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TMI Blog2015 (3) TMI 1158X X X X Extracts X X X X X X X X Extracts X X X X ..... id stock of petroleum product in their approved warehouses under Rule 20 of the of Central Excise Rules, 2002. The warehousing facility for petroleum products was withdrawn vide Notification No. 17/2004 (N.T.) dated 4-9-2004. During the course of stock verification it was found that the appellant/assessee were clearing the excisable goods "High Speed Diesel (HSD in short) to their ONGC Nhava Depot where the said goods were sold to their customers. The duty liability was discharged on the stock transfer price at the time of removal from the assessee's warehouses. However, on scrutiny of the invoices issued from the said depot, it was found that the assessee was selling the excisable goods from their depot at a higher price than the stock transfer price, resulting in short payment of duty. Accordingly, a show cause notice was issued vide notice dated 1-2-2006 for the period January, 2001 to 5-9-2004 demanding Central Excise duty of Rs. 43,72,070/-. The said notice was adjudicated vide order dated 28-2-2007 by the Jurisdictional Additional Commissioner wherein he confirmed a duty demand of Rs. 36,36,525/- and the amount paid by the appellant under protest was appropriated and the prot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pot. From the invoices issued by the appellant, it can be seen that a flat rate is charged from the buyers and it is not indicated therein that the extra amounts collected is towards handling or transportation. Therefore, the total amount charged by the appellant from the buyers is the transaction value and therefore, the appellant is rightly liable to discharge duty liability on the total consideration received. Revenue also placed reliance on the decision of this Tribunal in the case of CCE, Nashik v. VIP Industries Ltd. - 2012 (275) E.L.T. 602 (Tri.-Mum.) wherein it was held that with effect from 01-07-2000, in terms of Rule 7 of the Valuation Rules, while arriving at the transaction value for the purpose of charging excise duty, the cost of transportation from the factory to the depot is to be included and no abatement is permitted. Reliance is also placed on the decision of this Tribunal in the case of CCE, Chennai v. Madras Refineries Ltd. - 2007 (207) E.L.T. 582 (Tri. - Chennai) wherein also it was held that transfer charges incurred in relation to storage tanks and pipelines are includible in assessable value of the goods sold by the assessee. Therefore, it is prayed that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) read with Rule 7. Therefore, notwithstanding the fact that depot was not included as a place of removal, prior to 14-05-2003, the appellant has no case at all. After 14-5-2003, the price at the ONGC depot is clearly the value on which duty liability has to be discharged. The decisions of this Tribunal in the case of VIP Industries Ltd. (supra) and also the Madras Refineries Ltd. case (supra) clearly support this view. Once the duty demand is confirmed, the interest liability is automatic and consequential and has to be confirmed. 6.3 As regards the invocation of extended period of time, merely because the appellant is a Public Sector Undertaking, it does not mean that the appellant is liable to pay duty only for the normal period of limitation. If the appellant does not comply with the provisions of law and the documentary evidences available on record does not support the appellant's contention, the presumption that the appellant suppressed the facts would naturally arise. The law does not make any distinction between a PSU or non-PSU. In this view of the matter, invocation of extended period of time in the present case is fully justified. Consequently, the assessee is als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was further stated during the adjudication proceedings vide letter dated 23-2-2007 that JNPT terminal of the appellant was receiving LS-HFSD from Coastal region refinery through vessel/tanker during the relevant period and the same was pumped through Jetty to the said terminal through pipeline. Thereafter from JNPT terminal, the goods were removed on payment of duty by tanker/truck to IOCL, Nhava Depot, a duty paid location/depot from where the same was supplied to ONGC through dedicated pipeline upto ONGC Jetty, where delivery was given to ONGC Barges/Jetty. Product price charged ex-terminal to JNPT depot being the wholesale price at the factory gate/warehouse had been adopted as assessable value for payment of duty in respect of supplies made to both the category of supply to (i) JNPT Port Trust, and (ii) IOCL, Nhava depot, from where eventually sales were made to ONGC Barges. It was further stated that with respect to sales effected from IOCL, Nhava depot through pipeline to ONGC Barges/ONGC Jetty, additional amount of Rs. 172.54 per KL (in majority of the cases) was being recovered and shown in the sales invoice as 'other charges' over and above the selling price towards ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule 7 read with Section 4(1)(b) of the Act, to exclude the transport/handling charges incurred from the place of removal to place of delivery, the same cannot be added by taking resort of Rule 7 of the Valuation Rules alone. I also hold that the ruling in the case of Ispat Industries Ltd. - 2004 (165) E.L.T. 231 (Tri.