No NCCD leviable on hydrocarbons for not being marketable

Last updated: 06 August 2021

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The CESTAT has ruled that National Calamity Contingent Duty (NCCD) cannot be levied on a mixture of hydrocarbons if it's not considered marketable. In this case, the Commissioner of Central Excise and Service Tax appealed against an order that dropped a demand for NCCD against GAIL. The tribunal upheld the original order, finding no evidence that the product, which GAIL argued was volatile gas condensate, was marketable. Therefore, the appeal was dismissed.

Court :
CESTAT, Delhi

Brief :
In Commissioner, Central Excise and Service Tax, Large Taxpayer Unit, 3, NBCC Plaza, Pushp Vihar, Saket, New Delhi – 110017 v. M/s Gas Authority of India, GAIL Bhawan, 16, Bhikaji Cama Place, New Delhi EXCISE APPEAL NO. 55568 OF 2014, the Commissioner, Central Excise and Service Tax ('the Appellants') filed the current appeal before the CESTAT for challenging the Order-in-Original dated September, 14, 2014 dropping the demand of Rs. 3,03,36,274/- as National Calamity Contingent Duty ('NCCD') proposed in the six show cause notices issued to M/s Gas Authority of India, GAIL Bhawan ('the Respondents') alongside penalty and interest imposed by the Appellants.

Citation :
EXCISE APPEAL NO. 55568 OF 2014

In Commissioner, Central Excise and Service Tax, Large Taxpayer Unit, 3, NBCC Plaza, Pushp Vihar, Saket, New Delhi – 110017 v. M/s Gas Authority of India, GAIL Bhawan, 16, Bhikaji Cama Place, New Delhi EXCISE APPEAL NO. 55568 OF 2014, the Commissioner, Central Excise and Service Tax ('the Appellants') filed the current appeal before the CESTAT for challenging the Order-in-Original dated September, 14, 2014 dropping the demand of Rs. 3,03,36,274/- as National Calamity Contingent Duty ('NCCD') proposed in the six show cause notices issued to M/s Gas Authority of India, GAIL Bhawan ('the Respondents') alongside penalty and interest imposed by the Appellants.

The Appellants contended that the mixture manufactured by the Respondents is Natural Gas Liquid ('NGL') in contrast to which the Respondents submitted that the above is rather gas condensate on which NCCD should not be levied.

The Hon’ble CESTAT, Delhi upholding the Order in Original noted that the mixture of hydrocarbons, termed as NGL by the Appellants, is neither produced in the oil field nor supplied to the refineries by the Respondent.

Furthermore, accepting the contentions put forth by the Respondents that the ingredients in the product are volatile in nature which cannot be transported, the Hon’ble Tribunal held that there is no evidence led by the Appellants to provide that the product is marketable.

Therefore, no NCCD is recoverable on hydrocarbons from the Respondent as it is not marketable.

Dismissed the appeal.

FAQ :

The judgement concerns whether National Calamity Contingent Duty (NCCD) can be levied on a mixture of hydrocarbons manufactured by GAIL, which the Commissioner argued was Natural Gas Liquid (NGL) but GAIL contended was non-marketable gas condensate.

The Commissioner argued that the mixture manufactured by GAIL was Natural Gas Liquid (NGL) and therefore subject to NCCD, proposing a demand of over Rs. 3 crore.

GAIL argued that the product was gas condensate, not NGL, and crucially, that its volatile nature meant it was not marketable, thus not subject to NCCD.

The CESTAT upheld the original order, dismissing the appeal. They found no evidence presented by the Commissioner to prove the product was marketable.

The judgement clarifies that NCCD is not recoverable on hydrocarbons if they are not considered marketable.