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TMI Blog2010 (4) TMI 951X X X X Extracts X X X X X X X X Extracts X X X X ..... icate that duty liability can be paid by the appellant on 5th of the following month. Such determination of the duty can arise only when the goods are cleared from the warehouses. Appeal allowed - decided in favor of appellant. - E/22/2008 - Final Order No. 708/2010 - Dated:- 1-4-2010 - Shri M.V. Ravindran and P. Karthikeyan, JJ. Shri Harish R., Advocate, for the Appellant. Shri V. Raja Ram, DR, for the Respondent. ORDER This appeal is directed against Order-in-Original No. 21/2007 (RK) dated 5-10-2007. 2. The relevant facts that arise for consideration are the appellant had warehoused at Gummaladoddi where they received different petroleum products like M.S, HSD, SKO and Naphtha. Consequent to the withdrawal of facility of removal of petroleum products from the refineries to warehouses or from one warehouse to another warehouse without payment of duty w.e.f. 6-9-2004, the stocks lying in the said warehouses of the appellant as on 5/6-9-2004 was liable to duty. On scrutiny of records, it was noticed by the lower authorities that the appellant had cleared the said stock as on 5/6-9-2004 till the end of September 2004, by raising commercial invoices dischargin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case, the price which is prevailing at the warehouse at the time of clearance of the petroleum product should be adopted for the purposes of payment of duty. 3.5 It is submitted that for the clearances of petroleum products from 5/6-9-2004 onwards, the transaction value was available for each clearance was adopted for the purpose of payment of duty. In fact the circular dated 4-9-2004 categorically states that the value as to be as per Section 4. The relevant extracts of the Circular is as under : 2. The assessable value of petroleum products cleared from the refineries on or after 6-9-2004, is to be determined under Section 4 of the Central Excise Act, 1944 read with the Valuation Rules. For example, if the product is sold at the factory gate (refinery), the assessable value would be the transaction value under Section 4(1)(a). If however, a product is removed by the refinery but sold from the depot, the assessable value is to be determined as per the mode of valuation applicable to the sale of goods through depot . 3.6 The appellants submit that the case of the department to demand differential duty based on the value prevailing as on 4/5-9-2004 is without any basis. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Central Excise has imposed a penalty of Rs. 5,00,000/- under Rule 25 of the Central Excise Rules, 2002. 3.14 It is submitted that they have paid duty as per Transaction value and the present demand is not sustainable. Since the demand of duty itself is not sustainable, no penalty and interest can be demanded. 4. Learned DR on the other hand would submit that the Board Circular dated 4-9-2004, very clearly indicates that excise duty is liable to be paid on the stocks of petroleum products lying in the warehouses on the midnight of 5/6-9-2004. He would submit that the duty liability cannot be postponed by the appellant on these products as warehouse facility has been removed on 5/6-9-2004 which would mean that the entire stocks have to be duty paid. 5. We have considered the submissions made at length by both sides and perused the records. The issue involved in this case is whether the duty is payable on the stocks lying on the date of withdrawal of warehouse provisions or on the different transactions values adopted at the time of removal of goods from the warehouses subsequent to withdrawal of warehousing facility from 5-9-2004 to 30-9-2004. 6. On perusal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise duty is liable to be paid on the stocks of petroleum products lying in the warehouses on the midnight of 5th/6th September, 2004. The jurisdictional officers should ascertain such stocks of each petroleum product lying in the warehouses and ensure that appropriate duty is paid by the warehouses on such stocks immediately. (iii) Since the warehousing provisions stand withdrawn w.e.f. 6-9-2004, the refineries are required to discharge the excise duty on petroleum products in transit immediately. The jurisdictional officers should ascertain the details of such goods and ensure appropriate duty is paid by the refineries immediately. 2. The assessable value of petroleum products cleared from the refineries on or after 6-9-2004, is to be determined under Section 4 of the Central Excise Act, 1944 read with the Valuation Rules. For example, if the product is sold at the factory gate (refinery), the assessable value would be the transaction value under Section 4(1)(a). If however, a product is removed by the refinery but sold from the depot, the assessable value is to be determined as per the mode of valuation applicable to the sale of goods through depot. 6.2 It can be noticed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refinery shall supply the complete and relevant information latest within a fortnight of delivery of the goods to a prescribed end-user. (iii) The refinery shall be liable to discharge the duty on the quantity cleared from the refinery itself. Hence, there will be no question of any abatement with regard to any losses subsequent to removal from refinery. Accordingly, the duty shall be paid on any differential quantity between the quantity cleared and actually received by the eligible end- user. However, while allowing such procedure, the following aspects should be adequately taken care of : (i) The quantities of Petroleum products for which such Provisional Assessment are applied, should be reasonable and supported by some collateral evidence of the requirement of the end-user and their decision to acquire the same from a particular oil company. (ii) The instructions contained in the CBEC s Excise Manual for Provisional Assessment and for execution of Bond as applicable, should be followed. (iii) The jurisdictional Commissioners shall closely monitor that Provisional Assessments are finalised within the time limit envisaged under Rule 7 of the Central Excise Rules, 2002 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty paid excisable goods in the warehouse subject to conditions, procedure and manner of payment of duty prescribed by him . It is hereby, made clear that no storage losses are permitted in the export warehouses/tanks whether intermediate or at AFS including those with such mixed storage. Further, the export warehousing under Notification No. 46/2001-C.E. (N.T.), dated 26-6-2001 does not cover removal of goods from one export warehouse to another. For Bunker Fuel supply, as long as the intermediate storage tanks are dedicated forsupplies to foreign-going vessels, the same relaxation/procedure as stated above for ATF including those of mixed bonding for foreign-going aircrafts may be adopted. 3. Your attention is invited to 3. para 1(ii) in Circular No. 796/29/2004-CX, dated 4-9-2004 [2004 (171) E.L.T. 111] which stated that as on or after 6-9-2004, no stocks could remain bonded/warehoused, the excise duty on the stocks of petroleum products lying in the warehouses on the mid night of 5th/6th September, 2004 should be paid immediately. The matter has been re-examined in the light of the representations received in this behalf. Accordingly, para 1(ii) in the Board s Circular dat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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