-Mum.) and VIP Industries Ltd. - 2003 (155) E.L.T. 8 (S.C.), squarely cover the issue wherein it has been expressly held that no addition to the assessable value on account of transportation/handling charges incurred after removal of the goods from the place of removal, is permissible. 10.1 As regards non-disclosure of transport/handling charges separately in sale invoices, I find that it is an admitted fact that the appellant have incurred such expenses from the fact on record. Thus, the matter needs to be remanded to give opportunity to assessee/appellant to produce calculation of the charges incurred, so that excise duty is correctly assessed after reduction from gross amount billed. I further hold that there is no element of suppression or mis-declaration attributable on the part of the appellant. Thus, extended period is not invocable. Penalty under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The period of dispute in the case is from 1st Jan., 2001 to 4th September, 2004. The dates are important inasmuch as the new Section 4 relating to valuation of the goods was introduced with effect from 1st July, 2000. The date of 4th September is important inasmuch as the applicability of warehousing provision for petroleum products was withdrawn with effect from the said date. During the period in dispute, when goods were being cleared from the refinery, no duty was paid and the goods were stored in the approved warehouse without payment of duty. When the goods were being cleared from the warehouse, the duty was being paid. 15. In the present case, the appellant had a warehouse within the Nhava Sheva Port premises. They were clearing the petroleum products on payment of duty at the said warehouse. In addition to the said warehouse, the appellant had another depot in Nhava and the said depot was meant to cater to the needs of operations relating to ONGC. Thus the appellant has made the storage depot in Nhava. They had installed pipelines from the said depot to certain places in jetties and from such jetties the petroleum products were pumped into barges and other vesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereby declared that the price-cum-duty of the excisable goods sold by the assessee shall be the price actually paid to him for the goods sold and the money value of the additional consideration, if any, flowing directly or indirectly from the buyer to the assessee in connection with the sale of such goods, and such price-cum-duty, excluding sales tax and other taxes, if any, actually paid, shall be deemed to include the duty payable on such goods. (2) The provisions of this section shall not apply in respect of any excisable goods for which a tariff value has been fixed under sub-section (2) of section 3. (3) ....... (c) "place of removal" means - (i) a factory or any other place or premises of production or manufacture of the excisable goods; (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty; (iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory; from where such goods are removed; (cc) "time of removal", in respect of the excisable goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was the warehouse which was the place of removal but in respect of the goods under dispute, these were not sold at the place of removal, i.e. warehouse. Thus, valuation will be as per Section 4(1)(b) arid we have to take recourse to the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. It is seen that Member (Technical) has taken the view that the value has to be determined under Rule 7 of the said Rules while Member (Judicial) is of the view that the value has to be determined under Rule 5 read with Rule 7. For appreciating the said Rules, the same are reproduced below :- "Rule 5. Where any excisable goods are sold in the circumstances specified in clause (a) of sub-section (1) of section 4 of the Act except the circumstances in which the excisable goods are sold for delivery at a place other than the place of removal, then the value of such excisable goods shall be deemed to be the transaction value, excluding the cost of transportation from the place of removal upto the place of delivery of such excisable goods. Explanation 1. - "Cost of transportation" includes - (i) the actual cost of transportation; and (ii) in case where fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om such other place at or about the same time. Thus the transaction value prevailing at the depot will be taken as the transaction value while clearing the goods from the warehouse. In view of the above analysis, I concur with Member (Technical). 18. Member (Judicial) has quoted the Hon'ble Supreme Court's judgment in the case of VIP Industries Ltd. reported in 2003 (155) E.L.T. 8 (S.C.). I have gone through the said judgment. The said judgment pertains to the period before July 2000 when the old Section 4 existed. That old Section 4 was based upon the deemed value concept while the new Section 4 is based upon the transaction value. The decision of the Hon'ble Supreme Court was with reference to the old Section 4. In fact this Tribunal in the case of the very same assessee i.e. VIP Industries Ltd. in subsequent judgment reported in 2012 (275) E.L.T. 602 (T), has distinguished the same and explained in detail why the said judgment would not be applicable with reference to new Section 4. Member (Judicial) has also quoted another judgment of this Tribunal in the case of Ispat Industries Ltd. I have gone through the said judgment. In the said judgment, it has been clearly stated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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