2024 (9) TMI 308 - AT - Central Excise

Duty liability on HSD and SKO lying in pipelines - variations in batch quantities that was initially communicated by the appellant to the department and the actual quantity on which the Haldia Refinery subsequently paid the duty - HELD THAT - It is seen from the impugned order, that the learned adjudicating authority had confirmed the demand relating to 12268 K.L. of HSD, essentially because the computation submitted, referred to HB viz. Haldia-Barauni Pipeline while as per the learned adjudicating authority it should have been Barauni-Kanpur Pipeline. However, perusal of the said computation table, tallies with the batch no. and quantity as declared by the appellant to the department. It is also a fact that the pipeline continues from Haldia to Barauni and then onwards from Barauni to Kanpur/Lucknow. There being no separate pipeline perhaps the apparent confusion before the learned adjudicating authority leading to the presumption and restricting the meaning for the pipeline as Haldia-Barauni. For the typographical omission, the payment of duty duly supported by the challans cannot be ignored and will have to be taken due note of. As the batch numbers and quantity match with the appellant s claim and stand verified there are no justification for upholding the demand of Rs.3,68,40,813/- as confirmed by the learned adjudicating authority. It is also noted that the correspondence exchanged within the department by way of verification process and letters issued by them dated 11.04.2014, 26.05.2014, 04.08.2014 and 06.08.2014 confirm the duty payment being made by the Haldia Refinery. Thus, in view of the fact that the total demand as aforesaid stands duly paid along with interest, we find no justification in sustaining the aforesaid order. The impugned order is set aside and the appeal is allowed.

Summary

Issues Involved:
1. Verification of Central Excise duty payment by Haldia Unit.
2. Duty liability on HSD and SKO lying in pipelines as of 06.09.2004.
3. Confirmation of duty amount by the Commissioner.
4. Interest on the duty amount under Section 11AB.
5. Dispute on the quantity of HSD in the Barauni-Kanpur pipeline.

Issue-wise Detailed Analysis:

1. Verification of Central Excise Duty Payment by Haldia Unit:
The Tribunal had previously remanded the matter to the Commissioner to verify the claim of M/s. IOCL, Barauni Refinery that their Haldia Unit had paid the balance amount of Central Excise duty of Rs.4,02,13,940/- out of a total demand of Rs.24,30,22,403/-. The Commissioner re-determined and confirmed the duty amount of Rs.3,68,40,813/- against M/s. IOCL, Barauni Refinery for 12268 K.L. of HSD lying in the Barauni-Kanpur Pipeline as of 06.09.2004.

2. Duty Liability on HSD and SKO Lying in Pipelines as of 06.09.2004:
The appellant had informed the department that 77921 K.L. of HSD and 10277 K.L. of SKO were in the line fill at 00.00 hrs. of 06.09.2004, with a total duty of Rs.24,30,22,402.99. The Commissioner noted that the Haldia Unit had paid Rs.39,18,32,165/- for quantities dispatched or lying in pipelines/warehouses, covering 5809 KL of SKO in the Barauni-Kanpur pipeline. The duty liability for this SKO was discharged by Haldia Unit, leaving no further liability for Barauni or Haldia Refinery.

3. Confirmation of Duty Amount by the Commissioner:
The Commissioner confirmed the duty amount of Rs.3,68,40,813/- for 12268 K.L. of HSD in the Barauni-Kanpur pipeline, as the Haldia Unit's computation did not include this quantity. The appellant argued that the duty was paid on surplus quantities, which was not disputed by the Revenue. The Tribunal found that the Haldia Refinery paid Rs.10,24,02,908/- on 05.10.2004 for the line fill quantity as of 06.09.2004, covering the disputed HSD quantities.

4. Interest on the Duty Amount under Section 11AB:
The Commissioner ordered the payment of interest under Section 11AB on the confirmed duty amount. However, the Tribunal noted that the duty payment was made, and the interest liability was thus not justified.

5. Dispute on the Quantity of HSD in the Barauni-Kanpur Pipeline:
The dispute centered on whether the HSD in the Barauni-Kanpur pipeline was covered by the duty payments made by Haldia Refinery. The Tribunal noted that the batch numbers and quantities matched the appellant's declarations, and the payments were verified by departmental correspondence. The Tribunal concluded that the duty payment was duly made and supported by challans, setting aside the demand of Rs.3,68,40,813/-.

Conclusion:
The Tribunal set aside the impugned order and allowed the appeal, granting consequential relief as per law. The payment of duty by Haldia Refinery was acknowledged, and the demand for Rs.3,68,40,813/- was not sustained. The order was pronounced in the open court on 04.09.2024.