| Date: |
22-04-2002
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| Notification No: |
Central Excise Circular No 636/2002
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| Issuing Authority: |
Central Excise
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| Type: |
Circular
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| File No: |
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| Subject: |
Movement of Petroleum Products through Pipeline - Determination of Duty on Interface Quantity
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Movement of Petroleum Products through Pipeline - Determination of Duty
on Interface Quantity
Central Excise Circular No. 636 dated
22nd April 2002
The problem of accountal of petroleum
products resulting from intermingling of different products pumped through
pipelines has been engaging the attention of the Board for quite some time. In a
recent case, one of the oil companies has represented against the differential
duty demanded by the Department on account of shortage of Superior Kerosene Oil
(SKO) imported under concessional rate of duty. It has been contented that the
movement of petroleum products through pipelines is carried out by product to
product method of pumping and in such an event, co-mingling of one product with
another is inevitable. The case of the oil company is that shortage of SKO
imported under concessional rate of duty is accounted for in terms of the
interface quantity i.e. the gain in Motor Sprit (MS)/ High Speed Diesel (HSD)
and the duty paid by them on this interface quantity is more than the duty
foregone on SKO on account of concessional rate of duty. Therefore, as per the
assessee, the question of additional duty liability does not arise.
2. The Board has examined
the issue from the twin objectives of safeguarding revenue as well as avoiding
unnecessary litigation. The existing instructions vide Board�s letter F. No.
21/13/66-CX. III dated 20.3.67 and F. No. 11A/9/70-Cx. 9 dated 27.3.1973 accept
the offsetting of gain observed in one product against loss observed in another
product. Through in the scheme of accountal of one product for the other, the
duty payable on the interface SKO (co-mingled products) taken as MS or HSD is
presently more than the duty liability on the shortage of imported SKO, however,
the situation can be reverse also. Furthermore, it is a fact that the SKO
imported under concessional duty is not fully utilised for the intended purpose
and in such case, the concessional duty cannot be extended. The Board is
therefore, of the view that in the event of inter mixing of the products, the
higher of the two duties i.e. duty payable on SKO not used for intended purpose
and duty payable on surge/ gain in MS or HSD shall be payable for the inter
mixed/ interface quantity. In other words, the duty of inter mixed part of SKO
and MS/ HSD as the case may be, may be quantified and higher of the two values
may be accepted. The existing instructions on the subject stand modified to the
above extent.
3.
Trade and field formation may please be informed suitably.
4.
Receipt of the same may please be acknowledged.
5.
Hindi version will follow.
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