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TMI Blog2003 (6) TMI 269X X X X Extracts X X X X X X X X Extracts X X X X ..... , on which cess as specified in Section 15 of the Act is liable to be paid. 2. The facts which are not in dispute are these. The appellant pumps the crude oil from various wells that it operates situated in south and north Gujrat. The oil is pumped through pipelines to group gathering stations. We are told that there is a group gathering station in the vicinity of very field. The oil, is stored in these stations for a day or so, during which period sediment of some part of water which form part along with oil settled to the bottom and is drained off. There are however still contents of water to some extent. This oil is taken through pipelines to a central tank farm present at each field. There once again the water and sediment that settle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said that the quantity of crude oil which the appellant sent to the refinery of Indian Oil Corporation at Koyali i.e. the quantity before any water has been removed in that refinery by either of the two processes that we have referred to, is the crude oil on which duty is to be levied at Rs. 900/- per ton. She says that this is the quantity that is received in the refinery and hence the quantity referred to in sub-section (2) of Section 15 of the Act. 6. It is the appellant s contention that the crude oil which sub section (2) of Section 15 refers to as received in a refinery must necessarily be the crude oil as defined in clause (e) of Section 2 of the Act. That oil must be the oil from which sediment and water has been extracted by proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the crude to refining. She further finds that Section 2(e) lays down three criteria to determine whether the oil is crude oil. (i) It must represent petroleum in its natural state; (ii) the stage at which cess is to be levied must be the stage before the crude is subjected to refining or any other treatment; and (iii) the crude must be that from which water and foreign substances have been extracted but before it is refined or otherwise treated. 9. While analysing the ingredients of Section 2(e), the Commissioner has made an error in concluding that the stage at which cess is to be levied must be the stage before the crude is subjected to refining or any other treatment. This is not how we perceive the Section 2(e) of the Act. It does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e quantity of water that is drained in settling tank, and the quantity of water that is lost by heat treatment at the refinery subsequent to that stage. There is no logical reason as to why the first step should be ignored. After all, even prior to this stage, there has been removal of water by this identical method at two earlier points. Further, the heat treatment for removal of water to which the oil is subjected by the Indian Oil Corporation should also not be excluded. If, as is contended, the heat treatment of the crude oil at this stage is only to remove water, and not a process which is required for its refinery, it is clearly a treatment to remove water, and the emulsion emerging from it, this process will not be crude oil as defin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ows : (ii) Immediately on receipt of the information relating to the actual quantity of net crude oil received by the refinery of factory; determined after test results; the oil producing company shall debit the amount of cess in the PLA kept for the purpose separately for each refinery. Details of laboratory tests on crude oil samples in form B (enclosed) not printed and a crude oil delivery statement in form C (enclosed) not printed shall also be furnished to the assessing officer for his verification and record. (iii) Within 20 days after the close of each month the producer (oil producing company) shall file (with the proper form enclosed) not printed showing separately for each refinery or factory the quantity of crude oil produce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he department. It is contended on the basis of these documents, the appellant was under the impression that the department contemplated recovery of cess only on the net volume of the crude excluding water. 17. This point again has been raised for the first time. The appellant had relied upon these documents in support of its claim that from the data contained in form B and when the jurisdictional officers would have been aware that the quantity of crude oil of which duty was paid was not of water and sedimentation. The Commissioner has not accepted this plea on the ground that this test report was not submitted either by the appellant or the Indian Oil Corporation for which purpose he relies upon the letter dated 29-5-2000 of the Jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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