2002 (6) TMI 97 - AT - Central Excise

Summary

Issues:
1. Valuation of Natural Gasoline Liquid (NGL) for excise duty purposes.
2. Application of Rule 160 of the Central Excise Rules for duty demands.
3. Interpretation of Rule 159(2) for reassessment of goods.

Issue 1: Valuation of NGL for excise duty purposes:
The appellant, a manufacturer of Petroleum products, received NGL for processing. Dispute arose regarding the valuation of NGL for excise duty. The Commissioner confirmed duty demands based on a higher value, leading to a penalty on the appellant. The Tribunal considered relevant case laws and held that the price fixed by the Oil Co-ordination Committee should be used for levy of excise duty. As the NGL was used for spiking-crude by a refinery, the Tribunal concluded that the value of Rs. 1830.36 per metric ton (PMT) should be adopted for assessment. The Tribunal set aside the duty demands exceeding this value.

Issue 2: Application of Rule 160 of the Central Excise Rules:
The Commissioner relied on Rule 160 to confirm duty demands. However, the Tribunal explained that Rule 160 is applicable when goods are not satisfactorily accounted for in a warehouse. In this case, since the use of NGL was different (for spiking-crude), Rule 159(2) should have been applied for reassessment. The Tribunal emphasized that the Commissioner's order under Rule 160 was incorrect as it was not a case of unaccounted shortages but a case of reassessment under Rule 159(2).

Issue 3: Interpretation of Rule 159(2) for reassessment of goods:
The Tribunal highlighted that Rule 159(2) should have been followed for reassessment of goods when the use is different after ex-bond clearance, as in the case of NGL used for spiking-crude. Since the goods were not used for direct consumers but for spiking-crude, the value of Rs. 1830.36 PMT should have been considered. Consequently, the Tribunal found no basis to sustain the duty demands, interest, or penalty imposed by the Commissioner. The Tribunal set aside the order and allowed the appeal with consequential benefits.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing the correct valuation of NGL for excise duty purposes, the misapplication of Rule 160, and the necessity to apply Rule 159(2) for reassessment based on the actual use of goods.