9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (6) TMI 496 - AT - Central ExciseDemand of Central Excise Duty - SKO (PDS) - withdrawal of the warehousing facility, for petroleum products - N/N. 17/2004-CE (NT) dated-4/9/2004 - Department was of the view that the quantum of SKO not accounted as such at the other end, is liable to be charged to duty on the prices at which the same has been sold as MS or as HSD - HELD THAT - Tribunal in the case of M/S. INDIAN OIL CORPORATION LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, VADODARA 2018 (9) TMI 24 - CESTAT AHMEDABAD has held that the differential duty demand raised on inter-mixed quantity of SKO is not sustainable. Larger Bench of the Tribunal in the case of M/S JYOTI SALES CORPORATION, M/S PUNJAB FABRICATOR VERSUS CCE, PANCHKULA 2016 (11) TMI 767 - CESTAT CHANDIGARH has held that an item is required to be assessed in the form the same is cleared from the manufacturer s factory and not on the basis of its future use, after clearance, unless it is the requirement of entry. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Applicability of Central Excise Duty on SKO intermixed with MS/HSD during transportation. 2. Determination of duty based on the form of the product at the time of clearance. 3. Relevance and applicability of CBEC Circular No. 636/27/2002-CX dated 22/4/2002. 4. Consideration of the process of intermixing as 'manufacture'. Issue-wise Detailed Analysis: 1. Applicability of Central Excise Duty on SKO intermixed with MS/HSD during transportation: The appellant, a public sector undertaking, transported petroleum products via a pipeline, using SKO as a product plug to avoid intermixing of MS and HSD. The dispute arose as the quantity of SKO cleared from the refinery was not fully accounted for at the other end of the pipeline due to intermixing, resulting in a reduced quantum of SKO and an increased quantum of MS/HSD. The Department contended that the appellant should pay duty on the unaccounted SKO at the higher rates applicable to MS or HSD, as per CBEC Circular No. 636/27/2002-CX dated 22/4/2002. 2. Determination of duty based on the form of the product at the time of clearance: The appellant argued that duty should be paid on SKO at the time of its clearance from the refinery, in the form it was cleared, as per Rules 4 and 5 of the Central Excise Rules, 2002. The appellant had paid duty on SKO lost during intermixing at the rate applicable to industrial SKO, without availing the exemption for SKO (PDS). The Tribunal noted that the goods should be charged to duty in the form they are cleared from the refinery, and the intermixing during transportation does not change the duty liability at the time of clearance. 3. Relevance and applicability of CBEC Circular No. 636/27/2002-CX dated 22/4/2002: The adjudicating authority relied on the CBEC Circular dated 22/4/2002 to demand differential duty. However, the Tribunal referred to a precedent set by the Ahmedabad Bench in IOCL Vs. Commr. of Central Excise, Vadodara, which held that the circular was not applicable post the withdrawal of warehousing provisions on 6/9/2004. The Tribunal emphasized that Board Circulars cannot override statutory provisions and cited several Supreme Court judgments to support this view. 4. Consideration of the process of intermixing as 'manufacture': The Tribunal observed that the issue of whether the intermixing process constitutes 'manufacture' was not raised before the lower authority and was not discussed in the show cause notice or the impugned order. The Tribunal further noted that the adjudicating authority's reliance on Section 2(f)(iii) of the Central Excise Act was misplaced, as this clause applies only to goods specified in the Third Schedule, which did not include the appellant's products. Consequently, the intermixing of SKO with MS/HSD does not amount to manufacture. Conclusion: The Tribunal set aside the impugned order and allowed the appeal, holding that the differential duty demand on the intermixed quantity of SKO was not sustainable. The Tribunal followed the precedent set by the Ahmedabad Bench and the Larger Bench decision in Jyoti Sales Corpn. Vs. Commissioner of Central Excise, Panchkula, which emphasized that an item should be assessed in the form it is cleared from the manufacturer’s factory and not based on its future use.
|
