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TMI Blog2021 (8) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... l excise duty from M/s BPCL. 2.2 Since the supplies were made from the stock of goods which were duty paid, appellant filed a refund claim, in respect of the duty so paid. They claimed the refund of Rs. 50,81,772.56/-. 2.3 Assistant Commissioner vide his order referred in para 1, supra, restricted the refund claim to the extent of Rs. 2,07,220/- and denied the claim made for remaining amount. 2.4 Aggrieved by the order of the Assistant Commissioner, appellant preferred an appeal to the Commissioner (Appeals) which was rejected as per the impugned order. 2.5 Aggrieved Appellants have preferred this appeal before CESTAT. 3.1 We have heard Shri Sachin Chitnis, Advocate for the Appellant and Shri Sanjay Hasija, Superintendent, Authorized Representative for the revenue. 3.2 Arguing for the Appellants learned counsel submits,- * The fact that the goods as claimed by them to have been supplied to Indian Navy and admissibility of exemption claimed by them is not in dispute. * It is also not in dispute that they had supplied duty paid LSHFHSD to Indian Navy. * Commissioner (Appeals) has also held that unjust enrichment would not be applicable. * Commissioner (Appeals) has reje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The details of duty paid LSHFHS Diesel purchased from BPCL are as per Annexure A). Therefore the identity of the material supplied to Indian Navy is not established. The refund could be sanctioned only if it is established that the same goods, which had suffered duty, had been supplied to Indian Navy. The assessee claimed to have supplied from duty paid stock at warehouse at Wadala, to Indian Navy in the month of September, 2006. They have produced the documentary evidence like Outturn stock and the same is supported by the respective Certificates issued by the Naval Officer in token of having purchased/received the material from M/s. IOCL for consumption on the board of Naval Vessels at Nil rate of duty (Annexure C). Therefore, there is no dispute that the said material has in fact been supplied to Indian Navy. Further M/s. BPCL (Manufacturer) from whom the said material is purchased, have given disclaimer certificate in favour of M/S. IOCL vide letter dated 01.06.2007. The invoices issued from warehouse at Wadala to Indian Navy do not show the amount of Central Excise duty as such the same is not charged to Indian Navy and not recovered. Therefore the incidence of duty is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. Thus, M/S IOCL have contravened the provision of mix bonding permission as far as the clearances effected from Tank No. 3 is concerned as they can not clear the goods from any tank other than the tank wherein the goods were stored." 4.3 Commissioner (Appeals) has while upholding the order of Assistant Commissioner, in the impugned order recorded as follows: "I have gone through the records of the case and the oral and written submissions made before me. The duty payment made by M/s. BPCL in respect of the said claim has been verified by the Range Superintendent and he also certified the copies of Invoice No.6000025341 dated 29.05.06 and TR6 challan Nos.02 and 2A dated 5.6.06. The supply to Indian Navy is not in dispute and is supported by the respective certificates issued by the Naval Officer in token of having purchased / received the material from M/s. IOCL for consumption on the Board of Naval vessels at NIL rate of duty. As per the receipt Outturn Report No.104 dated 31.5.06 the total quantity of 1470.54 KL received vide invoice No.6000025341 dated 29.05.06, was stored in tank no.5. However, the clearances to Navy against various despatch outturn Reports have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h no Central Excise Duty was charged and recovered from Indian Navy. Therefore the incidence of duty has not been passed on to the Navy and there is no unjust enrichment." 4.4 From the order of both the authorities referred above it is quite evident that there is not dispute in respect of the admissibility of the refund claim made by the appellant. Both the authorities have conclusively recorded in respect of the duty paid nature of the goods received from the BPCL and also the fact that the goods were supplied to Indian Navy claiming the exemption under Notification No 64/95-CE. Both authorities also have concluded that the refund claim is not hit by the principles of unjust enrichment enshrined in Section 11B of the Central Excise Act, 1944. Both authorities have restricted the refund claim only for the reason that the duty paid goods received from the M/s BPCL were stored in tank No 5, whereas the supplies to Indian Navy were made from tank No 3 and 5. So they ruled in favour of the refund to the extent of supplies made from tank no 5. 