TaxTMI 
TaxTMI 
2024 (9) TMI 1167
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....cal reasons, the appellants pump the petroleum products in the sequence MS-SSKO- HSD-SSKO-MS. SSKO, thus, used as an interface in the pumping of MS and HSD; the use of SSKO as an interface result in mixing of a small quantity of the SKO or SSKO with MS or HSD cleared. The appellants discharged the applicable Central Excise duty on the petroleum products cleared by them on the basis of the quantity report given by M/s HPCL at the end of the month. The appellants are availing exemption contained under Notification No.12/2012 on Kerosene supplied to Public Distribution System. It is the case of the Department that a part of the Kerosene removed without payment of duty, availing exemption, having been mixed with MS and HSD loses the character of being an exempted product and as such on that portion of SKO, the appellants are liable to pay Central Excise duty as applicable to MS and HSD. Three Show Cause Notices dated 03.01.2020, 23.09.2020 and 31.05.2021, covering the period December 2014 to March 2020, demanding duty of Rs.325,77,77,486/- were issued to the appellants seeking, inter alia, penalty and interest. The Show Cause Notices were adjudicated vide impugned order dated 22.07.202....
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....acing 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 been regularly paying Central Excise duty and filing Returns; therefore, no suppression etc. with intent to evade payment of duty can be alleged and extended period cannot be invoked; accordingly, demand of interest and penalty is not sustainable. He submits that as appellant No.2 has bona fide belief that the goods are not liable for confiscation, penalty under Rule 26 of Central Excise Rules, 2002 is not imposable; moreover, appellant No.2 being a Public Sector Undertaking, no mala fide intention can be alleged. 3. Learned Counsel for both the appellants relies upon the following case in support of his argument as above: * Commissioner Of Central Excise, Bolpur Versus M/S Ratan Melting & Wire Industries 2008 (231) E.L.T. 22 (S.C.) * Precot Meridian Limited vs. Commissioner of Customs, 2020 (34) G.S.T.L. 27 (Mad.) * Indian Oil Corporation Limited vs. Commissioner of CE&ST, Guwahati, CESTAT Kolkata FO/A/76445- 76447/2019 dated 08.08.2019 (affirmed by Hon'ble Supreme Court in Civil Appeal Nos. 47....
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....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.Τ. 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 Ecotech Ltd. (New Cycle Division) And Hero Exports Versus Commissioner of Central Excise, Ludhiana, CESTAT Chandigarh, FINAL ORDER Nos.60028-60033/2024, 30.01.2024 * Kerala Co Operative Deposit Guarantee Fund Board Versus Commissioner of Central Tax and Central Excise, Thiruvanthapuram 2020 (42) G. S. T. L. 89 (Tri. Bang.) * M/S Sail Versus CCEX., Bolpur CESTAT Kolkata, Final Order No.76174/2019 dated 29.08.2019 (Affirmed by Calcutta High Court in Commissioner Of Central Excise, Bolpur Versus M/S. Sail vide order dated 03.05.2024 4. Ms. Pridhi Sandhu, learned Special Counsel for the Department, reiterates the findings of the impugned order. 5. Heard both sides and perused the records of the ....
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.... 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 assessee. 5.1. The appellants claimed that SCN and OIO did not allege that mixing of HSD/MS with SKO amounts to manufacture; as intermixing does not amount to manufacture, requirements of charging Section are not fulfilled and hence duty cannot be demanded on SKO at the rate applicable to MS/HSD. Ahmedabad bench observed in the above case that 5. As regards the issue that after removal of goods, intermixing of SKO with MS/HSD amounts to manufacture, we find that there is no charge in the show cause notice that the activity of supplying HSD/MS with i....
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.... 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 cleared from the factory as SKO and as such will be liable to duty only as SKO and not as MS/HSD. Of course, SKO not cleared for PDS will not be entitled to the benefit of exemption. 5.3. We find that Tribunal in the case of Sarita Chemicals Ltd. v. C.C.E., Mumbai-IV - 2000 (119) E.L.T. 394 (Tribunal) observed that the goods should be assessed in the condition in which the same are cleared from the factory and the value addition on account of the processing carried out by the job worker subsequent to t....
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....rposes, 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 returns, department cannot have knowledge of the activities so as to issue a demand and that only after investigation they came to know of the misuse of the Notification. The counsel for the appellants submits that there was no positive act of suppression or wilful misstatement on their part to necessitate invocation of extended period. The circular was issued by department itself way back in 2002, albeit after the removal of warehousing provisions; department was fr....
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....at 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 relief if any, as per law. 7. We find that the appellant No.1 is removing MS, HSD and SKO from their refinery. In the spirit of Section 4, the appellants are discharging duty on the quantity of goods removed by them by assessing the same in the condition in which they are removed by them. If a subsequent mixing happens at a later stage, duty liability, if any, cannot be fastened to the appellant No.1. Such duty liability, if any, can only be f....