2009 (7) TMI 1031 - AT - Central Excise

Summary

Issues Involved:
1. Waiver of pre-deposit of duty and penalty.
2. Valuation of petroleum products sold from depots/installations.
3. Applicability of Section 4(1)(a) vs. Section 4(1)(b) read with Rule 7 of Central Excise Valuation Rules, 2000.
4. Determination of transaction value and whether the process of mixing additives amounts to manufacture.

Summary:

1. Waiver of Pre-deposit of Duty and Penalty:
The applicant sought waiver of the pre-deposit of duty amounting to Rs. 1,11,67,333/- confirmed u/s 11A(2) of the Central Excise Act, 1944, along with interest u/s 11AB and a penalty of Rs. 25 lakhs imposed under Rule 25 of Central Excise Rules, 2002.

2. Valuation of Petroleum Products Sold from Depots/Installations:
The dispute centered on the valuation of petroleum products (MS-Speed, Speed 93, Speed 97, and HI-HSD) sold from depots/installations after the withdrawal of warehousing facilities by Notification No. 17/2004-C.E. (N.T.). The applicant paid duty based on the sale price of ordinary MS and HSD, despite selling the enhanced value products from depots/installations.

3. Applicability of Section 4(1)(a) vs. Section 4(1)(b) read with Rule 7:
The applicant argued that Section 4(1)(a) was not applicable and that the case should be governed by Section 4(1)(b) read with Rule 7 of Central Excise Valuation Rules, 2000, as the goods were transferred to depots/installation before sale. The Revenue contended that the valuation should be based on the actual transaction value realized from the sale of the branded goods from depots/installations, thus falling under Section 4(1)(a).

4. Determination of Transaction Value and Manufacturing Process:
The applicant contended that the mixing of additives did not amount to manufacture, and thus the value should be based on the sale price of ordinary MS or HSD. The Revenue argued that the transaction value should be the actual sale price of the branded goods, as the place of removal was the depot/installation. The Tribunal found that the applicant was previously paying duty based on the transaction value of the branded goods and that there was no change in the legal provisions for valuation post-September 2004.

Conclusion:
The Tribunal concluded that the applicant had not made out a case for the waiver of the full amount of duty and penalty. The applicant was directed to pre-deposit the entire duty amount of Rs. 1,11,67,333/- along with interest within eight weeks. Upon compliance, the pre-deposit of the penalty would be waived, and recovery stayed pending the appeal's disposal. Failure to comply would result in the vacation of stay and dismissal of the appeal.