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Hindustan Petroleum Corporation Vs. Collector of Customs and Central - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Tamil Nadu
Decided On
Reported in(1988)(33)ELT560Tri(Chennai)
AppellantHindustan Petroleum Corporation
RespondentCollector of Customs and Central
Excerpt:
.....the order of the appellate collector of customs and central excise, madras, and order refund of duty paid on sludge.2. this appeal coming up for orders upon perusing the records any upon hearing the arguments of shri d.p. bhave, employee of the appellant and upon hearing the argument of shri s.k. choudhury, senior departmental representative for the respondent, the tribunal makes the following: 3. in accounting for light diesel oil stored in a bonded tank between 27.10.1962 and 25.8.1963, the appellant sought refund of duty in respect of the duty paid oil bottom introduced into that tank on which, during the course of operations of the bonded oil, duty came to be paid a second time. in his order no. v/11a/18/6/75/3799, dated 12.6.1979, the assistant collector of central excise, rbc.....
Judgment:
1. Appeal under Section 35-B of the Central Excises & Salt Act, 1944, praying that in the circumstances stated therein, the Tribunal will be pleased to set aside the order of the Appellate Collector of Customs and Central Excise, Madras, and order refund of duty paid on sludge.

2. This appeal coming up for orders upon perusing the records any upon hearing the arguments of Shri D.P. Bhave, employee of the appellant and upon hearing the argument of Shri S.K. Choudhury, Senior Departmental Representative for the respondent, the Tribunal makes the following: 3. In accounting for light diesel oil stored in a bonded tank between 27.10.1962 and 25.8.1963, the appellant sought refund of duty in respect of the duty paid oil bottom introduced into that tank on which, during the course of operations of the bonded oil, duty came to be paid a second time. In his order No. V/11A/18/6/75/3799, dated 12.6.1979, the Assistant Collector of Central Excise, RBC Division, Ernakulam, accepted the claim for refund in respect of 23.912 MTs and rejected the claim in respect of the balance quantity out of a total duty paid oil bottom of 64.413 MTs. The appellant's plea that there was sludge weighing 39.063 MTs which was destroyed under the Department's supervision was taken note of by the Assistant Collector but not accepted as accounting for part of the bonded oil that was removed from the tank. When the matter was agitated in appeal before the Appellate Collector of Customs and Central Excise, Madras, he observed : "It must be remembered that dip measurement for every receipt, discharge and the balance is taken from the upper most level of the sludge and not from the bottom of the sludge. The element of loss due to formation of sludge is, therefore, covered in the inbond loss occurring from time to time. That being the case the quantity of sludge should not be taken into consideration for the quantity of L.D.O. cleared on payment of duty and therefore, the question of double payment of duty in this context will be untenable".

Accordingly, he rejected the appeal vide his order C. No. U/11A/7/79 dated 1.11.1980. The appellant filed a revision petition before the Government of India which in terms of Section 35-P of the Central Excises and Salt Act, 1944 has been transferred to the Tribunal.

4. Before us it is argued that sludge is formed because of oil standing in the tank for a length of time and obviously arises from the bonded oil and the oil bottom. However, the quantity of bonded oil handled is 9587.323 MTs as against an oil bottom of 64.413 MTs. The sludge should for all practical purposes be deemed to have arisen from the bonded oil. As the sludge was in fact removed and destroyed, on the accepted plea that sludge was not dutiable, whether it arose from non-dutiable oil or duty paid oil, an adjustment in the clearance of bonded receipts to the extent of the sludge actually destroyed ought to be given. In this view, duty has got paid on 39.063 MTs of bonded oil when various quantities were removed from the tank. There has, therefore, been a net removal of 9611.235 MTs. of oil and 39.063 MTs in the form of sludge.

The appellant therefore, requests for refund of the duty paid on the latter quantity as it really forms part of the oil bottom. We accept this view, ignoring for the moment the infinitesimal quantity of sludge that could have formed, theoretically at least, from out of the duty paid oil bottom. Accordingly, we allow the appeal and order refund of duty paid on a quantity of 39.063 MTs of L.D.O. removed from the tank on payment of duty in addition to the refund already granted by the Assistant Collector.


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