Tax dept, OMCs locked in dispute over excise duty, oil firms served notice

The indirect tax department and oil marketing companies are locked in a battle over levy of excise duty on ethanol-blended motor spirit (EBMS), with the latter being issued notices over non-payment of dues, which they have strongly contested.

The matter pertains to difference in interpretation in provisions of the central excise act, with the Intelligence wing of the central board of indirect taxes and customs (CBIC) arguing that oil companies have pocketed excise duty collected on the ethanol portion of EBMS as the price of EBMS and petrol is the same.

Oil companies have contested the claim saying that since EBMS is an exempt product, no duty was collected on that by them. They have further added that the higher or lower price of EBMS compared to that of motor spirit cannot be ground to suggest that duty was collected.