2000 (2) TMI 130 - AT - Central Excise

Summary

Issues involved: Assessment of excise duty on lubricating oils sold in smaller packings from depot, interpretation of Section 4 of the Central Excise Act, 1944.

Summary:
1. The appellants, manufacturers of lubricating oils, were selling products in smaller packings from their depot after repacking. The Department claimed duty on goods sold from depot in smaller packings was not paid correctly. A show cause notice was issued for differential duty. The adjudicating authority confirmed the demand and imposed a penalty. On appeal, the issue was remanded for reevaluation based on the price of smaller packings.

2. The appellant argued that duty assessment should consider the price of bulk oil in tankers and blended oils sold in smaller packings. The Department insisted on levying duty based on the price of oils sold from the depot in smaller packings.

3. The dispute centered on whether the assessable item for duty was oil in smaller packings sold to wholesale buyers from the depot. The Department's stance was influenced by an amendment making the depot a "place of removal" under Section 4 of the Act.

4. The assessment of excise duty is based on the normal price at the time and place of removal of goods. The definition of "time of removal" in relation to goods removed from the depot specifies the time at which goods were cleared from the factory as the basis for valuation.

5. The time and place of removal for goods from the depot should be the factory gate and depot, respectively. Goods are valued concerning the time of removal from the factory, even if removed from the depot.

6. The value of goods at the time of removal includes the cost of packing if delivered in a packed condition. The nature of packing at the depot during removal is irrelevant for assessing excise duty.

7. The assessment should be based on the price of the largest small packing for oils not sold in 205 litre barrels. The cost of packing at the depot cannot be included in the assessable value. Duty for oils sold in barrels should be assessed at the barrel price minus packing costs.

8. Referring to a similar case, the Tribunal rejected the Department's attempt to fix the value of bulk oil based on smaller container prices. The appeal was disposed with directions to reassess based on the Tribunal's observations.

Conclusion: The Tribunal directed the adjudicating authority to reassess the excise duty in line with the observations provided in the order.