TaxTMI 
TaxTMI 
2026 (1) TMI 1283
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....xcise duty, to above depots for barrelling for onward sale therefrom as well as stock transfer to other depots located outside Jamnagar for further sale. They purchase barrels on payment of duty for packing of Bitumen at the depots. 1.1 Till May 2010, they were paying excise duty on transfer of bulk Bitumen from refinery to depots by adopting the price of barreled Bitumen prevailing at the depots at the time of removal. They changed the practice of assessment thereafter by intimating the department on the ground that the process of barreling the Bitumen does not take place at the refinery and does not amount to manufacture. The Range Superintendent wrote to the appellant for determining assessable value by adding cost of barrel or any other expenditure, but they did not agree and started assessing goods by deducting cost of barrels on the ground that process of barreling was not essential for sale of bulk Bitumen at their refinery. After obtaining the cost of barrels and other expenditure, revenue issued them three show cause notice, one dated 29.06.2011 (for the period June 2010 to December 2010), the second dated 01.03.2012 (for the period Jan 2011 to March 2011) and the third....
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....ermined under Section 4(1)(a). * The decision in the case of Clariant (I) Ltd. Vs. CCE reported in 2006 (196) ELT 353 as relied upon by the Adjudicating Authority is not binding precedent as it has overlooked the definition of "time of removal" in Section 4(3)(cc) of the Central Excise Act, 1944. * They sell bulk bitumen from the refinery to independent buyers by paying excise duty on the transaction value. The assessable value in respect of goods transferred to depot, was determinable under Rule 4 by adjusting value of the goods sold to independent parties at the factory gate to take into account difference in date on which sale was made vis-à-vis the date on which assessment of the goods being cleared to the depot was being made. If Rule 4 is applied, there was no short levy of duty as alleged against them and in fact, excess duty has been paid by them. They rely on the decision of Larger Bench in the case of Ispat Industries Ltd. Vs. CCE reported in 2007 (209) ELT 185 wherein, Rule 4 has been applied in somewhat similar situations. * Rule 7 of the Valuation Rules applies in case where excisable goods are not sold by the assessee at the time and ....
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....led Bitumen cleared from the depot, for payment of duty. For imposition of penalty under Section 11AC, there should be deliberate suppression of fact with intent to evade payment of duty which is absent in this case. They followed the decision in the case of Savita Chemicals (cited supra) which held that value addition on account of packing material outside the factory premises, cannot be subjected to levy of excise duty. They requested to set aside the impugned orders and allow their appeals. 3. During hearing, learned Counsel highlighted the decisions mentioned in their appeal and impressed that the Adjudicating Authority cannot travel beyond the foundation laid down by the show cause notices as held by Hon'ble Apex Court in a series of decisions. The revenue's reliance on the decision in the case of Clariant (I) Ltd is misplaced as facts are different. He argued that Rule 4 of the Central Excise Valuation Rules is applicable in their case as held by the Tribunal in the case of Ispat Industries Ltd and therefore, there no additional duty liability on them. In respect of his alternate submission, he relied on decision of Allahabad Tribunal in the case of M/s Simbhaoli Sugar Ltd....
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.... CBEC's Excise Manual of Supplementary Instructions, 2005 and Board Circular No.693/14/2002-Cx. dated 01.07.2002 and prayed for dismissing the party's appeals and upholding the impugned orders passed by the Commissioner. 5. We have heard the rival submissions. The issue to be decided here is whether the cost of barrels is to be deducted from the price of barreled Bitumen sold from the depot(s) to arrive at assessable value for payment of duty. The appellant is clearing bitumen in bulk from the refinery for sale to independent buyers and also transferring some quantity to their Jamnagar depots for packing in barrels for sale as well as transfer to other depots located outside. The dispute revolves around valuation of barreled Bitumen which the appellant was initially determining on the basis of transaction value at the depot but later on, started deducting cost of barrels from the sale value, for payment of duty. Both sides agree that Bitumen packed in barrels is not cleared from the refinery. 5.1 The relevant provisions of Section 4 of the Central Excise Act,1944 and Central Excise Valuation Rules, 2000 are reproduced as under:- Section 4 of the Central Excise Act, 1....
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...., the value shall be the normal transaction value of such goods sold from such other place at or about the same time and, where such goods are not sold at or about the same time, at the time nearest to the time of removal of goods under assessment." 5.2 For goods cleared from depot, time of removal shall be deemed to be the time at which "such goods" are cleared from the factory. At refinery, some quantity of bulk bitumen is sold to independent buyers whereas the rest quantity is transferred to depots located in Jamnagar for packing in barrels for further sale from there as well as distribution to other depots for sale. Since, barreled Bitumen is not sold from the refinery, value of such goods (barreled Bitumen) cannot be determined at the refinery under Section 4(1)(a) of the above Act, and it becomes necessary to take recourse to Section 4(1)(b) read with Central Excise (Determination of Value) Rules, 2000. Going sequentially, Rule 4 which deals with situations where delivery of goods takes place at time other than the time of removal of goods under assessment, is not applicable. Therefore, reliance by the appellant on decision in the case of Ispat Industries reported in 2007 ....
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.... the instruction of the customers. The department's contention on the other hand, is that the laminated sheets cannot be sold in the ordinary course of trade without packing and, therefore, the packing charges would be includable in the assessable value. The Apex Court in the case of U.O.I. v. Bombay Tyre International Ltd. (supra) on the question of inclusion of packing charges in the assessable value has held that the packing in which the goods are ordinarily sold in the course of wholesale trade to the wholesale buyer is includable in the assessable value - the degree of packing in which the excisable article is contained may vary from one class of articles to another. The Apex Court in the case of Union of India v. Godfrey Philips India Ltd. reported in 1985 (22) E.L.T. 306 (S.C.) has held that the cost of packing which is essential for protection of excisable goods during transportation is also includable in the assessable value. Relying upon these judgments, the Apex Court in other judgments in the case of Royal Enfield v. CCE, Chennai 2011 (270) ELT 637(SC) has held that the packing used by an assessee in respect of the goods, which is necessary for putting the excisable art....
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.... (I) Ltd. Vs. CCE, Thane-I (cited supra), where it has been held that where goods are not sold when removed from the factory but are merely transferred to the depot, the depot becomes a place of removal under the Law and smaller packages are sold from there only and not from the factory and therefore, cost of packing included in the transaction of the such packages. 5.5 The appellant has contested invocation of extended period in the case on the ground that they had intimated the department vide their letter dated 20th May, 2010 regarding change in assessment practice in respect of goods sold from depot. The above say has also not been disputed by the department. Therefore, it cannot be said that the appellant had suppressed nonpayment of excise duty on cost of barrel, from the department. We are not convinced with the department's argument for invocation of extended period and therefore, hold that extended period in this case is not invocable. For the same reasons, we set aside penalty under Section 11AC of the Central Excise Act, 1944 with liberty to the department to consider whether or not to impose penalty under Rule 25 of the Central Excise Rules, 2002. 5.6 Regarding al....