ONGC shifts excise load to IOC

IOC told to pick the Rs 130-cr tab for disputed excise on PDS kerosene, LPG.

Oil and Natural Gas Corporation has served a notice to Indian Oil for bearing the burden of the disputed excise duty on public distribution of kerosene and domestic cooking gas that amounts to nearly Rs 130 crore.

"If the excise department sticks to its stand of charging duty on refinery gate prices rather than the subsidised selling price of the commodities in question, we will pass it on to the oil marketing companies," a company executive told Business Standard.

The executive added that as ONGC sold the commodities in question to Indian Oil, it had already issued Indian Oil a notice for paying the outstanding amount in case the issue was not resolved.

The dispute between the excise department and ONGC and Reliance has been on for over a year. The excise department has slapped several show-cause notices on Reliance and ONGC for payment of duty, with the amount owed by both companies nearing Rs 1,000 crore.

Sources said while the amount due from ONGC(including interest and penalty) was about Rs 195 crore, that for Reliance was nearly Rs 500 crore.

ONGC had appealed against the excise duty to both petroleum and finance ministries, but to no avail. The excise department issued orders to various work centres including the ONGC Uran plant in Maharashtra.

ONGC then appealed against the order to the customs, excise and service tax appellate tribunal in Mumbai. The tribunal, in January this year, asked the petroleum ministry and the revenue department to resolve the matter amicably. Subsequently, ONGC wrote to the petroleum ministry and finance ministry again to intervene in the matter.

The disputed excise amount is for a four-year period from 2000. In 2005, both PDS kerosene and domestic cooking gas were exempted from excise duty.

In 2000, the finance ministry had issued a notification that the duty would be applicable on assessable value. However, oil companies argue that the ministry of finance had also issued a clarification for making an exception in case of PDS kerosene and domestic cooking gas.