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CUSTOM EXCISE & SERVICE TAX APPELLATE TRIBUNAL, AHMEDABAD
SMT. ARCHANA WADHWA, M. VEERAIYAN, JJ.
Indian Oil Corpn. Ltd. -Appellant
Versus
Commissioner of Central Excise, Vadodara -Respondent
Final Order Nos. A/2042-2043/WZB/Ah’bad/2007-CII Appeal Nos. E/1845/2005 & E/919/2006, 2042 of 2007, 2043 of 2007, 1845 of 2005, 919 of 2006
Decided On : 08-08-2007
Per M. Veeraiyan : The Appeal No. E/1845/2005 by M/s IOCL is against the order of Commissioner No. 28/Demand/Commr.I/2005, dt.3.3.05 whereas the Appeal No. E/919/2006 is against the order of Commissioner No.60-61/Demand/Commr.I/2005, dt.28.11.05.
2. Heard both the sides.
3.1 The relevant facts, in brief, relating to Appeal No. E/1845/2005 wherein the challenge is against demand of interest are as follows:
(a) The appellant are clearing various petroleum products through Tank Wagons and Lorries to various locations with out payment of duty under Bond under cover of AR3A. These movements are under the warehousing provisions contained in Rule 20 of Central Excise Rules, 2002 and the notifications issued there under.
(b) The present dispute relates to the period Oct.03 to March 04.
(c) There were cases where the quantities re-warehoused were found to be lesser than quantities dispatched and treated as transit losses.
(d) Up to 1% of the loss is condonable in terms of Board's Circular No. 261/6/20/02-CX-8. dt. 31.10.85.
(e) The appellants on their own, before issue of show cause notice determined the transit losses which were in excess of 1% and deposited the duty.
(f) They were issued a show cause notice dt.9.11.04 proposing confirmation of duty and also demand of interest under Section 11AB of Central Excise Act, 1944.
(g) Commissioner confirmed the duty amounting to Rs 1,37,76,686/- which stands paid already and ordered payment of interest of Rs. 5,55,010/-.
3.2 The relevant facts, in brief, relating to Appeal No. E/919/2006 are as follows:
(a) The appellant cleared their products on payment of duty, under Nil rate of duty and under bond without payment of duty under the provisions of Rule 20 of the Central Excise Rules, 2002 to different locations through the multimode transportation system viz. pipeline/railway wagons/truck lorries.
(b) There are guidelines by the Board vide their Circular No. 663/54/2002-CX dt 23.9.02 [reported in 2002 (52) RLT M98] covering such transportation.
(c) The appellant has not filed any application for transit loss through pipeline.
(d) Show cause notice dt. 29.4.05 was issued proposing duty of Rs.1,99,69,213/- for the year 2003-04 being the duty involved on transit loss and Rs.2,23,77,518/- on the same issue for the period April'04 to June'04.
(e) The Commissioner passed the following orders:
"(i) I confirm the demand of Rs. 1,56,13,216/- on 6590.128 KL for the year 2003-04 and Rs. 2,07,66,762/- on 1715.877 KL for the period April'04 to June'04 on transit losses on movement of the petroleum products under bond through pipeline under the provisions of Section 11A of the Central Excise Act, 1944.
(ii) I also order to pay interest at appropriate rate under Section 11AB of the Central Excise Act, 1944 from the date of re-warehousing till the date of payment of duty."
4.1 The learned advocate for the appellant submits that in respect of Appeal No. E/1845/2004, as the duty involved stands paid suo motto, in respect of losses in the condonable limit and 1%, the question of demand of interest does not arise. The para 96 of the manual of departmental inspection of petroleum products does not envisage demand of interest. They also rely on the decision in case of CCE Delhi Vs. Machino Montell 2004 (62) RLT 709.
4.2 In respect of Appeal No. E/919/2006, it was submitted that they are clearing more than one product through the same pipeline. As different products are transported , there can be an apparent loss, in case of particular product and gain for other product, because of line fill quantity and inter mix quantities. In other words, in respect of some of the products, there can be an increase in the quantities and there can be loss in some other products. CBEC envisaged annual accountal and if the account tallying is done on annual basis, there would be no shortage in excess of the condonable limit. The show cause notice issued proposing demand of duty, and the order of the Com
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