The Gujarat High Court has dismissed the department’s appeal against Indian Oil Corporation Ltd (IOCL), holding that the Commissioner of Customs (Preventive), Jamnagar, had no jurisdiction to reassess or demand differential duty on petroleum imports warehoused and cleared from refineries outside his territorial control.
The Bench of Justice Bhargav D. Karia and Justice Pranav Trivedi agreed with IOCL and upheld the CESTAT order, holding that assessment at the port of import is merely provisional and final duty liability arises only upon clearance from the warehouse.
IOCL imported crude oil at Vadinar Port during 1997–98 and 1998–99 and warehoused it under provisional assessment. The goods were later moved through pipelines to its refineries at Mathura, Koyali, and Panipat under Section 67 of the Customs Act, 1962, for duty payment and clearance there.
The Jamnagar Commissioner later issued orders raising differential duty demands alleging undervaluation due to exclusion of certain cost elements like survey fees, tank charges, and freight to the Shipping Corporation of India.
CESTAT Ahmedabad quashed the reassessment orders, observing that once goods are removed to other jurisdictions for warehousing and clearance, only the customs officers at those refineries can finalize or reassess duties. The Tribunal relied on Ferro Alloys Corporation Ltd v. Collector of Customs [1995 (77) ELT 302 (T)], affirmed by the Supreme Court, to conclude that officers at the port of import cannot demand duty after transfer of goods to bonded warehouses elsewhere.
Arguing before the High Court, the Revenue maintained that the Commissioner at Vadinar/Jamnagar was the proper authority under Section 17(4) of the Act and that Ferro Alloys was inapplicable as that case related to a 100% EOU.
IOCL contended that only the proper officer having administrative control over the receiving refinery could reassess duties, since the final ex-bond bills of entry were filed there.
Citing Tungabhadra Fibres Ltd. [1994 (71) ELT 655 (Mad)] and Prakash Cotton Mills (P) Ltd. [1979 (4) ELT (J241)], the Bench ruled that the Jamnagar Commissioner could not reopen or reassess duties once goods had been transferred and cleared under the jurisdiction of other Customs authorities.
The High Court dismissed the Revenue’s appeal as devoid of merit, affirming that only the customs authorities having jurisdiction over the refineries at Mathura, Koyali, and Panipat were empowered to reassess duty.
Case Details
Case Title: Commissioner Of Customs (Preventive) Versus Indian Oil Corporation Limited
Case No.: R/TAX APPEAL NO. 1417 of 2008
Date: 01/10/2025
Counsel For Petitioner: CB Gupta
Counsel For Respondent: Hardik P Modh
