Calcutta High Court
Commissionerate vs M/S. Indian Oil Corporation Limited on 6 September, 2024
Author: Hiranmay Bhattacharyya
Bench: T.S Sivagnanam, Hiranmay Bhattacharyya
od 5 & 6
IN THE HIGH COURT AT CALCUTTA
SPECIAL JURISDICTION (INCOME TAX)
ORIGINAL SIDE
IA NO. GA/3/2024
In CEXA/8/2020
COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, HALDIA
COMMISSIONERATE
Vs
M/S. INDIAN OIL CORPORATION LIMITED
IA NO. GA/4/2024
In CEXA/8/2020
COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, HALDIA
COMMISSIONERATE
Vs
M/S. INDIAN OIL CORPORATION LIMITED
BEFORE :
THE HON'BLE THE CHIEF JUSTICE T.S SIVAGNANAM
-A N D-
HON'BLE JUSTICE HIRANMAY BHATTACHARYYA
DATE : September 06, 2024.
Appearance :
Mr. Bhaskar Prosad Banerjee, Adv.
Mr. Tapan Bhanja, Adv.
...for appellant
Dr. Samir Chakraborty, Sr. Adv.
Mr. Abhijit Biswas, Adv.
Mr. Bhaskar Sengupta, Adv.
...for IOC.
The Court :- We have heard learned Advocate on either side.
This application has been filed to condone the delay in filing the application for
restoration. Though the reasons given are not very satisfactory yet since the appeal
had been filed under Section 35G of the Central Excise Act, 1944, way back in the
year 2020 and the appeal was pending, and we are required to consider as to whether
any substantial question of law arose for consideration we exercise discretion and
condone the delay in filing the application for restoration.
Accordingly, GA/3/2024 is allowed.
GA/4/2024 has been filed to restore the appeal which was dismissed for non
prosecution. We have perused the reasons given in the affidavit filed in support of the
2
application and we find that the reasons to be acceptable. Accordingly, GA/4/2024 is
allowed. The appeals and the application are restored to the file.
GA/1/2020 has been filed to condone the delay of 151 days in filing the appeal.
Though the prayers are vehemently opposed by the learned Advocate appearing for the
respondent/assessee, considering the fact that the Court is to see as to whether any
substantial question of law arises for consideration in this appeal, we exercise discretion and condone the delay in filing the appeal. Accordingly, GA/1/2020 is allowed treating it as on day's list.
This appeal has been filed under Section 35G of the Central Excise Act, 1944 (the Act) challenging the common order passed in E/75388/15, E/70134/13, E/70384/13, E/70426/13, E/70428/13 and E/70429/13 by the Customs, Excise and Service Tax Appellate Tribunal, East Zonal Bench, Kolkata (the Tribunal) dated 27th June, 2019. The revenue has raised the following substantial questions of law for consideration:-
i) Whether the Learned Tribunal erred in not appreciating the C.B.E.C.'s Circular No. 636/27/2002/-CX dated 22.04.2022, which clearly indicates that the duties payable on surge/gain of MS/HSD shall be p0ayable for intermixed/interfaced quantity ?
ii) Whether the Learned Tribunal erred in law by holding that value of SKO should be taken into account for calculation of Central Excise Duty in connection with clearance of intermixing of SKO with MS/HSD which is in contravention of C.B.E.C.'s Circular No. 636/27/2002/-CX dated 22.04.2002?
iii) Whether the Learned Tribunal failed to appreciate that the assessee/Respondent paid duty on the interface quantity of co-mingled products resulted due to mixing of SKO with MS adopting assessable 3 value of SKO (NPDS) at the prevalent rate instead of paying duty on MS to evade Central Excise Duty as because duty leviable on MS is higher than duty leviable on SKO (NPDS) ?
Heard the learned Counsel for either side.
The respondent/assessee is a public sector undertaking, Indian Oil Corporation Limited filed the appeal before the Tribunal challenging the order passed by the Commissioner of Central Excise, Haldia, by which the proposal made in the show- cause notice was affirmed and higher rate of Central Excise Duty was demanded. Apart from demand of duty the interest was levied. The issue which arose for consideration before the Tribunal was whether the revenue was justified in solely relying upon C.B.E.C.'s Circular No. 636/27/2002- CX dated 22.4.2002 stating that in the event of inter mixing of Superior Kerosene Oil (SKO) with Motor Spirit (MS)/High Speed Diesel (HSD) during the movement of petroleum product through pipeline, higher of the two duties i.e. duty payable on SKO and not used for intended purpose and duty payable on surge/gain of MS or HSD shall be payable for intermixed/interfaced quantity. The learned Tribunal has elaborately considered the factual position and recorded the submission made on either side. The Tribunal also took note of the circular dated 22.4.2002 and found that the Circular cannot vitiate the law, in other words the Circular cannot be issued contrary to the statutory provision. The Tribunal on facts found that the assessee have correctly applied the price for respective goods cleared from the factory at the time of removal. The learned Tribunal took note of the decision of the Hon'ble Supreme Court in Sindue Micro Circuits Limited Vs. CCE, Belgaum, 2008 (229) ELT 641 (SC), Atul Commodities Pvt. Ltd, Vs. CCE, Cochin, 2009 (235) ELT 385 (SC) and DGFT Vs. Kanak Exports, 2015 (326) ELT 26 (SC) for the proposition that the Board cannot issue circular contrary to the statutory provision. Nextly, the Tribunal considered as to whether the findings of 4 the adjudicating authority that after removal of goods inter mixing of SKO with MS/HSD amounts to manufacture. The Tribunal noted that there was no such allegation in the show-cause notice and, therefore, the adjudication order travelled beyond the scope of show-cause notice which is not permissible under law. Not stopping with that the learned Tribunal also took note of Section 2(f)(iii) which defines "manufacture" and held that what amounts to manufacture is only in respect of goods specified under third schedule and it is undisputed that products of the respondent/assessee are not specified under third schedule and therefore, whatever activity mentioned in clause (iii) of Section 2(f) shall not apply to the goods which are not specified in the third schedule. Therefore, the Tribunal came to the conclusion that inter mixing of SKO with MS/HSD does not amount to manufacture. With the above finding the learned Tribunal allowed the assessee's appeal.
We find the reasoning given by the learned Tribunal to be perfectly valid and justified, as the Board cannot issue a Circular contrary to the statutory provision nor the adjudicating authority can travel beyond the allegations in the show-cause notice.
Thus we find no grounds to interfere with the order passed by the learned Tribunal.
Accordingly, the appeal fails and dismissed and the substantial questions or law are answered against the revenue.
(T.S. SIVAGNANAM) CHIEF JUSTICE (HIRANMAY BHATTACHARYYA, J.) pkd/GH.