cess as if it were Central Excise duty. The Ministry's administrative directives did not override the statutory provisions, and any change in the cess rate required an official amendment to the Notification.

Issue 3: Authority of Central Excise Officers to collect cess under the Oil Industry (Development) Act, 1974
The Tribunal clarified that the Central Excise Officers were empowered to collect the cess on Crude oil under the provisions of the Central Excise Act, 1944, as authorized by the Oil Industry (Development) Act, 1974. The Ministry's directives, while administrative in nature, did not negate the legal obligation to pay the cess at the prescribed rate. The Tribunal upheld the Revenue's argument that the appellants were liable to pay the differential amount as per the Central Excise Act, 1944. Consequently, the Tribunal allowed all three appeals filed by the Revenue, setting aside the Order-in-Appeal that had favored the appellants.