4.5 Warehousing facilities for removal of petroleum products from the refineries to warehouse or from one warehouse to another ware house with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l reasons, cannot supply the petroleum products under end-use based exemptions (including the supplies of petroleum products to vessels of Indian Navy or Coast Guard), directly to the actual users without routing the goods through the installations created under the previous arrangement. In some cases, the oil installation are dedicated for a particular end user through which supply of petroleum products takes place whereas in other cases, the oil installation may cater to more than one end-users. In such situations, at the time of removal from refinery, the refinery may not know as to which particular consignment under clearance will eventually be supplied under end-use based exemption. Decision: In case at the time of removal of petroleum products, the refinery is unable to identify the consignment which would ultimately be received by an eligible end-user, they can opt for Provisional Assessment indicating appropriate reasons before the Deputy/Assistant Commissioner. While applying for provisional assessment, the refinery may be required to undertake the following: (i) The consignment reaching the prescribed end-user shall be deemed to be relatable to the earliest clearanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are made from the ware house, to the Indian Navy under claim of exemption under Notification No 64/95-CE. However Commissioner (Appeal) has referred to this circular and has stated that he is not aware whether the assessments were provisional as required by this circular. In our view when the issue at hand is not in respect of the goods supplied claiming end user based exemption from refinery, then reliance placed by the Commissioner (Appeal) on the said circular is totally out of context. 4.9 Assistant Commissioner has referred to violation of the bonding permission etc., which in our view is totally uncalled for as the goods which we are concerned with are duty paid goods. Even in terms of the Board Circular of 2004 all the goods stored in warehouse are duty paid. Since all the goods stored in warehouse are duty paid as per the board circular 2004, the ground on which Assistant Commissioner has proceeded is clearly contrary to this clarification issued by the board. Appellant in our view has supplied the goods to Indian Navy under claim of exemption out of the duty paid stock. In case where the entire stock is deemed to be duty paid, then whether the supply is made from tank 3 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplied to Indian Navy is not present in the Notification or the general law of Central Excise. The supply to Indian Navy without, Central Excise Duty is not in dispute and is also confirmed by Indian Navy through the letter dated 28-11- 2005 of Deputy Controller warehousing/Naval Stores Officer. A Notification should not be construed in a manner, which defeats the very purpose of the Notification. After withdrawal of the warehousing facility, the CBEC vide Circular No. 804/l/2005-CX. dated 4-1-2005 issued instructions that in case at the time of removal the refinery was unable to identify the consignment, which would ultimately reach the eligible end user/Indian Navy, it could opt for provisional assessment and the consignment reaching the prescribed end user shall be deemed to be relatable to the earliest clearance under provisional assessment. Mixed storage of duty paid non-duty paid goods was .also permitted subject to maintenance of tank-wise account. It is clear that as per the procedure permitted/prescribed by the Board, the identity of the goods would be lost and the assessment would be finalized on the basis of a deeming provision. Thus the finding of the lower authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the central excise duty involved in respect of these removals were Rs. 3,85,74,452/- and Rs. 4,05,34,500/- respectively. The said notification granted exemption to "goods supplied as stores for consumption on board a vessel of the Indian Navy or Coast Guard". Investigation conducted revealed that HSD was sold by HPCL to IOCL on commercial sales basis and the appellant had not received any orders from the Indian Navy and it was IOCL who subsequently sold the same to Indian Navy. Therefore, the department was of the view that the appellant is not eligible for the benefit of duty exemption and accordingly issued two show cause notices dated 25-9-2007 and 1-8-2008 proposing to deny the benefit of the exemption and recover duty thereon along with interest and to impose penalty on the appellant. The said notices were adjudicated vide the impugned orders and the duty demands were confirmed along with interest and a penalty of Rs. 5 lakhs and Rs. 10 lakhs was imposed on the appellant. Aggrieved of the same, the appellant is before us." Distinguishing the decision of Ahmedabad Bench, in this decision following is observed: "5.4 In the IOCL case (supra) relied upon by the appellant, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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