Warehousing Permission to Storage Tanks Mounted on a Vehicle - Board's Instructions
Brief History:
IT appears that the withdrawal of warehousing provisions to petroleum products in the year 2004 is still causing headaches to the Board as well as the field formations. After withdrawal of these facilities vide Notification No. dated 4th September, 2004, Board was seized with representations from oil companies and field formations on certain procedural hassles.
Consequent to this, Board issued clarifications vide Circular No. 804/1/2004-CX, Dated: January, 4, 2005 to address the concerns of the oil companies and the field formations. In this circular, with regard to export warehousing of petroleum products, it was clarified that the facility of removal of petroleum products without payment of duty for export warehousing continues to be available vide Notification No. dated June 26, 2001 and the conditions, procedures, class of exporters and places of warehouses under Rule 20(2) of Central Excise Rules, 2002 for export warehousing of excisable goods as specified vide Circular No. dated June 29, 2001 were to govern the same.
However, to address the specific issue of supply of Air Turbine Fuel to foreign bound aircrafts , Board in Circular dated January 4, 2005 clarified that ATF cleared for export warehouse may be allowed to be stored in the intermediate storage tanks subject to condition that such intermediate storage tanks are used exclusively for storing export goods. The details of such intermediate storage tanks including their physical location in the concerned installation should be intimated to jurisdictional Central Excise officer. Accordingly, paragraph 6.1 of the Circular dated June 29, 2001 was amended.
Further, it was clarified therein that in view of difficulties in installing separate tanks at the airports, mixed storage of duty paid and non-duty paid goods at Aviation Fuel Station (AFS) at airports may be allowed subject to the condition that a tank-wise regular account shall be maintained about the receipt and discharge of duty paid and non-duty paid stocks of ATF. Accordingly, the following sub-para was added to paragraph 6 of Circular dated June 29, 2001:
"6.3 The Commissioner of Central Excise having jurisdiction over the warehouse may permit the registered person of the warehouse to store duty paid excisable goods or duty paid imported goods along with non duty paid excisable goods in the warehouse subject to conditions, procedure and manner of payment of duty prescribed by him"
Current problem:
Now it appears that this paragraph 6.3 has given scope to an ingenious solution from a specific field formation (which Board has not named for obvious reasons) and Board is not happy with this development. It has come to the notice of the Board that this field formation has granted “on wheel bonding facility”, thereby permitting the assessee to receive, store and dispatch bonded duty paid ATF in Mobile Refuelling Tanks (is it duty paid or non-duty paid. If it is duty paid ATF what is the problem and what is ?) and that this permission was granted in terms of paragraph 6.3 of Board's Circular No. 804/1/2005-CX dated January 4, 2005 and the purpose of the assessee seeking such permission appears to avail the facility of non-duty paid supplies to international flights.
(Ironically, paragraph 6.3 of Circular dated January 4, 2005 does not deal with this issue, but paragraph 6.3 of Circular dated June 29, 2001 which was newly incorporated through Circular dated January 4, 2005 is what the Board is probably referring to here. Too many issues, too many circulars and a whole lot of confusion.)
References were also received from other field formations to clarify this issue (probably word of allowing ingenious facility by one Commissioner would have spread like wild fire).
Board's Solution:
After examining the issue Board clarifies that paragraph 6.3 of the said Circular empowers the jurisdictional Commissioner to permit the registered person of the warehouse to store duty paid goods along with non duty paid goods in the warehouse subject to the conditions, procedure and manner of payment of duty as prescribed by the Commissioner.
The provisions of the circular nowhere allows storage of goods in mobile tanks. Further, it is stated that such “on wheel” facility has an inherent danger of pilferage/theft of non-duty paid goods and resultant revenue loss. It has also been noted that in any case, the registered person of the warehouse can avail the facility of clearance of goods under rebate for supplies to international flights, which are non-dutiable.
In view of the above, it is clarified that any such facility granted by field formations is improper and not in accordance with the Board's circulars issued in this regard. The field formations are directed to immediately withdraw such facility, if any, granted in their respective jurisdictions.
Board also requests the field formations to advise the assessees to avail the option of rebate under Rule 18 of Central Excise Rules for supply of duty-free fuel to foreign bound aircraft.
For supply of duty-free fuel to foreign bound aircraft, how can the facility of rebate under Rule 18 be allowed? Instead why not encourage the assessees to follow the provisions of Rule 19 of Central Excise Rules, 2002 as well?
Is there no inherent danger of pilferage/theft in immobile tanks?
CBEC Letter F.No.267/27/3/2001-CX8 (Pt.I)., Dated: 14th July, 2010