Indian Oil Corporation Ltd. vs Union of India

These two petitions are by the Indian Oil Corporation Ltd. In Writ Petition No. 2078 of 2013, the petitioners state that they have an Excise registration in their favour and engaged in warehousing and dealing in petroleum products falling in Chapter 27 of the Schedule to Central Excise Tariff Act, 1985.

The petitioners supplied the duty paid LSHF HSD (Low Sulphur High Flash High Speed Diesel) to foreign going vessel and following export under bond procedure inasmuch as filing of ARE-1, shipping bill, the submission of proof of export, etc. inadvertently. In other words, though the petitioners claim that they are entitled to rebate of duty in terms of Rule 18 of the Central Excise Rules, 2002 inadvertently they filed documents which indicated that the goods were cleared without payment of export duty. In other words, the application for refund/rebate ought to have been processed in terms of Rule 18 but was erroneously treated as made under Rule 19 and rejected throughout.

An attempt is made before us to show that the other goods were supplied to M/s. Bharat Petroleum Corporation Ltd. The petitioners have realized that LSHF HSD supplied to foreign going vessels was actually duty paid. That is how the refund applications were made and invoking Rule 18 of the Central Excise Rules, 2002. The petitioners assert that the Rule 18 was invoked and that is why various documents evidencing duty paid character of goods have been submitted. However, the jurisdictional Assistant Commissioner did not accept the stand of the petitioners and instead issued show cause notices. The show cause notices were resisted but the petitioners were served a Order-in-Original dated 15th December, 2009 rejecting their rebate claim. There are three orders to this effect and against which appeals were filed before the Commissioner (Appeals). He rejected the appeals by the order dated 16th December, 2010. Aggrieved thereby the petitioners filed two separate Revision Applications before the Joint Secretary to Government of India, Ministry of Finance (Department of Revenue) but the Revisional Authority also rejected the Revision Applications.

Mr. Patil appearing in support of these petitions submitted that the authorities proceeded on the footing that the applications have been made in cases of goods which were exported without payment of duty. Meaning thereby, Rule 19 of the Central Excise Rules was applied. That contemplates excisable goods being exported without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, as may be approved by the Commissioner. In that event, Rule 18 could not have been invoked. However, Mr. Patil submits that the authorities were aware that Rule 18 was invoked by the petitioners and that is how they discussed the aspect of co-relation of the goods. In other words, the petitioner''s claim for rebate has been rejected on the ground that the necessary co-relation could not be established. However, there are enough number of documents on record to establish such co-relation. Reliance is placed on the written submissions and even the communication addressed during the course of revisional proceedings.

Mr. Kantharia appearing for the department in both matters submitted that this Writ Petition deserves to be dismissed. The petitioners are seeking to re-appraise and re-appreciate the factual matters and which exercise is impermissible in writ jurisdiction. Mr. Kantharia has invited our attention to the impugned orders and from the paper book of the Writ Petition No. 2078 of 2013. Mr. Kantharia relies upon paragraph Nos. 5.1 to 5.3 as also paragraph Nos. 6 to 8 of the Revisional Order and submits that though the claims have been made under Rule 18 but the goods have not been duty paid, then, the Revisional Authority rightly upheld the rejection of the petitioners claim. A different view cannot be taken now. The Writ Petition, therefore, deserves to be dismissed.

We have with the assistance of the learned counsel appearing for both sides, perused the orders impugned in these Writ Petitions including the Revisional Orders. What we find from a reading thereof is that the Commissioner as also the Revisional Authority proceeded on the basis that the copies of the ARE-1 contained particulars of the letter of undertaking, which clearly goes to show that no amount of duty was paid on the product LSHF HSD. The personal hearing before the Revisional Authority reveals that the two officers of the petitioners, who were present, submitted that after the export it was detected that the product exported was a duty paid item and hence the procedural lapse of submission of the undertaking and following Rule 19 of the Central Excise Rules, 2002 occurred. The goods were duty paid and the goods carried the duty which has been paid and proof thereof was produced. According to the petitioners, from para 6 of the Revisional Order it is apparent that the application was treated as made under Rule 19. However, the authorities were aware that the goods were procured from BPCL on payment of duty and, therefore, rebate claims under Rule 18 of the Rules have been filed. Now, if the application has invoked Rule 18 and that is how the petitioners application has been treated, then, what we find is that the reasoning from para 8 onwards was not necessary. Then, the findings that the petitioners failed to establish that there is no co-relation with the duty paid goods procured from BPCL was wholly unnecessary.

In that regard, Mr. Patil has rightly placed reliance on page 103 of the paper book in the Writ Petition No. 2079 of 2013 and page 50 of the paper book where the application for refund of duty is made in Form-R. That according to Shri Patil, establishes that the goods were duty paid and Rule 18 was invoked. At page 103 of the paper book we find a letter which has been addressed on 21st January, 2013 by the petitioners to the Joint Secretary of the Government of India confirming their presence at two hearings. During the personal hearing, the petitioners relied upon the co-relation statement supported by documentary evidence. According to them, these statements have been prepared so as to establish the co-relation with the goods which are covered by the invoices raised by BPCL. We find that this communication was received on 23rd January, 2013 together with the co-relation statement/enclosures. However, we do not find any reference made to this aspect of the matter in the impugned orders. We have not been shown anything which would enable the Revisional Authority and others particularly when such documents were placed on file and it was emphasized that the application for refund of duty is traceable to Rule 18 of the Central Excise Rules, 2002 that they can omit the same from consideration totally. Having found that a clear statement was made in the application as also before us that the Indian Oil Corporation Ltd. which is also answerable to the public and Parliament having produced such document that they can be left out of consideration. If Rule 18 was invoked and that is how the impugned orders proceed, then, this material should have been referred to by the Revisional Authority.

As result of the above discussion, we quash and set aside both the orders impugned in these Writ Petitions and passed by the Revisional Authority namely Joint Secretary, Government of India, Ministry of Finance (Department of Revenue) and direct that the Revision Applications filed by the petitioners shall be decided afresh on merits and in accordance with law after taking into account all the material supplied including the details of the co-relation statement, the documents referred therein and which according to the petitioners evidence payment of duty. Needless to clarify that we are not holding that the applications which have been made for refund are traceable to a particular Rule and it was the applicable provision. We have only found from the admitted facts and the observations and conclusions in the impugned orders that the Authorities themselves referred to Rule 18 and the petitioners not being able to establish the correlation with the goods supplied by BPCL to them and on which duty has been paid. In such circumstances and in the larger interest of justice, we give this opportunity to the petitioners. Therefore, the impugned orders are quashed and set aside. The Revision Applications shall now be decided by taking into consideration all the relevant materials. A fresh order shall be passed after hearing the petitioners. All contentions of both sides are kept open. The Writ Petitions are allowed accordingly. No costs.