Refund of Terminal Excise Duty (TED) paid on fuel supplied from depot/warehouse of Domestic Oil Companies to EOUs – Board issues Draft Circular
- 06 12 2005, observed,
It has been more than a year since the warehousing facility had been withdrawn for petroleum products and the worst sufferers had been EOUs who used to get their fuel from the depots of oil companies under CT3 without payment of duty. Board had clarified by Circular No. 799/2004 that EOUs can take CENVAT credit. But the Board did not realize that no CENVAT credit is available for most of the petroleum products especially the fuel. Finally it is left to the DGFT to solve the problem and he has solved it rather well. DGFT has decided that fuels procured from the depots of domestic oil companies on payment of excise duty by EOU/EHTP/STP/BTP will be eligible for reimbursement in the form of terminal excise duty in addition to drawback rates notified by DGFT from time to time provided the recipient unit does not avail CENVAT credit/rebate on such goods.
Now there is another problem as understood well by the Board. Purchases of fuel from the depots of domestic oil companies are eligible for the deemed export benefits including refund of TED prescribed under para 8.3.1 of FTP. TED benefits are usually granted by the Development Commissioner based on the excise attested invoices as proof of supply and/ or excise attested CT3 form.
But excise officers are refusing to attest invoices and rightly so, because the depots of the Oil Companies are not under their control and they don't issue any excise invoices. The EOUs are running from DC to DC (Development Commissioner, SEZ to Deputy Commissioner, Excise) and nobody is ready to solve their problem.
So the Board proposes that:-
The jurisdictional Supdt. Incharge of depot/ arehouse supplying the petroleum product can issue the duty payment certificate after verification of duty paid nature of the products. For this purpose, the officer may verify the duty paying documents under which goods have been received by the depot/warehouse. In case, the goods are received by the depot/warehouse from the other depot/warehouse, the verification report from the previous depot/warehouse may be obtained for verification. This duty payment certificate can then be produced before the Development Commissioner to claim the refund of TED.
The solution appears to be more complicated than the problem. If a depot gets the oil from various refineries and depots, there can't be a mechanism by which the Central Excise Officer can verify where duty has been paid on the particular consignments supplied to EOUs. He would ask for all kinds of documents which the Depot will not be able to provide. The Result – No excise officer will give the duty payment certificate.
Most of the Oil Companies are giant Public Sector Units and can't we safely assume that the oil stocks in the Depots of these Companies are duty paid? Why can't the Development Commissioner grant the refund based on the certificates issued by the Depots of the Oil Companies or for that matter why insist on a certificate at all? Just give the refund for the quantities supplied from the depots?
Why should we complicate matters that would lead to more interaction and charges of corruption? And why does Board assume that there is a jurisdictional Supdt IN CHARGE of a Depot? As mentioned earlier the depot is not under excise control/registration and there is no Supdt IN CHARGE of the Depot.
The problem is nearly five years old and still we are on the draft stage of a possible solution that will lead to more confusion.
For every problem, there is a solution that is simple, neat, and wrong.
Incidentally, many Development Commissioners have been granting the refund without insisting on the attestation by CE officers till late 2008, but somebody seems to have alerted them.
Anyway, Board has asked for suggestions which can be sent to amishkumargupta@gmail.com by 10th February 2009.
Let us hope the Board comes up with a more workable and simple solution.
CBEC Draft Circular in F.No.268 /14/2008- CX -8