The Hindu Business Line : Easy excise method for petro pipelines

THE Central Board of Excise and Customs (CBEC) has eased the excise procedure relating to movement of petroleum products through pipelines. The present procedure of "accountal" requires that consignment-wise information be provided (in ARE-3 form) at the refinery-end and reconciliation carried out annually. At the end of the year, the quantities of `line fill' and `intermix' are determined and the account of dispatch through the pipeline and receipts at various installations submitted; thereafter, gain or loss gets determined.

The problem with the procedure was that disputes arose owing to difficulty in getting the warehousing certificates within the prescribed period of 90 days; it was not possible to identify the destination at the time of dispatch of petroleum products, through pipelines, from refinery. Also, pumping of the product was continuous to multiple tap-off points. To remove difficulties, the CBEC held discussion with oil companies to evolve the following procedure:

Refineries should generate one ARE-3 on quarterly basis for each product and destination. So, if `N' number of petroleum products are sent to `D' number of destinations, in each quarter there would be N X D forms to fill up.

The receiving Commissionerate at the tapping off points can issue the re-warehousing certificate ARE-3 wise as per the receipt at their end. These re-warehousing certificates should be acceptable to jurisdictional Central Excise Officer at the refinery-end in the first instance, though provisionally.

At the end of the year, when annual pipeline accountal takes place in the oil companies, reconciliation can be carried out by way of a statement to be submitted by oil companies having refineries showing the actual quantity dispatched, the quantity re-warehoused and the gain and loss in respect of each product and each destination.

The oil companies should determine the annual account within 60 days from the end of the financial year, which should be certified by a firm of practicing chartered accountants. The necessary assessment order may be issued within 60 days of the receipt of the annual account.

The limit of transit loss to be condoned shall be 0.25 per cent as per the existing guidelines.

Wherever the imported and indigenous products are involved, the annual reconciliation statement should give the details separately for the purpose of reconciliation.

Wherever, shortages occur, the assessment may ordinarily be carried out on the basis of highest value and highest rate of duty applicable for the particular product during the quarter/period under consideration unless the assessee establishes that the shortages relate to a particular batch for which the value and rate of duty is not in dispute.

The new procedure would be applicable to new as well as existing pipelines. (CBEC Circular No 54/663/2002 dated September 23, 2002).

D. Murali

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