9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (7) TMI 165 - AT - Central ExciseExemption from excise duty - kerosene(SKO) used as interface for pumping diesel/petrol(HSD/MS) - superior kerosene oil (SKO) meant for distribution in PDS - time limitation - Department relies on the circular of 2002 and seeks duty on that part of the SKO, which is used as interface for pumping HSD/MS SKO, as applicable to MS/HSD as the case may be in terms of the CBEC Circular of 2002 - HELD THAT - The issue is squarely settled by the coordinate bench at Ahmedabad in the case of M/S. INDIAN OIL CORPORATION LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, VADODARA 2018 (9) TMI 24 - CESTAT AHMEDABAD . The ratio was followed by Kolkata Bench in the case of M/S. NUMALIGARH REFINERY LTD. VERSUS COMMR. OF CENTRAL EXCISE, SHILLONG 2019 (6) TMI 496 - CESTAT KOLKATA . The goods are to be assessed in the form they are cleared from the factory and as the appellants have satisfied the conditions of Notification at the time of removal of goods from factory, duty cannot be demanded from them for subsequent activities, if any, by the purchasers. At best, the department could have a case that certain quantity of SKO is not being used for intended purposes, subsequent to the clearance and that applicable duty on the same has escaped payment, at least as applicable to SKO, if not as applicable to MS/HSD - However, the issue not being the subject matter of the appeals, we refrain from coming to a conclusion on this issue. What has been cleared by the appellants at the factory is undisputedly, SKO for use in PDS system. If some quantity of the SKO is not used for the intended purposes, after clearance, duty cannot be demanded from the appellants. Time Limitation - HELD THAT - There are sufficient reasons to believe that there could be bona fide belief on the part of the appellants. Therefore, extended period cannot be invoked - The SCN is based on a Circular issued in 2002. SCN is issued in 2014, a clear 12 years later. We find that nothing prevented the department from making suitable enquiries and to issue notice in even time. Moreover, no evidence of suppression of facts etc with intent to evade payment of duty has been placed on record. Therefore, the extended period is not invokable. The appeals survive on merits and limitation - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Applicability of Exemption Notification No. 12/2012 for SKO used as an interface. 2. Applicability of CBEC Circular No. 63/27/2002-CE dated 22.04.2002. 3. Whether the intermixing of SKO with MS/HSD amounts to manufacture. 4. Validity of invoking the extended period of limitation. 5. Imposition of penalties under Section 11AC and Rule 26 of Central Excise Rules, 2002. Detailed Analysis: 1. Applicability of Exemption Notification No. 12/2012 for SKO used as an interface: The appellants, Mangalore Refinery and Petrochemicals Ltd., argued that they availed exemption under Notification No. 12/2012 for SKO intended for sale through the Public Distribution System (PDS). They contended that the exemption should be applied based on the intended use of SKO, as supported by the Supreme Court's interpretation in the case of State of Haryana Vs Dalmia Dadri Cement Ltd. The court held that "for use" should be construed as "intended for use." The Tribunal agreed with the appellants, stating that the exemption should apply as long as the SKO was intended for sale through PDS, regardless of its subsequent use as an interface. 2. Applicability of CBEC Circular No. 63/27/2002-CE dated 22.04.2002: The Revenue argued that based on the CBEC Circular, duty should be paid on the portion of SKO used as an interface, at the higher rates applicable to MS or HSD. The Tribunal, however, found that the Circular does not have statutory backing and cannot override the law. The Tribunal cited several judgments, including the Supreme Court's decision in Sindur Micro Circuits Limited vs. CCE Belgaum, which held that Board Circulars cannot create law and are not binding if contrary to statutory provisions. Thus, the Tribunal rejected the application of the Circular. 3. Whether the intermixing of SKO with MS/HSD amounts to manufacture: The Tribunal noted that the show cause notice did not allege that the intermixing of SKO with MS/HSD amounted to manufacture. The Tribunal referred to Section 2(f) of the Central Excise Act and concluded that the intermixing does not constitute manufacture since the products are not specified under the Third Schedule. The Tribunal cited the case of IOCL Vs CCE & ST, Vadodara, where it was held that intermixing post-clearance does not amount to manufacture, and goods should be assessed in the form they are cleared from the factory. 4. Validity of invoking the extended period of limitation: The Tribunal found that the appellants had a bona fide belief that they were not required to pay additional duty on SKO used as an interface. The Tribunal observed that the Department was aware of the Circular since 2002 and could have made inquiries earlier. The Tribunal cited the Supreme Court's decision in Bharat Electronics Ltd., which held that mala fide intent cannot be attributed to a Public Sector Undertaking (PSU). Hence, the extended period of limitation was not applicable. 5. Imposition of penalties under Section 11AC and Rule 26 of Central Excise Rules, 2002: The Tribunal held that penalties under Section 11AC and Rule 25 of the Central Excise Rules could not be imposed as there was no evidence of suppression or intent to evade duty by the appellants. Additionally, penalties under Rule 26 could not be imposed on a company, as the Rule contemplates elements of knowledge and belief attributable to a natural person. The Tribunal found no evidence against Shri V.K. Jain, thus penalties on him were also not justified. Conclusion: The Tribunal allowed the appeals on merits and limitation, setting aside the demands and penalties imposed by the Commissioner of Central Excise, Mangalore. The Tribunal emphasized that goods should be assessed in the condition they are cleared from the factory, and the appellants had fulfilled the conditions of the exemption notification at the time of removal. The extended period of limitation was not invocable, and penalties were not justified. Consequently, all five appeals were allowed with consequential relief as per law.
|
