TaxTMI 
TaxTMI 
2002 (6) TMI 595
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....re manufacturers of Lubricating oils falling under Chapter 2710.90 and lubricating preparations falling under chapter sub-heading 3403.00 of CET. The appellant company since August, 1999 has been clearing the lubricating oil in bulk i.e. in tankers on payment of duty on the value as determined under Section 4 of the C.E. Act, 1944 to M/s. Lubs & Greases Guindy for re-packing in smaller containers, packings and then clear it to their depots for further sale to customers. As this was not acceptable to the department and duty should have been paid under Section 4A value at depot, a show cause notice dated 29-2-2000 was issued by the range officer to demand differential duty of Rs. 55,96,547/- for the period from 1-8-99 to 31-1-2000 and to impose penalty and the show cause notice culminated in the original authority passing the order-in-original whereby the original authority has demanded a duty of Rs. 55,96,547/- under Section 11A of the C.E. Act, 1944 besides imposing a penalty of Rs. 5000/- under Rule 173Q of the C.E. Rules, 1944. Against that order, the appellants filed appeal before the Commissioner (Appeals) who by the impugned order uphe....
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....le price under Standards of Weights & Measures Act read with Rule 6 of Packaged Commodity Rules is required to be made and there is no requirement for declaring MRP in respect of wholesale package. (i) Value as per Section 4(4)(d) will include packing charges only when they are removed in packed condition at the time of removal from the factory, as held in their own case as well as in the Savitha Chemicals case (supra). 3. Shri N. Venkataraman, learned Counsel for the appellants argued the matter on the above lines and submitted that the decision of the Tribunal in their own case reported in 2000 (118) E.L.T. 35 and that of the Savitha Chemicals (supra) squarely applies to the facts of the present case and he submitted that the impugned order is not sustainable and is required to be set aside. 4. Shri G.S. Menon, appearing for the department referred to the comments received from the Commissionerate vide C. No. V/27/2/89/2001-C, dated 30-10-2001, a copy of which has been placed in the file. He submitted that in this case the show cause notice was issued under Section 4A of the Act and the order-in-original also was confirmed under th....
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....case in respect of a different unit and reported in 2000 (118) E.L.T. 35 (Tri.). I have perused the said case law. Though the facts mentioned in the said case law are identical to the case in hand, the said case law is clearly distinguishable from the present one in view of the fact that disputed period involved in the said case was from 1-10-96 to 31-3-97 during which period Section 4(A) was not in vogue. The point of consideration before the Honourable Tribunal in that case was valuation under Section 4 only. The Honourable Tribunal presumably did not consider the applicability of Section 4A as it was not in vogue. The said section came into effect from 14-5-97 only and the disputed period in the present case is after this date only. I take similar view in respect of the case law reported in the matter of Savitha Chemicals." 6. It will be seen from the above findings of the Commissioner (Appeals) that he has very thoroughly analysed the provisions of law under Section 4(1)(a) as also under Section 4A(1) of the Act. He has correctly come to a conclusion that the period of dispute in the present case was after Section 4A(1) came into effect. He has also distinguished the ca....
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.... the Revenue. In view of the above discussion, we do not find any infirmity in the order-in-appeal and we uphold the same and reject the appeal. Sd/- (Jeet Ram Kait) Member (T) 8. [Contra per : S.L. Peeran, Member (J) (Oral)]. -  With due respect to my learned brother, I am unable to agree with the findings recorded by learned brother in his order. Hence, I am recording a separate order. 9. The case was argued by Shri Rajesh Chandra Kumar, ld. Advocate and not by Shri N. Venkatraman, Advocate as noted in the cause title and in the order recorded by my brother. 10. The facts and the grounds of appeal has already been noted by learned brother and hence the same are not repeated here. 11. The main contention of the ld. Counsel was that Section 4A is not attracted to the facts of the case. Although M/s. Castrol India Ltd. is notified under Section 4A but the said provision of law will not apply till the goods are in packed form. He pointed out that provision of process of packing amounting to manufacture was introduced in the chapter by Finance Act on 1-3-2000. He further argued that Section 4A is not applicable to the facts of the ca....
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.... are sold in 205 litre barrels, the bulk oil in tankers should be assessed at the same price of 205 litre barrels minus the cost of barrels and where the blended oils are not sold in 205 litre barrels but sold in smaller packings, the bulk clearances in tankers should be assessed at the price of the largest of the small packings like 20 litres minus the cost of packing and the cost of transportation from the factory gate to the depot. 3. Appellants clear blended lubricating oils from their factory to packing stations in tankers. Excise duty on bulk clearance in tankers was being paid on the basis of the list price of 205 litre barrels. At the packing stations, oil is packed in barrels of 205 litres as also in retail packings of 20 litres, 10 litres, 5 litres and 0.5 litres. Department took the view that assessable item is oil in the smaller packings which are sold to wholesale buyers. Accordingly, they want Central Excise duty to be levied on the price at which the oil was sold from the depot in the smaller packings. This is sought to be done on the premises that depot is the place from where oil is removed and the price of the oil at the place of removal should be the norm....
