1. This is a revision application (hereinafter called ''appeal") filed before the Central Government which under Section 131 B of the Customs Act, 1962, stands transferred to this Tribunal to be disposed of as if it were an appeal presented before the Tribunal.
2. The salient facts are that the appellants had a bonded tank in their Visakhapatnam installation in which they were storing non-duty paid furnace oil, indigenous as well as imported. Clearances of the oil from the bonded tank were taken from time to time, on payment of full. duty or after taking advantage of duty exemptions admissible in respect of furnace oil used for specified purposes. On 24.10.73 the appellants, according to the statutory accounts contained in their RG1 register, had a balance of 235 KL of indigenous oil and 1319 KL of imported oil in the tank (for convenience fractions of a KL are omitted). On 24.10.73 they filed a "provisional" Bill of Entry for the quantity of 1319 KL of imported oil for home consumption, and paid the corresponding amount of duty, it appears that there was a procedure whereby the appellants used to estimate the quantities of oil which they expected to clear for home consumption over a period of 2 or 3 weeks. They would pay the appropriate duty on this quantity of oil, but would not remove the whole quantity immediately. Instead, they would remove quantities as required from time to timekeeping an account of the quantities removed, and at the end of the period of 2 or 3 weeks, when a quantity app-loximately equal to that declared in the Bill of Entry had been removed, they would "finalise" or "close" the Bill of Entry, and pay duty or claim refund, as the case might be, on the difference between the quantity declared and the total quantity actually cleared.
3. In accordance with this procedure the appellants cleared 235 KL of oil for home consumption on 14.11.73 and 198 KL of oil for home consumption on 16.11.73. On 19.11.73, they supplied 475 KL of oil from the tank to bunker a coastal vessel. Subsequently, they made further clearances for home consumption of 411 KL of oil completing the process on 4.12.73. By these clearances they accounted for the total quantity of imported oil, namely 1319 KI, which was in the tank on 24.10.73.
4. The appellants believed that in respect of 475 KL of oil supplied for bunkering, they were entitled to the concessional rate of duty admissible under the relevant exemption notification, which made the concession applicable in respect of "furnace oil imported into India and supplied ex-bond to coastal vessels as bunkers". They accordingly applied for refund of the duty on this quantity of oil paid by them under the provisional Bill of Entry. Their claim was, however, not accepted by the authorities below and accordingly the matter has come up to the Tribunal.
5. The ground for rejection of their claim as explained in the Appellate Collector's order, is that the oil which was supplied on 19.11.73 for bunkers was from duty-paid stocks and not ex-bond. In upholding this decision, the Appellate Collector has observed that 1319 KL of imported oil was taken into the bonded tank on 16.10.73. Between 14.11.73, and 4.12.73, there were a number of clearances of oil, as set out in para 3 above, and these accounted for the total quantity of 1319 K.L. These clearances included one of 475 KL on 19.11.73 as bunker fuel. The Appellate Collector has observed that the releases effected between 14.11.73 and 4.12.73 were covered by the Bill of Entry for home consumption. If the appellants had desired an ex-bond release for bunkering on 19.11.73, they ought to have closed the transaction under the home consumption Bill of Entry for whatever quantities they had so far taken release of, and started a separate transaction of ex-bond release or bunkering on 19.11.73. As they had not done so, the supply of oil could not be held to be ex-bond and the claim for refund was correctly held as not admissible.
6. Arguing the appt Hants' case, Shri Venkataraman submitted that they were following a procedure of filing provisional Bills of Entry (as explained in para 2 above). The fact that they had put in a home consumption Bill of Entry did not disentitle them from supplying oil concurrently ex-bond to bunker a coastal vessel. The Appellate Collector had admitted that if they had closed the provisional Bill of Entry before filing the shipping bill for supply of oil to the coastal vessel, they would have been eligible for the concessional rate of duty under the notification. Such a procedure, according to him, would have only involved unnecessary paper work, and their claim should not be rejected on such a technical ground. He stated that in other similar cases the Department had allowed them the concession.
7. When the case was first heard on 1915.83, we asked Shri Venkataraman whether he had evidence to show the exact quantity of imported oil in the bonded tank on 19.11.73 and whether it was sufficient to cover not oily the quantity of 1320 KL covered by the home consumption Bill of Enuy but also the quantity of 476 KL covered by the shipping bill. Shri Venkataraman stated that he could produce the necessary data if time was given to him. The matter was accordingly adjourned to 29.6.83. At the resumed hearing. Shri Venkataraman, after recapitulating his earlier argument (since the composition of the Bench had changed) filed photostat copies of pages 124-125 of their RGI register relating to the tank in question for the period 1.9.73 to 29.11.7. The entries in the register, as explained by Shri Venkataraman, disclosed that the position of receipts and withdrawals of oil was as stated in paras 2 and 3 above. Shri Yenkataraman argued that this was evidence that they had a sufficient stock of imported oil to cover the actual clearances made by them for home consumption as well as the clearance for bunkering.
