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Accountal of Petroleum Products Movements through Pipelines without
Payment of Duty
Central
Excise Circular No. 663 dated 23rd September 2002
I
am directed to refer to the present procedure of Accountal of Petroleum Products
movements through pipelines without payment of duty governed by instructions of
Board vide letter 20/ 1/ 66 - CX III dated 12.5.66 as amended by letter F. No.
11A/ 14/ 70 - CX8 dated 7.6.71. As per these instructions, the consignment wise
ARE-3 is generated at the refinery end and the re conciliation is carried out
annually. At the end of the year, the quantities of �line fill� and
�intermix� are determined and the account of dispatch through the pipeline
and receipts at various installations is submitted. The gain and/or loss are
determined after considering the quantities of �line fill� and
�intermix�. It was represented to Board that the present system of
consignment wise generation of ARE-3 is causing disputes in getting the
warehousing certificates within the prescribed period of 90 days as it is not
possible in the pipe line movement to identify the destination at the time of
dispatch of petroleum products from refinery due to the pumping of the product
continuously to multiple tap off points. Accordingly, the matter was examined by
the Board in consultation with the oil companies and the following procedure is
being prescribed.
(a) The refineries can generate one ARE-3 on quarterly
basis for one product for one destination at the end of each quarter within
fifteen days of the end of the quarter. In other words, if �N� no. of the
petroleum products are sent to �N� no. of destinations, in each quarter
there shall be N x N ARE-3 at the refinery end
in each quarter. (It is felt that at the end of the quarter, the refinery
should be able to know the destination product-wise).
(b) The receiving Commissionerate at the tapping off
points can issue the re-warehousing certificate ARE-3 wise as per the receipt at
their end. These re-warehousing certificates should be acceptable to
jurisdictional Central Excise Officer at refinery end in the first instance,
though provisionally.
(c) At the end of the year, when annual pipeline
accountal takes place in the oil companies, the reconciliation can be carried
out by way of a statement to be submitted by oil companies having refineries
showing the actual quantity dispatched, the quantity re-warehoused and the gain
and loss in respect of each product and each destination.
(d) The annual account should be submitted by the oil
companies within 60 days from the end of the financial year, which should be
certified by a firm of practicing Chartered Accountants. The necessary
assessment order may be issued within 60 days of the receipt of the annual
account.
(e) The requirement of D-3 intimation and
consignment-wise AR-3A/Annexure-A/ARE-3 may be dispensed with.
(f)
The limit of transit loss to be condoned shall be 0.25 percent as per the
existing guidelines.
(g) Wherever the imported and indigenous products are
involved, the annual reconciliation statement should give the details separately
for the purpose of reconciliation.
(h) Wherever, shortages occur, the assessment may
ordinarily be carried out on the basis of highest value and highest rate of duty
applicable for the particular product during the quarter/ period under
consideration unless the assessee establishes that the shortages relate to a
particular batch for which the value and rate of duty is not in dispute.
2. The above procedure shall be applicable to
new as well as existing pipelines. It may be seen that for the purpose of filing
ER-1, the quantity cleared without payment of duty is required to be mentioned
which should be available with the refineries in terms of total quantity
dispatched without payment of duty. Therefore, there should not be any
difficulty in filing monthly return with this procedure. Similarly, the duty
demand for the shortage assignable to a particular quarter can be raised at the
end of the quarter. For all other shortages not assignable to a particular
period, demands may be raised if necessary, at the end of the year when the
annual reconciliation statement is available. Regarding the limit of condonation
of losses, it may be emphasized that this is the maximum limit to which the
losses can be condoned. If it is felt that there is improper accountal of the
goods or the condonation which is claimed by the assessee is not supported by
the documents, action to safeguard the interest of the revenue should be taken.
3. The jurisdictional Commissioners are
requested to extend the time limit for submission of warehousing certificates
wherever necessary, as envisaged in para 3 of Board�s circular 579/ 16/
2001-CX dated 26.6.2001 issued under rule 20 of Central Excise Rules, 2002.
Chief Commissioners/ Jurisdictional Commissioners are requested to bring to the
notice of the Board the difficulties if any, in implementing the new procedure.
Jurisdictional Commissioners may issue supplementary instructions on the
accountal procedure of petroleum products through pipelines without payment of
duty consistent with the above procedure. The existing instructions on the
subject are modified to the extent mentioned above. This procedure shall come
into force w.e.f. 1.10.2002.
4.
Trade and field formations may be informed suitably.
5.
Receipt of the circular may be acknowledged.
6.
Hindi version shall follow.
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