Circular dated 31 October 2022

Key Pointers:

• As part of Budget 2022-23 an additional basic excise duty @ Rs.2 per litre levied on unblended motor spirit (commonly known as petrol) intended for retail sale and the said duty rate was to be applicable w.e.f.01 October 2022. The date of effect was deferred to 01 November 2022 vide Notification No.31/2022-Central Excise dated 20 September 2022.
• The difficulty faced by OMCs is that at the time of clearance of motor spirit from the refinery, the same are cleared as intended for retail sale as blended but they are not able to estimate quantity that will eventually be sold as unblended.
• Therefore, to ensure smooth implementation of differential duty, the following procedures are prescribed in addition to the existing procedure:
• As per the current statutory provisions, central excise duty shall be paid on motor spirit at the refinery stage. Where the moor spirit is cleared as intended for retail sale after blending, the manufacturers/refineries shall remove such motor spirit to the deposit/terminals by paying excise duty as applicable for blended motor spirit.
• Where the refinery removes motor spirit as intended for retail sale to the depots for blending after payment of duty as applicable to blended motor spirit, the refinery shall furnish a running bond equal to the differential duty on th quantity removed from the refinery to the jurisdictional Central Excise Commissioner with an undertaking to pay the differential excise duty along with interest as applicable.
• It shall be made by 6th of the following month based on actual clearance of quantity of unblended motor spirit from the depot.
• A reconciliation statement certified by the statutory auditor shall be submitted to the jurisdictional Central Excise Commissioner by the 10th of the month for every preceding quarter. In case of any short payment of duty, he same shall be liable to pay along with applicable interest.
• Detailed records must be maintained electronically at the depot/terminals which will be open to check by the officers of Central Excise.