Custom, Excise & Service Tax Tribunal
M/S. Hpcl vs Cce, Hyderabad on 9 August, 2010
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench Division Bench
Court I
Date of Hearing: 09/08/2010
Date of decision:09/08/2010
Appeal No. E/500/07;
Appn. No. E/ST/317/07
(Arising out of Order-in-original(Denovo) C.Ex. No.03/2007 dt. 27/3/2007 passed by CC&CE, Hyderabad)
For approval and signature:
Honble Mr. M.V.Ravindran, Member(Judicial)
Honble Mr. P.Karthikeyan, Member(Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3.
Whether their Lordship wish to see the fair copy of the Order?
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. HPCL
..Appellant(s)
Vs.
CCE, Hyderabad
..Respondent(s)
Appearance Mr. G. Shivadass, Advocate for the appellant.
Ms. Sudha Koka, SDR for the Revenue.
Coram:
Honble Mr. M.V.Ravindran, Member(Judicial) Honble Mr. P.Karthikeyan, Member(Technical) FINAL ORDER No._______________________2010 Per P.Karthikeyan After hearing both sides on the stay application filed by the appellants M/s. Hindustan Petroleum Corporation Ltd., Sanatnagar (HPCL for short), we take up the appeal proper after dispensing with the requirement of pre-deposit to hear the appeal.
2.1. The facts of the case are that HPCL used to receive non-duty paid petroleum products indigenously, imported duty paid petroleum products and duty paid indigenous products in its storage tanks. Non-duty paid products received in the tanks were cleared on payment of duty. Clearances of petroleum products made by the assessee from 01/03/1994 were subject to duty on the basis of value. The authorities tentatively found that HPCL did not pay duty on the correct quantity of petroleum products cleared from its bonded tanks, had adopted a lower value for computing the duty due and had collected excess amount of duty than what had been paid on the customs duty paid cargo. Adjudicating 23 show-cause notices, Orders-in-original No.23/97 to 45/97 dt. 15/7/1997 were issued. Another show-cause notice was adjudicated under Order-in-Original No.3/97 dt. 29/8/1997. These orders found that the appellants were paying duty on the quantity shown in the daily outturn statements; but realized Central Excise duty on the quantity mentioned in the invoices which was in excess of the outturn statement quantity. The Commissioner also held that the assessee had not included the following charges realized from the buyers of its products and short paid the duty due.
i. Railway freight.
ii. Sliding and shunting charges-.
iii. RPO charges.
iv. RPO surcharges.
v. State surcharge.
2.2. Aggrieved by these orders, the assessee approached the Tribunal and filed the appeals impugning the demand and penalty. A total of Rs.16,20,02,255/- was demanded as duty and penalty of Rs.1,61,00,000/- was imposed as penalty on the appellants. Vide Final order No.1710 to 1745/2000 dt. 30/11/2000 [reported in 2002(149) ELT 1294], the Tribunal held, inter-alia, that the outturn statement should be the basis for payment of duty; the quantity ought to be adopted was the outturn statement quantity less duty paid stock. With regard to deductions admissible the order passed by the Tribunal in the case of BPCL Vs. CCE [1999(108) ELT 402] had to be followed.
2.3. The Tribunal accordingly remanded the dispute to the Adjudicating Authority for taking a decision afresh in the light of the above finding. The Revenues appeal impugning the above Final Order was dismissed by the Honble Apex Court vide Order dt. 13/7/2004. The impugned order No.3/2007 dt. 27/3/2007 has been passed pursuant to the above remand order No.1710-1745/2000 dt. 30/11/2000.
