Legal principle

Where sale prices are fixed under the Administered Price Mechanism, excess collections are surrendered to the oil pool account, and invoices do not separately indicate customs duty, no amount can be treated as duty of customs collected and Section 28B of the Customs Act cannot be invoked to demand the excess.

Court decision

The Tribunal set aside the impugned Orders-in-Original and allowed the appeals with consequential relief, wholly in favour of M/s. Bharat Petroleum Corporation Ltd, holding the Section 28B demand unsustainable.

Facts

M/s. Bharat Petroleum Corporation Ltd, a Government of India undertaking, stored imported Motor Spirit and High Speed Diesel in tanks declared as mixed bonded warehouses under the Customs Act, 1962 at Visakhapatnam during November 1997–December 1999 and April 1997–April 2000, clearing them after paying customs duty assessed in Ex-Bond Bills of Entry. Sale prices of petroleum products, identical for indigenous and imported goods, were fixed by the Oil Coordination Committee under the Administered Price Mechanism (APM), leaving oil companies no freedom to charge any other price. Two show cause notices dated 01.06.2001 and 30.04.2002 alleged that BPCL collected amounts representing duty of customs (countervailing duty) in the guise of excise duty, in excess of the CVD actually paid on imports. The adjudicating authority, by order dated 27.02.2003, confirmed demands of Rs. 14,15,13,934/- and Rs. 4,55,72,849/- under Section 28B of the Customs Act, 1962, prompting these appeals.

Key provisions

• Section 28B, Customs Act, 1962 — Duties collected from the buyer to be deposited with the Central Government
• Section 28, Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded