Customs, Excise and Gold Tribunal - Delhi
Indian Oil Corporation Limited Gujarat ... vs C.C.E., Vadodara on 8 May, 2001
ORDER K.K. Bhatia, Member (T)
1. M/s. Indian Oil Corporation Limited, Gujarat Refinery, Vadodara (appellants herein) manufacture petroleum products falling under Chapter 25, 27 and 29 of the Schedule to the Central Excise Tariff Act, 1985. They were issued two show cause notices dated 21.1.97 and 2.7.1997 by the Assistant Commissioner of Central Excise, Division-IV, Vadodara, demanding differential duty of Rs.2,27,242/- for the period from 23.7.96 to 3.9.1996 and Rs.2,82,796/- for the period from December, 1996 to May, 1997 respectively on the clearances of their products namely Super Kerosene (S.K.) (Industrial use) on the grounds as extracted below from each of these notices:-
1. Show Cause Notice dated 21.1.97.
"It further appears that the assessee have classified their products namely superior-kerosene (S.K.) (Industrial Ose) under Chapter Sub Heading No.2710.90 of the Schedule to the C. MX. Tariff Act, 1985 prior to 22.7.96 and they were paying duty of excise @ 10% adv. on this product; that in the Budget for 1996-97 presented on 22.7.96 the tariff rate for the duty of excise on SK (Industrial Use) has been increased from 10% to 15%. The assessee has filed fresh declaration under Rule 173B on 29.7.96, under which they have classified their product SK (Industrial Use) under Chapter sub heading No.2710.90 and duty rate @ 10% Adv. which is not correct in as much as the tariff rate on due product has been increased to 15% w.e.f. 23.7.96 in the Budget for the financial year 1996-97; that they continued to pay the duty @ 10% adv. on this product even after 22.7.96; It appears that IOC had cleared total 696.820 KLS of SK (for Industrial consumers) during the period 23.7.96 to 30.9.96 and have short paid duty amounting to Rs.2,27,242/- as mentioned in the enclosed Annex-A."
2. Show Cause Notice dated 2.7.97.
"It further appears that the assessee have classified their product namely super-Kerosene (S.K.) (Industrial Use) under Chapter Sub-heading No.2710.90 of the Schedule to the C. Ex. Tariff Act, 1985 prior to 22.7.96 and they were paying duty of Excise @ 10% Adv. on this product; that in the Budget for 1996-97 presented on 22.7.96, the tariff rate for the duty of excise on SK (Industrial Use) has been increased from 10% to 15%. The assessee has filed fresh declaration under Rule 173B on 29.8.96 under which they have classified their product SK (Industrial use) under Chapter Sub-heading No.2710.90 and duty rate 10% Adv. under Notification No.4/97-CE dated 1.3.97. The benefit of this notification can be given only to the product Kerosene which is ordinarily used as an illuminant in oil burning lamps and not for the Kerosene cleared for Industrial use. Under C. Ex. Tariff the product falling under Chapter sub-Heading No.2710.90 attracts C. Ex. duty at the rate of 15% Adv. w.e.f. 23.7.96, in the Budget for the financial year 1996-97 presented on 22.7.96; that they continued to pay the duty @ 10% Adv. on this product even after 22.7.96. It appears that I.O.C. has cleared total 864.640 KLs of SK (for Industrial consumers) during the period December, 1996 to May, 1997 and have short paid duty amounting to Rs.2,82,796/- as mentioned in the enclosed Annexure-A."
2. After considering the reply of the party, the Additional Commissioner of Central Excise, Vadodara, decided both the aforesaid notices by a common order dated 10.2.98. The Additional Commissioner in his order confirmed the total demand of Rs.5,10,038.00 raised against the party in both the above notices. The findings arrived at by the Additional Commissioner in his order are extracted below:-
"I have gone through the show cause notice, defence reply, record of personal hearing and written submissions made at the time of personal hearing. The point for decision in the case is whether benefit of notification No.8/96 dated 23.7.96 under the serial NO.27.27 and Notification No.4/97 dated 1.3.97 Sr. No.24 is available to the assessee and as to whether they are liable to pay duty at the concessional rate of @ 10% or at the tariff rate of 15%. To analyse the said Sr. Nos. of both the notifications which are identically worded are reproduced herewith:
27.27 27 Kerosene 10% Adv. Explanation. The expression "Kerosene" shall refer to any Hydrocarbon oil (excluding mineral colza oil and white spirit) which has a smoke point of 18 MM or more (determined in the apparatus known as Smoke Point Lamp in the manner included in the Bureau of Indian Standard Specification ISI:1448 (p.31) -1968 as in force for the time being) and is ordinarily used as an illuminant in oil burning lamps.
9. The point required to be decided is whether the benefit of above notifications are available to the assessee. On perusal of SCN it is found that classification under the Sub-heading 2710.90 is never disputed. The demand is only raised on the ground that for Kerosene used for industrial purpose the benefit of notifications is not available. On perusal of notifications, I find that the exemption has been granted on the condition of its usage i.e. if the said product is ordinarily used as an illuminant in Oil burning, in other words to say that if it is used for domestic purpose the Govt. intended to give a concessional rate of duty. The Kerosene therefore if used for industrial purpose the benefit of notification is not available to them. The demand is therefore required to be confirmed."
3. The party filed an appeal against the above order of the Additional Commissioner. The Commissioner (appeals), Vadodara, however, vide his order dated 3.5.2000 dismissed the appeal upholding the order passed by the Original Authority.
4. This is the second stage appeal filed by M/s. I.O.C. We have heard Shri R. Venkataraman, Adviser (Excise and Customs) for the appellants and Shri S.P. Rao, JDR for the Revenue/respondent. The learned representative of the appellants has placed heavy reliance on an earlier decision of the Tribunal in C.C.E. V/s. I.P.C.L. - 1990(46) ELT-173(T) in which the proposition under consideration is held in favour of the assessee in the following terms:-
"27. Applying the above principle to the facts of the present case, we see that the term "Kerosene", though a commonly understood term, has been defined by the Legislature and the definition contains the technical terms smoke point and final boiling point. If the intention of the Legislature was to restrict the scope of the term to "Kerosene" properly so called, and as popularly understood, there would appear to have been no need to define the term. This is all the more so because, as we have seen earlier, sub-item (2) read "Others" and not "Kerosene" which would have been the terms employed if the intention was to restrict the total coverage of Item 7 to A.T.F. and Kerosene and the coverage of sub-tem (2) to Kerosene. Since such is not the case, it appears to us that any mineral oil (excluding mineral colza and turpentine substitute), other than A.T.F., which has a smoke point of 18 mm or more and has final boiling point not exceeding 300 C falls within sub-item(2) though it may not be Kerosene as ordinarily understood and ordinarily used as an illuminant in oil burning lamps."
5. The learned representative of the Appellant Company has also relied on the C.B.E.C circular No.562/58/2000-CX (F.No.83/3/2000-CX.3) dated 8.12.2000 issued on the same subject.
6. We have considered the submissions made before us by both the sides. It is observed that the Original Authority in dealing with the issue before him has referred to the benefit of the concession at serial No.27.27 under Notification No.8/96 dated 23.7.96 whereas there is not even a whisper about this notification in the show cause notice dated 21.1.97. Demand under this show cause notice is raised- as could be see from the extracts of this notice appended above - on the ground that the assessee filed a declaration under Rule 173-B on 29.8.96 under which they classified their product (S.K.) (Industrial use) and claimed duty at the rate of 10% Adv. which is not correct in as much as tariff rate on this product was raised to 15% with effect from 23.7.96 in the Budget presented on 22.7.96 and they continued to pay duty at the rate of 10% Adv. on this product even after this date. The Original Authority has thus not dealt with the issue as raised in the show cause notice and has travelled beyond its scope. His order and that of Commissioner (appeals) therefore, cannot be sustained in law. These orders consequently are set aside and the matter is remanded to the Original Authority for passing a de-novo order within the scope of the facts and the propositions raised in both the show cause notices. On the fresh proceedings, the Original Authority shall keep in view the ratio of the decision of the Tribunal in the case of M/s. IPCL and the instructions of the Board cited supra. He shall also afford a reasonable opportunity of hearing to the appellants before taking a final view in the matter.
7. The appeals are, thus, allowed by remand in the above terms.