2.4. The impugned order recorded the facts and findings in the remand order of the Tribunal as follows:-
13. The Honble Tribunal vide its Final Order referred to above, observed that:
i. HPCL are receiving imported and indigenous petroleum products under D-3 intimation filed by them and indigenous non-duty paid product on AR-3A and also duty paid petroleum products from other manufacturers of the same appellants company and / or other petroleum companies what are called by them (HPCL) as bridging arrangements. The imported petroleum products and the indigenous petroleum products are stored in same tanks and are being accounted for under FIFO system of material management accounting. The goods received under the bridging arrangements are entered in the Companys own record while the imported goods received under D-3 RG-1 Register maintained under the Central Excise Rules. HPCL are transferring the duty paid goods received under the bridging arrangements without entering the goods physically into the tanks. These goods are normally received in the road tank lorries and are being transferred to their customers under invoice being issued by the assessees. The imported goods and the indigenous non-duty paid goods are also cleared likewise under the same series of invoices by the assessees. While clearing the indigenous non-duty paid goods, the assessees are discharging the duty due thereon based on the quantity therein, called as out turn statement. No duty of excise is discharged on the customs duty paid stocks, which are stored in these mix-bonded tanks.
ii. It was also observed that a series of show-cause notices were issued for the period 3/1994 to 4/1997. These show-cause notices are identical for the period 3/1994 to 12/1996 and from 1/1997 to 4/1997. The only other issue involved is quantum and demand under Section 11D of the Central Excise Act, 1944 while for the earlier period, the issue involved are quantum and assessable value. Certain show-cause notices also dealt with the question of service station license fees and their includability in the assessable value under Section 4 of the Central Excise Act, 1944.
14. Honble Tribunal finally held that:
i. As regards the determination of the quantum of goods, duty payable should be determined on out turn basis by adopting the quantum formula suggested by HPCL.
ii. As regards the assessable value, the decision in the case of Bharat Petroleum Corporation reported in 1999(108) ELT 402 should be followed and accordingly, the assessable value is to be re-determined.
iii. Retails Service Charges are not be included in assessable value.
iv. Service Charges liability in transit should be settled as per Board instruction as prescribed therein.
v. The provisions of Section 11D are not applicable to imported petroleum products and hence determination of the amounts under Section 11D is to be re-determined as per amended Section 11D introduced by Finance Act, 2000.
vi. Penalty is to be re-determined after giving an opportunity to HPCL and considering their reply.
2.5. The Commissioner went on to observe that HPCL had failed to furnish material required to adjudicate the dispute despite repeated requests. He observed that even on earlier occasions, before the Adjudicating Authority as well as the appellate authority, HPCL had failed to adduce documentary evidence in support of their claim for various deductions. Relying on a couple of judicial authorities which had denied relief to the respective appellants for their failure to produce documentary evidence in support of the claim, the Commissioner confirmed the demand of Rs.16,20,02,255/-, interest ordered vide Orders-in-original No.23/97 to 45/97 and imposed penalty of Rs.1,62,00,000/-.
3. In appeal filed by HPCL, it is submitted that in respect of Orders-in-Original No.23/97 to 45/97 (involving demand towards excise duty of Rs.13,00,35,905/- and penalty of Rs.1,30,00,000/-) the Adjudicating Authority had not required them to provide any details for re-determining their liability in the de-novo proceedings. These orders pertained to the period of March, 1994 to January, 1996. During the de-novo proceedings, the only issue that had been referred and discussed was in respect of Order-in-Original No.3/97 pertaining to the period of 2/96 to 9/96. Only during personal hearing on 5/2/2007 on the appellant enquiring about the earlier period, the Commissioners office sought various documents. Without giving any further opportunity to explain the issue and to submit any documents, the original demand was confirmed again contrary to natural justice. As regards the period covered by Order-in-Original No.3/97 also, the Adjudicating Authority was required to re-determine the duty due based on the outturn statements as per the directions of the Tribunal. The Department had never contended even during the initial proceedings that quantities, based on outturn statements, were incorrect. The claim had been that the assessee was required to pay duty with reference to invoice quantities. In spite of the appellant providing detailed working of the outturn based clearances out of excise bonded stocks and audit certificate to authenticate the data, the Adjudicating Authority had re-confirmed the original demand without discussing the material submitted. As regards valuation, the assessee had furnished detailed break-up of sale price for each period involved in the proceedings. Elements such as state surcharge, RPO charges, RPO surcharges etc. were required to be abated from value as directed in the Tribunal's decision in BPCL Vs. CCE [1999(108) ELT 402]. The assessee had in fact provided certificates from Railways to prove that the actual railway freight per kl. was excluding price of each of the product. The adjudicating authority did not discuss includability of otherwise of siding & shunting charges. This was part of railway freight and an element of post removal activity. Till definition of place of removal was changed on 28/9/1996, siding & shunting charges were eligible for abatement.
