In a major relief to Indian Oil Corporation, the Madras High Court ruled that Lubricants can’t be considered to be excisable goods for purposes of the Sabka Viswas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS).
The petitioner, M/s. Indian Oil Corporation Limited is engaged in the manufacture of lubricants that fall under Chapters 27, 34, and 38 of the First Schedule to the Central Excise Tariff Act, 1985. The supply was made without the payment of duty on the strength of exemption Notifications issued during the period September 2013 and June 2014, as per which, supplies made as against international competitive bidding to power projects did not carry the incidence of duty.
The petitioner, a Public Sector Undertaking has challenged an order passed by the sole respondent, Commissioner of Central Excise and GST rejecting the application of the petitioner for settlement of disputes under the Sabka Viswas (Legacy Dispute Resolution) Scheme, 2019.
The single bench of Justice Anitha Sumanth held that there is no quarrel with the proposition that exempt goods continue to be excisable goods, though the rate of duty is stipulated as ‘nil’. However, that is not the question that arises for consideration. It is nobody’s case that lubricants are exempt from central excise duty. Undoubtedly, they figure as goods under Schedule 4. However, the rate of duty stipulated is ‘….’ and lubricants cannot be considered to be excisable goods, in such circumstances, for the purposes of the SVLDRS Scheme. The SVLDRS Scheme has been brought in to weed out pending litigations where possible and where the litigation falls within the limits set out under the Scheme. The interpretation of the clause under the Scheme must thus be in line with this avowed object and any conflict that arises in interpretation must be resolved in favor of the assessee.
“Section 125(h) specifically uses the term ‘excisable goods’. The Hon’ble Supreme Court in Moti Laminates (supra) provides guidance on how the term ‘excisable’ should be understood and interpreted. The rate of duty mentioned alongside lubricants under the 4th schedule is ‘…….’ and as rightly clarified by the Departmental Officer on Special Duty, it is only some of the products in the 4th schedule, such as Petroleum crude, high-speed diesel, motor spirit, natural gas, aviation turbine fuel and tobacco and tobacco products, that are to be construed as ‘excisable goods’ to determine the exclusions under the SVLDRS Scheme. The 101st amendment substitutes Entry 84 of the Union List to state that duties of excise shall be on the following goods manufactured or produced in India, namely, petroleum crude; high-speed diesel; motor spirit (commonly known as petrol); natural gas; aviation turbine fuel; and tobacco and tobacco products. The interpretation of Section 125 of the Scheme has to be seen in this context only as otherwise, the object of the Scheme will not be achieved,” the court said.
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