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TMI Blog2024 (9) TMI 1167X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in the case of Ispat Industries Ltd. [ 2015 (10) TMI 613 - SUPREME COURT] held that liability to pay excise duty arises at the place of removal. Hon ble Supreme Court in the case of Dalmia Dadri Cement Ltd. [ 1987 (11) TMI 94 - SUPREME COURT] held that exemption is available if the product is intended to be cleared to PDS. The impugned orders set aside - appeal allowed. - HON BLE Mr. S. S. GARG, MEMBER (JUDICIAL) And HON BLE Mr. P. ANJANI KUMAR, MEMBER (TECHNICAL) Shri B.L. Narasimhan, Ms. Krait Singh and Ms. Shreya Khunteta, Advocates for the Appellants Ms. Pridhi Sandhu (Senior Standing Counsel, CBIC), Special Counsel for the Respondent ORDER PER: P. ANJANI KUMAR M/s HPCL Mittal Energy Ltd. (Appellant No.1) are a joint venture and own a refinery at Bhatinda, Punjab; they are engaged in manufacture of Motor Spirit (MS), High Speed Diesel (HSD), Superior Kerosene Oil (SKO), Sweet Superior Kerosene Oil (SSKO) and other petroleum products; they supply the major production to M/s HPCL (Appellant No.2) through dedicated pipelines which are owned, controlled and operated by M/s HPCL. Due to technical reasons, the appellants pump the petroleum products in the sequence MS-SSKO- HSD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. vide Final Order No.20739/2019 dated 18.09.2019 and in other cases. Learned Commissioner wrongly relied on the earlier decision of the Tribunal in the case of Nayara Energy Ltd. vide Final Order No. A/11008/2019 dated 18.06.2019; whereas the order was rectified by the Tribunal vide Order dated 16.12.2019. Learned Commissioner wrongly interpreted the ratio of the judgment of the Tribunal in the case of M/s BPCL- 2018 (364) ELT 571 (Tri. Bang.); Tribunal in that case has only held that duty is to be discharged on the quantity of goods cleared from the refinery; in the instant case, it is not the Department s argument that the appellant No.1 is not discharging duty on the quantity of the goods cleared by them. The reliance on Petroleum Natural Gas Regulatory Board (Access Code for Common Carrier or Contract Carrier Petroleum and Petroleum Products Pipelines) Regulations, 2016 is not permissible as the issue was not the subject matter of the Show Cause Notice. Learned Commissioner travelled beyond the Show Cause Notice in discussing and placing reliance on the above rules. The appellants have informed vide letter dated 09.07.2015 the fact of inter-mixing of the Kerosene; they have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .L.T. A262 (S.C)] Castrol India Ltd. Versus Commissioner Of Central Excise, New Delhi 2000 (118) E.L.T. 35 (Tribunal) [Maintained by Commissioner v. Castrol India Ltd.- 2000 (121) E.L.T. A224 (S.C). State of Haryana v. Dalmia Dadri Cement Ltd. 2014 (178) ELT 13 (SC) CCE, Pondicherry v. Caterpillar India Pvt. Ltd. 2013 (297) ELT 8 (Mad.) Maintained in Commissioner v. Caterpillar India Pvt. Ltd. - 2016 (335) E.L.TA27 (S.C.) CCE, New Delhi v. Hari Chand Sri Gopal 2010 (260) ELT 3 (SC) Pushpam Pharmaceuticals Company vs. CCE 1995 (78) E.L. T. 401(S.C.) Bharat Hotels Ltd. vs. Commr. of CE-2018 (12) GS. T.L. 368 (Del.) Mangalore Refinery and Petrochemicals Ltd. Others vs. CCE ST CESTAT Bangalore, Final Order No. 20515-20519/2019 dated 02.07.2019 supra Rakesh Kumar Garg Others v. Commissioner of Central Excise, 2016 (331) E.L.T. 321 (Del.) Commissioner of Central Excise, Delhi - III v. M/s. Vee Gee Faucets Pvt. Ltd. 2015 (329) E.L. . 76 (P H) Steel Tubes of India v. CCE, Indore - 2007 (217) E.L.T. 506 (Tri.-LB) Woodmen Industries Versus Commissioner Of Central Excise, Patna 2004 (164) E.L.T. 339 (Tri. - Kolkata) (affirmed in SC in 2004 (170) E.L.T. A307 (SC) M/S Hero Cycles Limited, Hero ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular as follows. 