Refund of Terminal Excise Duty (TED) paid on fuel supplied from depot/warehouse of Domestic Oil Companies to EOUs
DDT 255 - 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It has been more than a year since the warehousing facility had been withdrawn for petroleum products and the worst sufferers had been EOUs who used to get their fuel from the depots of oil companies under CT3 without payment of duty.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.
DDT 1044 – 03 02 2009 , observed,
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.
DDT 1061 – 26 02 2009, commenting on Circular No. , observed,
The EOUs are eligible for deemed export benefits, one of which is refund of terminal excise duty by the DGFT/Development Commissioner. Now they would require a certificate (or endorsement on the invoice) from the excise authorities regarding duty payment, which the excise authorities will be most unwilling to give.
Now the DGEP has prescribed a simple procedure if an EOU needs such an endorsement.
1. Maintain detailed accounts of the receipt, consumption, disposal of the goods received.
2. File an intimation with the Superintendent of Central Excise within one day of the receipt of the goods with duplicate copy of the invoice.
3. The Superintendent will depute a bond officer who will conduct a physical verification of the goods and records and will submit a report to the Superintendent.
4. The Superintendent will endorse the invoice and keep a copy in the Range records.
Are we back to the Physical Control days? It is not mentioned as to what would happen if the Bond Officer does not turn up for verification and if the EOU gets an invoice every day, will the Central Excise officer visit the EOU every day. Does EOU stand for Excise Officer's Unit? And if the duty on an invoice is less than Rs. 5000/-, is it worth all the trouble?
So, for the last five years, the EOUs are facing a huge problem in getting the refunds because of the ego clash between Commerce and Revenue Departments.
Commerce Ministry which is certainly more friendly (and usually don't treat every businessman as a criminal), has come up with a new solution.
They have added the following at the end of Para 8.3.1(iii) of the HOP.
“For supply of High Speed Diesel / Furnace Oil from Depots of domestic oil Public Sector Undertakings under para 8.2(b) of FTP, Terminal Excise duty shall be refunded on the basis of duty paid certificate issued by concerned domestic oil Public Sector Undertaking in the format given in Annexure I to ANF 8. Duty refund will be allowed for quantity of HSD /Furnace oil procured by EOU / EHTP / STP / BTP, for its production activities, as certified by concerned DC/Bond authorities.”
This is a very sensible step and should have solved the problem. But maybe the drafting skills of the Revenue Babus have infected the Commerce Babus too.
After appearing to have solved the problem, they again want a certificate from the Bond Officer. But what they don't understand is that the oil does not come under bond and all these days the Excise Officers were refusing to attest the invoices because the receipt was not under their control.
So it is back to Square One – EOUs will not get that refund of Terminal excise duty!
PUBLIC NOTICE NO 181/( RE:2008)/2004-2009, Dated: May 26, 2009