Finance Ministry forms panel to resolve excise dispute

The finance ministry has set up a committee of central excise commissioners to resolve an year-old dispute between the petroleum ministry and the revenue department.

The dispute, involving dues of around Rs 1,000-crore, is over charging of excise duty on the basis of the refinery gate price of cooking gas and kerosene for public distribution instead of the subsidised selling price.

"The committee has been formed for a speedy decision. We have asked it to submit the report within a month," a finance ministry official said.

The decision comes after the excise and service tax tribunal, on the appeal of the Oil and Natural Gas Corporation, in January asked the revenue department and the petroleum ministry to resolve the matter amicably.

The finance ministry had even issued notices to oil companies like ONGC and Reliance, asking them to pay excise on the basis of the refinery gate price. The disputed excise amount is for the period 2000-2004. After that, both PDS kerosene and domestic cooking gas were exempted from excise.

The dispute stems from a 2000 finance ministry notification that excise will be payable on assessable value. The oil companies, however, argued that the finance ministry had issued a clarification making an exception for PDS kerosene and domestic cooking gas.

Upstream companies like ONGC have said that the payment will be a pass-through for them. However, it will be a double whammy for oil marketing companies, which are already suffering under-recoveries. ONGC, in fact, has asked Indian Oil Corporation, to which it sells most of its products, to pay the dues.

Sources said while for ONGC, the amount due, including interest and penalty, is about Rs 195 crore, it is nearly Rs 500 crore for Reliance.

Sources in the petroleum ministry said it had represented its case to the finance ministry.