4. .On careful reading of the above Circular, we find that the Circular suggests that even on clearance of SKO, the price of HSD/MS should be applied. However, this proposal of the Board Circular does not flow from any statutory provision. As discussed above, the appellant have correctly applied the price of respective goods cleared from the factory at the time of removal. Therefore, we do not find any support of any statutory provisions in the Board Circular. The Hon'ble Supreme Court time and again held that the board Circular cannot vitiate the law or the Board Circular cannot be issued contrary to the statutory provisions. We refer some of the judgments on this issue:- (a) 2008 (229) ELT 641 (SC) Sindur Micro Circuits Limited vs. CCE Belgaum (b) 2009 (235) ELT 385 (SC) Atul Commodities Pvt. Limited vs. CC, Cochin (c) 2003 (156) ELT 819 (Bom) Narendra Udeshi vs. UOI (d) 2015 (326) ELT 26 (SC) DGFT vs. Kanak Exports 4. In view of the above judgments, it is clear that the Board can only clarify the existing law but cannot create law by itself. Therefore, the above Board Circular dated 22.04.2002 having without support of any Act or Rule, is not binding on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SKO (PDS) has been used as a buffer between transportation of MS and HSD. The portion of SKO which has got inter mixed has been accounted as MS or HSD at the other end of the pipeline, depending upon its character. In the result, the portion of SKO which got inter-mixed is no longer available as SKO. This resulted in increase in the quantum of MS/HSD accounted at the other end. While there is no dispute regarding the payment of duty in the increased quantity of MS/HSD, the Department was of the view that the quantum of SKO not accounted as such at the other end, is liable to be charged to duty on the prices at which the same has been sold as MS or as HSD. 5.2. The appellants further submitted that duty requires to be charged at the time of clearance on the form in which goods are cleared at the factory. Ahmedabad Bench observed, in the case cited above, as follows in this regard. 11. The appellant s contention on the other hand is that goods are required to be charged to duty at the time of clearance from the refinery, in the form in which it is cleared. Hence, it has been argued that even though a portion of inter mixed SKO and ultimately cleared as MS/HSD, such goods have been c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... followed by Kolkata Bench in the case of Numaligarh Refinery Ltd Vs CCE Shillong. We also find that the goods are to be assessed in the form they are cleared from the factory and as the appellants have satisfied the conditions of Notification at the time of removal of goods from factory, duty cannot be demanded from them for subsequent activities, if any, by the purchasers. At best, the department could have a case that certain quantity of SKO is not being used for intended purposes, subsequent to the clearance and that applicable duty on the same has escaped payment, at least as applicable to SKO, if not as applicable to MS/HSD. However, the issue not being the subject matter of the appeals, we refrain from coming to a conclusion on this issue. 8. As per above, we find that the appeals succeed on merits and the Revenue s stand is not acceptable. We also proceed to discuss the issue of limitation. The appellants further contend that extended period cannot be invoked as the entire activity is in the knowledge of the department. The department alleges that in spite of the circular issued in 2002, the appellants did not choose to pay duty and that simply on the basis of ER-1 and other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd. 9. In view of the above, we find that the appellant s contentions are acceptable. The Show Cause Notice is based on a Circular issued in 2002. Show Cause Notice is issued in 2014, a clear 12 years later. We find that nothing prevented the department from making suitable enquiries and to issue notice in even time. Moreover, no evidence of suppression of facts etc with intent to evade payment of duty has been placed on record. Therefore, we find that the extended period is not invokable in respect of appeal No E/20679/2015. Moreover, for the reason that, Knowledge and belief that goods were not cleared on payment of applicable duty, with intent to evade payment, cannot be attributable to an organisation and more so, to a PSU, penalty under Section 11AC and/or Rule 25 of the Central Excise Rules is not imposable. For the same reason, penalty of Rs 6,00, 00,000 imposed on M/s HPCL is not acceptable. As no evidence, that Shri V.K. Jain was responsible for clearance of goods without payment of duty is placed, penalty cannot be imposed on him. 10. In the result, we find that the appeals survive on merits and limitation. Therefore, we allow all the five appeals with consequential relie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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