By TIOL News Service

NEW DELHI, MAR 26, 2013: WITH the Financial Year inching closer, and the Ministry of Finance showing desperation to close the revenue gaps in yearly collections, the latest case booked by the DGCEI Hqs seems to have helped the Revenue topbrass in reducing the shortfall in a major way. In one of the biggest recovery cases, the DGCEI sleuths have recovered as much as Rs 747 Crore from the leading mineral company Coal India.

Netizens may recall that the DGCEI had booked Coal India and its subsidiaries for central excise duty evasion of Rs 750 Crore. The major allegation was that the Coal India was not including the value of “Royalty” and “Stowing Excise Duty”, collected by them from their customers, in the assessable value of “Coal” for the purpose of payment of Central Excise Duty,.

Investigations conducted by DGCEI (Hqrs) revealed that all the seven coal producing subsidiaries of CIL were charging and collecting “Royalty” and “Stowing Excise Duty” from their customers through the invoices issued for sale of coal. However, they were not including the components of “Royalty” and “Stowing Excise Duty”, collected by them from their customers, in the assessable value of coal thereby evading Central Excise Duty. In terms of the provisions of Section 4 (1) (a) of the Central Excise Act, 1944, the assessee were required to pay Central Excise Duty on the transaction value. Since “Royalty” and “Stowing Excise duty” are not in the nature of taxes, they should have been included in the assessable value of coal for the purpose of payment of Central Excise Duty.

During his statement recorded under Section 14 of the Central Excise Act, 1944, Mr Abhijit Chatterjee, Director (Finance) of CIL stated that Central Excise Duty on “Royalty” and “Stowing Excise duty” was not being paid by coal producing subsidiaries of CIL as these were considered to be “other taxes”. Mr Chatterjee was explained the provisions of valuation under Central Excise law by the officers of DGCEI (Hqrs). Being convinced about the Central Excise Duty liability of coal producing subsidiaries of CIL on the elements of “Royalty” and “Stowing Excise duty”, he undertook to deposit the entire differential Central Excise Duty liability, earlier not paid by various coal producing subsidiaries of CIL, on the elements of “Royalty” and “Stowing Excise duty” for the period from 01.03.2011 to 28.02.2013.