4. We have examined the case records and the rival submissions. We observe that the dispute relates to determination of (i) the correct quantum of various products cleared on payment of duty by the appellant from its storage tanks in which non-duty paid petroleum products and duty paid imported products were stored and (ii) its valuation. The Tribunal had accepted the plea of the assessee that by relying on the invoices for determining duty liability of such clearances, the adjudicating authority had also included duty paid quantities. The quantum liable for payment of duty had to be determined on the basis of the outturn statement less the duty paid imported goods received in the mixed bonded tanks. The bridging quantity traded by the assessee had to be excluded from the quantum exigible to duty. As regards valuation, the Tribunal noted that the Counsel for the assessee had accepted that siding & shunting charges were not entitled to abatement from the assessable value. As regards various other charges such as freight and taxes, the dispute was covered in favour of the assessee by the decision of the Tribunal in the case of BPCL Vs. CCE [1999(108) ELT 402]. The duty liability in respect of the clearances involved was thus remanded to the adjudicating authority for re-determination. The Tribunal vacated the demand under Section 11D and kept the penal liability of the assessee open to be adjudicated afresh after hearing the assessee.
5. We observe from the records that the impugned order has been passed by the adjudicating authority without studying the relevant material. According to him, despite repeated directions, HPCL had not furnished the same. According to the appellant, it was not given opportunity to furnish material required for re-quantification of its liability as regards Orders-in-original No.23/97 to 45/97 pertaining to the period 3/94 to 1/96. It was directed to furnish the material at the time of personal hearing and the impugned order was before the same could be submitted to the adjudicating authority. As regards the liability covered by the order-in-original No.3/97, the Commissioner did not accept quantities reflected in the outturn statements as directed by the Tribunal. He found that as regards the abatement for the period 3/94 to 1/96, the documents furnished by the assessee were not helpful in ascertaining the actual amount of freight incurred could not be determined as the assessee had only furnished certificate showing rate of freight per kl. prevalent during different periods certified by the Goods Supervisor. The Commissioner found that the Chartered Accountant's certificate furnished in support of figures of delivery charges and commission charges was not reliable for the reason that different invoices raised on the same date and for the same quantity showed different figures. The Commissioner was handicapped in that the assessee had not enlightened as to whether relevant transactions involved duty paid goods or not. It was difficult for him to determine the admissible deductions as per the directions of the Tribunal unless the assessee furnished all the relevant material.
6. We find that the impugned order has been passed without following the directions contained in the remand order of the Tribunal. While the Commissioner finds fault with the assessee for not having furnished the relevant information supported by documents, the assessee submits that the adjudicating authority passed the impugned order without even asking for and obtaining information pertaining to most of the period of dispute viz. 3/94 to 1/96. We note that the finding of the Commissioner that in the absence of reliable documentary evidence he was not in a position to accept the claim of the appellant for abatements is also not without substance. In the circumstances, we set aside the impugned order and allow the appeal filed by HPCL by remand for de-novo adjudication in terms of the Final Order No.1710-1745/2000 dt. 30/11/2000. The assessee shall cooperate fully with the authorities and furnish relevant material in deciding the matter expeditiously. Appeal and the stay petition are disposed of.
(Operative portion of this order pronounced on conclusion of the hearing) (P. KARTHIKEYAN) MEMBER (TECHNICAL) (M.V. RAVINDRAN) MEMBER (JUDICIAL) Nr 9