AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1434
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....ior Kerosene Oil (SKO), Aviation Turbine Fuel (ATF), Lube Oil etc. by classifying the aforesaid products under Chapter 25, 27 of the First Schedule to the Central Excise Tariff Act, 1985. The appellants are registered taxpayers holding Central Excise Registration No. AAACH1118BXM010 for manufacture of aforesaid excisable goods on payment appropriate Central Excise duty and for compliance with Central Excise statue. 2.3 The excisable goods viz., HSD, MS and SKO manufactured at Mahul refinery are transported to their different depots situated at Vashi, Pakni, Lone and Hazarwadi through pipelines called Mumbai-Pune-Solapur pipeline (MPSPL) from where sales to retailers takes place. The pipeline transfers of aforesaid goods on payment of applicable duty and dispatch of such goods are made by the appellants in the form batch of shipments, following a sequential product-to-product pumping method, whereby at any one point of time only one product in the pipeline is pushed through. However, upon completion of pumping of one product, say HSD or MS, the other product i.e., SKO is introduced in the pipeline which pushes the other product without any positive segregation. Therefore, the lin....
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....1 Learned Advocate appearing for the appellants had submitted that the activity of mixing of SKO with MS or HSD is happening because of technical necessity, and such activity does not amount to manufacture in terms of Section 2(f) of the Central Excise Act, 1944 and hence the demand of duty is not sustainable. Further, the appellants though cleared the SKO for the purpose of PDS availing the duty exemption benefit, for the quantum of inter mixed product SKO, they have been discharging the appropriate duty at the rate applicable for clearance of industrial SKO. Therefore, she submitted that demand of duty on such inter mixed SKO, as though such products are MS/HSD is not legally sustainable in view of the judgements of the Hon'ble Supreme Court in the following cases: (i) Commissioner of Customs, Calcutta Vs. Indian Oil Corporation Ltd. - 2004 (165) E.L.T. 257 (S.C.) (ii) State of Haryana Vs. Dalmia Dadri Cement Ltd. - 2004 (178) E.L.T. 13 (S.C.) (iii) BPL Display Devices Ltd. Vs. Commissioner of Central Excise, Ghaziabad - 2004 (174) E.L.T. 5 (S.C.) (iv) Commissioner of Central Excise, Bolpur Vs. Ratan Melting & Wire Industries - 2008 (231) E.L.T....
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.... October, 2014 to March, 2015; and whether the adjudged demands confirmed in the impugned order is legally sustainable. 8.1 In order to address the above issue, we would like to refer the relevant legal provisions contained in Central Excise Act, 1944 as it existed during the disputed period, which is extracted and given below: Central Excise Act, 1944 Chapter II Levy and Collection of Duty "Duty specified in the First and Second Schedule to the Central Excise Tariff Act, 1985 to be levied. Section 3. (1) There shall be levied and collected in such manner as may be prescribed (a) a duty of excise to be called the Central Value Added Tax (CENVAT) on all excisable goods (excluding goods produced or manufactured in special economic zones) which are produced or manufactured in India as, and at the rates, set forth in the First Schedule to the Central Excise Act, 1985 (5 of 1986): xxx xxx xxx xxx Provided that the duty of excise which shall be levied and collected on any excisable goods which are produced or manufactur....
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.... 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; (cc) "time of removal", in respect of the excisable goods removed from the place of removal referred to in sub-clause (iii) of clause (c), shall be deemed to be the time at which such goods are cleared from the factory; (d) "transaction value" means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outwa....
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....ing Notes : xxx xxx xxx xxx Supplementary Note : In this Chapter, the following expressions have the meanings hereby assigned to them : (a) "motor spirit" means any hydrocarbon oil (excluding crude mineral oil) which has its flash point below 25°C and which either by itself or in admixture with any other substance, is suitable for use as fuel in spark ignition engines. "Special boiling point spirits (tariff items 2710 12 11, 2710 12 12 and 2710 12 13)" means light oils, as defined in Sub-heading Note 4, not containing any anti-knock preparations, and with a difference of not more than 60°C between the temperatures at which 5% and 90% by volume (including losses) distil; (b) "natural gasoline liquid (NGL)" is a low-boiling liquid petroleum product extracted from Natural Gas; (c) "superior kerosine oil (SKO)" means any hydrocarbon oil conforming to the Indian Standards Specification of Bureau of Indian Standards IS : 1459 : 1974 (Reaffirmed in the year 1996); (d) "aviation turbine fuel (ATF)" means any hydrocarbon oil conform....
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.... under 2710 1910 (SKO), 2710 1930 (HSD) and 2710 1211, 2710 1212, 2710 1213, 2710 1219 (MS). Further, in order to qualify commodity as MS or HSD, the relevant supplementary note has to be fulfilled in terms of technical specifications and BIS standards. The records placed in the case file do not provide any documentary evidence to show that intermix of SKO with MS/HSD have the characteristics of MS or HSD, in terms of the aforesaid supplementary note to classify the same as MS or HSD. Therefore, we are of the considered view that there is no possibility under the Central Excise tariff for classifying intermix of SKO with MS/HSD, as MS or HSD, for charging such product with the duty applicable for MS/HSD. 8.4 We also find that from the facts of the case, that it is not in dispute that while clearing the goods, the appellants have cleared from the factory quantities of MS, HSD and SKO separately. Since all the three goods are supplied through a pipeline, the SKO get mixed with either MS or HSD. As per the provisions of Section 4 ibid, the excise duty is payable on the transaction value at the time of removal of the goods from the factory. In the present case, the goods cleared fro....
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.... 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 judgements 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. Ltd. Vs. CCE, Cochin. c) 2003 (156) ELT 819 (Bom) - NarndraUdeshi Vs. UOI d) 2015 (326) ELT 26 (SC) - DGFT Vs. Kanak Exports. 9. In view of the above judgements, 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 having support of any Act or Rule, is not binding on the assessee. 10. 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 interface SKO amounts to manufacture. Therefore, on this point, the adjudication order travelled beyond the scope of show cause notice which is not permissible in the law. The Adjudicating authority has r....