8. On the Appellate Collector's finding that the goods were duty-paid and not ex-bond, Shri Venkataraman argued that the goods were physically inside the bonded tank. They could not be treated a? duty-paid simply because a provisional ex-bond Bill of Entry was filed for anticipated releases. He also pointed out that under Section 15 of the Customs Act, if there had been a change in the rate of duty before the goods were actually removed from the tank, they would have been liable to pay duty at the revised rate.
9. For the Department, Shri Sunder Rajan submitted that the goods were clearly duty-paid. Merely because they had not been physically removed from the tank they could not be said to be "non-duty-paid". He referred to a number of judicial decisions to the effect that exemption notifications should be interpreted strictly according to their language and departures from their provisions should not be made merely because of apparent hardship.
10. We have carefully considered the arguments from both sides. At the initial hearing we were given the impression that the quantity of imported oil in the tank was sufficient to cover net only the quantity of 1319 KL declar red in the Bill of Entry for home consumption but also the quantity of 475KL supplied for bunkering. In other words, we were given the impression that the tank contained at least 1794 KL of imported oil as on 19.1173. Had this been so, there would have been considerable justification for us to accept the appellants' arguments, because it would then have been possible for the clearances for home1 consumption to be treated as entirely separate and distinct from the clearances for bunkering. There would be substance in the appellants argument that operational requirements should be taken into account and unnecessary paper work avoided. However, the position as disclosed by the Company's records is otherwise. On 19,11.73, when they submitted a Bill of Entry for 1319 KL of oil for home consumption, and paid duty accordingly, there was only that quantity of imported oil in the bonded tank. Normally they would have been expected to remove the goods immediately on payment of duty. However, in the case of mineral oils, certain special procedures are being followed, such as allowing the storage of both imported and indigenous oils in' the same tank, and allowing the assessees to retain the goods for a short period in the bonded tank even after payment of duty. These special procedures are evidently based on the special nature of the goods, that is, mineral oils. Such oils in bulk can be stored only in approved storage places like the appellants' tanks. Further, transfers of oil are done by pumping it through pipelines, and a receipt or a withdrawal can never be of an exact and predetermined quantity. Thus, -following the normal requirements of stating the exact quantity in the bill of entry, and removing the goods immediately on payment of duty, would be difficult in the case of mineral oils in bulk.
11. The fact that certain special procedures are followed in (he case of mineral oils in bulk would not, however, after the basic legal position in this case, the appellants had paid duty on 1319 KL of imported oil, and that oil, therefore, became duty-paid. No doubt the Bill of Entry was termed "provisional", but this was obvicusly meant to provide for the normal small variations between the estimated quantity as declared in the Bill of Entry and the quantity finally found to have been cleared, on the basis of dip measurements. The "provisional" nature of the Bill of Entry did not apply to the duty-paid character of the quantity of goods covered by it. When the appellants filed a shipping bill for 475 KL of oil to be supplied as bunkering fuel, they did not have at their disposal even a single KL of non-duty paid imported oil, since the entire quantity of 1319 KL of imported oil taken into the tank had already been allocated to the Bill of Entry for home (consumption and a part of it already cleared. Thus, the oil supplied by them as bunker fuel could have been indigenous oil or could have been duty-paid imported oil; but it could not have been non-duty paid imported oil supplied ex-bond in terms of the exemption notification, and was, therefore, mot entitled to the confessional rate of duty. The appellants could have avoided this result by more careful planning. For example, as pointed out in the Appellate Collector's order, they could have cancelled the home consumption Bill of Entry as regards the quantity not yet cleared under that Bill of Entry.
Alternatively, they could have made a more accurate or conservative estimate of the amount of oil likely to be cleared for home consumption, and filed a Bill of Entry for such a smaller quantity of oil, leaving a sufficient balance of imported oil in the tank which could be allocated against the shipping bill for bunkering fuel. They did not follow either of these alternatives. Consequently, as already pointed out, they had no stock of non-duty paid imported oil in the tank which could to applied as bunker fuel and which could get the benefit of the concessional rate of duty. Accordingly, we hold that the orders of the authorities below were correct, and reject the appeal.