Legal principle

Where prices of petroleum products are fixed under the Administered Price Mechanism and any excess collection of duty is surrendered to the oil pool account, there is no excess collection of duty recoverable from the oil company under Section 28B of the Customs Act, 1962.

Court decision

The Tribunal allowed both Customs Appeals Nos. 264 and 265 of 2010 in favour of Indian Oil Corporation Ltd, holding that the demands confirmed against the appellant were not sustainable; it set aside the impugned orders and allowed the appeals with consequential relief, if any.

Facts

The appellant, Indian Oil Corporation Ltd, a Public Sector Undertaking registered with Central Excise for storage and sale of petroleum products at Mughalsarai and Kanpur terminals, received duty-paid imported High Speed Diesel through a pipeline from Haldia and sold it to customers under invoices reflecting duty under the head 'Customs/Excise'. The HSD was not notified under the Cenvat Credit Rules/Modvat Credit Rules. Two show-cause notices were issued alleging that the appellant had collected from customers the CVD it had paid at the time of importation, with an excess collection of Rs.1 per litre of additional duty on indigenous imported HSD, recoverable under Section 28B of the Customs Act, 1962. The Commissioner of Customs (Port), Kolkata adjudicated the matter and confirmed the demand against the appellant by two Orders-in-Original dated 19.05.2010.

Key provisions

• Section 28B, Customs Act, 1962 — Duties collected from the buyer to be deposited with the Central Government