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.... are removed from depot, such goods are to be valued with reference to the time when it was removed from the factory. 6. Clause (4)(d) of Section 4 defines "value" in relation to any excisable goods where the goods are delivered at the time of removal in a packed condition, value includes the cost of such packing. So, the condition of the goods at the time of removal is to be the basis for finding the value. If the goods were not packed in smaller containers at the time of removal from the factory, its condition at the time of removal from the depot cannot be of any relevance. In this view of the matter, we are clear in our mind that the nature of packing of the oil at the depot when it was removed is irrelevant in finding out the assessable value for the purpose of charging it with duty of excise. 7. In the instant case, blended lubricating oils of various grades were removed from the appellant's factory in bulk in tankers as also in barrels of 205 litre capacity. Bulk removal was also assessed and tax paid on the basis of the list price of 205 litre barrels. Some grades of lubricating oil are not sold in barrels of 205 litre capacity. They are sold in smaller pack....
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....ment, the Hon'ble President has followed the ratio of Savitha Chemicals Ltd. v. CCE, Mumbai, 2000 (119) E.L.T. 394 which also held the same view. In the case of Savitha Chemicals, in Paras 12 to 35 the WRB held as follows :- "12. Thus where the price at which the sale is made to an independent buyer is available, that price becomes the basis of sale to other similar consumers and also for stock transfers to depots. Thus, if the sale price from the depot is higher than the price at which the stock transfer is made, the department cannot demand differential duty. 13. Nowhere in the proceedings had the department claimed that the price at which the sale of lubricating oil in bulk made to independent buyers as contrived or fake. Therefore, those prices would form the basis for valuation of the goods cleared for repacking. 14. In this situation, it is not material, whether the goods are sold or not. In the case of Collector of Central Excise v. Ashok Leyland Ltd. [1987 (29) E.L.T. 530] the Tribunal was examining the valuation of stock transferred to regional sale offices. Such stock transfer could not be called as "sale". However, the Tribunal ruled that such sto....
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....h Court had undertaken a similar exercise. The ratio of these two judgments is not even remotely applicable to the belief of the Commissioner that after packing only, the lubricating oils became marketable. Before the Commissioner, three orders were cited to show that packing did not amount to manufacture. In the case of Indian Oil Corporation Ltd. v. C.C.E. [1987 (27) E.L.T. 482], the Tribunal had held that where the goods were cleared in bulk from the refinery and where they were later repacked and sold in packing, the valuation should be made in the form in which it was removed from the factory and that its subsequent repacking in containers was not a material aspect. The assessees had cited two other judgments also viz. in the case of EID Parry Ltd. v. U.O.I. [1978 (2) E.L.T. (J18)] and Prabhat Packaging Corpn. [1990 (47) E.L.T. 102]. The ld. Commissioner overcame this hurdle by holding in Para 44 as under : "Therefore, what was done by the job worker was packing and not repacking". 20. In specific circumstances by virtue of Section notes and Chapter notes, packing is equated to the activity of repacking where the goods in bulk form would pay duty and thereafter woul....
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....er Section 4(4)(b) of Central Excise Act has been amended on 28-9-1996 and inter alia which defines place of removal to include depots, premises of the consignment agents or any other place or premises from where the goods are sold. Removal of the goods from the premises of M/s. Savita Chemicals to the premises of packers cannot be treated as goods sold in the course of wholesale trade and further in view of the fact that higher price have been charged by M/s. Savita Chemi­cals for these goods from the depots after getting these repacked from M/s. Unique Packers. As the assessable value of the said goods i.e. Lube oil as per amended provi­sions of Section 4 of Central Excise Act, 1944, should be the invoice price charged at depot for the retail packs. Therefore, for the purpose of determin­ing Central Excise duty under Rule 173F read with Rule 9(i) depot should be considered as a place of removal and duty should be determined accordingly as such they have contravened the provisions of Rule 9(i) read with Rule 173F by not determining the duty correctly at the factory gate." 23. To determine the merit in the charge, it is necessary to see the relevant provisions whi....
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....n from the factory gate to the depot gate. 26. The effect of the amendment was brought out in the C.B.E. & C Circular No. 251/86/96-CX., dated 14-10-1996, as reproduced in 1996 (87) E.L.T. 48 (T). The extract read as under : "In the Finance Act of 1996, definition of 'place of removal' has been amended to include depot, consignment agents or any other place or premises from where the goods are sold by or on behalf of the assessee within its scope. However, time of removal for these other places of removal added in Section 4 shall be deemed to be the time at which such goods are cleared from the factory. The significance of these changes is that sale price at any of these "places of removal" will be the normal price for levy of excise duty and there can be different assessable values for the same excisable goods depending upon the place of removal. It also means that duty will be required to be paid at the time of clearance of goods from the factory for those goods which are sold by the manufacturer at depot, consignment agents or any other place etc. at a sale price of the place of removal i.e. depot, consignment agents etc. Where the goods are sold at the factory gate, th....
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....ods'. To illustrate, a company manufactures refrigerators of a particular brand and capacity: each of these refrigerators will fall in the category of 'such goods' (emphasis supplied). Similar goods, for example, goods of different brands manufactured by another assessee are also not 'such goods'. Similar goods manufactured by another assessee are also not 'such goods': that may fall in the category of 'comparable goods'. Even homogeneous goods e.g., sugar or cloth manufactured by different manufacturers would only be comparable goods and would not constitute 'such goods'." 30. Thus the grouping of the goods was to be as per brands or capacities. Goods falling in a particular group would become "such goods" as far as the other goods in the same category or group are concerned. When these goods are placed in juxtaposition with the goods from another group they would not remain 'such goods' but would become comparable goods. 31. Following these guidelines, oil packed in containers of different sizes also would not become 'such goods' in relation to each other but would become comparable goods. Continuing this logic further, the goods which are cleared in bulk canno....