Gaurav Raghuvanshi

Ahmedabad, Sept. 1

RELIANCE Industries Ltd (RIL) has been served a show-cause notice by the Central Excise Department regarding non-payment of additional excise duty to the tune of Rs 10,500 crore on export of petroleum products from its refinery at Jamnagar in Gujarat.

A Reliance spokesperson on Thursday confirmed that the notice has been received by the company. "Our legal department is looking into the matter and we will respond to the notice. As such, we don't see any liability," the company's spokesperson said here.Oil industry sources said a Central Board of Excise and Customs (CBEC) circular dated February 10, had stated that the duty under question need not be paid.

While refiners are exempted from payment of excise duty on motor spirit and diesel exports, the dispute arises from the issue whether they are also exempted from paying Additional Excise Duty (AED) and Special Additional Excise Duty (SAED).

When asked about the CBEC circular, the Rajkot Excise Commissioner, Mr Suman Nair, told Business Line that the department was aware of it and any further queries should be directed to his Chief Commissioner (who was not available for comment).

The circular reads: "The Board (CBEC) has also observed that it is the policy of the Government to grant relief from element of domestic taxes on goods which are exported. Therefore, the notification governing conditions and procedures for export of excisable goods without payment of duty issued under rule 19 shall include the aforementioned duties, namely AED and SAED, levied as duty of excise".In view of above, it is clarified that AED and SAED levied on motor spirit and high speed diesel under respective sections of Finance Acts are not required to be paid for goods exported under bond," the circular says.

Mr Nair said that he had specified why the claim was being raised despite the CBEC circular in the show-cause notice served to Reliance. But he refused to explain the apparent contradiction.

Reliance has been given one month to reply to the notice, failing which the Excise Department would be entitled to levy a penalty of the same amount (and double the claim to Rs 21,000 crore), Mr Nair said.

Meanwhile, sources said that similar show-cause notices had been slapped on other refiners such as Indian Oil Corporation, Bharat Petroleum Corporation and Mangalore Refineries and Petrochemcials Ltd. While Oil and Natural Gas Corporation, which owns Mangalore Refineries, denied that any such notice has been received, the other companies could neither confirm nor deny the development. The amounts involved in the case of other refiners were, however, much smaller as all of them largely cater to the domestic market, the sources said.

(This article was published in the Business Line print edition dated September 2, 2005)
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