Custom, Excise & Service Tax Tribunal
Hindustan Petroleum Corporation Ltd vs Commissioner Of Customs ,Central ... on 14 February, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order No .20229 / 2014 Application(s) Involved: E/Stay/2140/2012 in E/2944/2012-DB Appeal(s) Involved: E/2944/2012-DB [Arising out of Order in Appeal 28-2012 dated 29/05/2012 passed by CCE&C, Hyderabad-IV] HINDUSTAN PETROLEUM CORPORATION LTD GHATKESAR TERMINAL, POST BOX NO.5, ANKUSHAPURA VILLAGE, GHATKESAR PO, R.R.DIST 501301 Appellant(s) Versus Commissioner of Customs ,Central Excise and Service Tax - HYDERABAD-IV POSNETT BHAWAN, TILAK ROAD, RAMKOTI, HYDERABAD, ANDHRA PRADESH 500001 Respondent(s) Appearance: Shri G. Shivadass, Advocate For the Appellant Dr. A.K. Nigam, Addl. Commissioner(AR) For the Respondent CORAM: HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER HON'BLE SHRI S.K. MOHANTY, JUDICIAL MEMBER Date of Hearing: 14/02/2014 Date of Decision: 14/02/2014 Order Per : B.S.V.MURTHY The matter was heard in great details even though the issue involved was only consideration of waiver of predeposit and stay against recovery. The learned counsel covered important factual and legal elements and in our opinion, the details covered by the learned counsel and after consideration of the records by us, is sufficient to arrive at the final decision at this stage itself. Accordingly, we dispense with the requirement of predeposit and take up the appeal itself for final decision. 2. The matter is before us in its 3rd round of litigation and details of earlier rounds are as under:- 1st round of litigation: Period involved : March 1994 to September 1996 Orders-in-Original passed in 1st proceedings : 15/07/1997 & 29/08/1997 Date of first CESTAT remand order : 30/11/2000 Date of dismissal of Civil Appeal filed by the Deptt. At Supreme Court : 13/07/2004 2nd round of litigation: Date of 2nd OIO : 27/03/2007 Date of 2nd CESTAT remand order : 09/08/2010 3rd round of litigation: Date of impugned OIO : 29/05/2012 Duty demanded : Rs.16,20,02,255/- Penalty imposed : Rs.1,62,00,000/- 3. The appellant is engaged in refining of crude petroleum and marketing various petroleum products thereof. They have an installation at Sanatnagar which was registered under Central Excise Act, 1944. This installation received petroleum products in bond from various refineries. The installation was also receiving customs duty paid as well as excise duty paid stocks. All the three types of products were stored in common bonded tank in a co-mingled condition. The disputes have arisen with regard to valuation as well as the clearance of non-duty paid /duty paid stock from such tanks. In addition to the above, the appellants were also engaged in trading of petroleum products which they received from other oil marketing companies and sold it without discharging into the tank which is called bridging in OMC parlance. 4. W.e.f. 01/03/1994, the rate of duty applicable to petroleum products was changed from specific rates of duty to ad valorem rate of duty. The assessable value to be adopted for payment of excise duty was fixed by the Ministry of Petroleum and Natural Gas for various petroleum products and this was adopted by all the oil companies. Further the Board had also issued circular providing that for mineral oils removed from bonded tanks, out-turn reports can be the basis to determine the quantity of oil withdrawals for payment of duty. The appellants were calculating the quantity withdrawn on the basis of out-turn reports to determine the quantity of petroleum products withdrawn which became the basis for payment of duty. The appellants were preparing and maintaining Out-Turn Statement(OTS) on daily basis wherein the appellants were maintaining a record of the quantity available in each storage tank at the start of the day and quantity available at the close of the day. 5. The appellants were issued show-cause notice from March 1994 onwards proposing to demand duty for the differential quantities between invoices and the OTSs and also duty on a portion of the price which was charged but not included in the assessable value. The show-cause notice had alleged that quantities cleared under invoices were in excess of OTS and therefore duty should have been paid on such excess quantity and inadmissible deductions should be assessed to duty. 6. In this 3rd round of litigation, the demand has been confirmed on the following ground viz. a. quantity shown in the OTS on the basis of which the duty has been paid is less than the quantity as per the invoices, b. appellants have not paid duty on the full consideration received from their buyers and c. certain deductions claimed by the appellants are inadmissible. 7. On the first issue, appellants submitted that they had submitted detailed calculation on a daily basis to the Commissioner, according to which they had paid duty on the entire quantity of non-duty paid petroleum products as per OTS. The differential duty demand had arisen because the investigating officer and the Department did not take into account the quantity of duty paid petroleum products received in the tanks. They had also submitted the Chartered Accountants certificate. When the matter came up last time before this Tribunal, we had required the Department to do a sample study and get a report. The report shows that the statements prepared by the appellants are acceptable. During the course of hearing, we verified one statement relating to furnace oil for the quarter of April to June 1994 and after going through the report, we find that the appellants have maintained the accounts and the statement clearly shows that the quantity received in the tank as per OTS has suffered duty. Since the entire quantity received in the tank as per OTS which is non-duty paid petroleum product has suffered duty, we find that the submission of the appellant that the Department has ignored the quantity of duty paid petroleum product receipts have not been taken into account for calculation of differential duty is correct. 8. As regards additional consideration, the following submissions were made:- a. The department has also raised a contention that though the Appellants are claiming dealers' commission as deduction from the assessable value while the same is being recovered from the dealers. On the basis this assumption, the Commissioner has disallowed the deduction on account of dealers' commission. b. The Appellants submit that this finding of the Commissioner is completely erroneous for the following reasons: i. The Appellants submit that as stated elsewhere, pursuant to petroleum products being brought within the purview of ad valorem rate of duty, the Ministry of Petroleum Products and Natural Gas vide Circular dated 31.05.1999 issued a revised price build up excluding the element of excise duty which was uniformly applicable to all the oil companies. Therefore in terms of the said Circular all the oil companies were required to adopt the said price for the purpose of payment of duty and the same was required to be charged on the customer. ii. The Appellants further submit that dealer commissioner which has been mentioned in the invoice is not collected from the customer as alleged by the department. It is further submitted that the appellants have in fact paid duty on the entire assessable value as determined based on the price circular issued by the Ministry without claiming any deduction on account of dealer's Commission. This would be clear form an illustrative example to show how the amount to be charged on the Customer is determined. Price list and Invoice dt. 19/11/1994 S. No. Particulars MS HSD A Price as per the price list/ KL - Rs. 12844.34 Rs. 5717.28 B Quantity of MS cleared as per the invoice 8000 LT 4000 LT C Assessable value of the goods A*B/1000- Rs. 102754.72 Rs. 22869.12 D Duty paid on the goods @ 20% - Rs. 20550.94 Rs. 2286.91 E Other delivery charges - Rs. 4329.06 Rs. 1469.29 F* Total value of the goods (C+D+E) - Rs. 127634.72 Rs. 26625.32 G Sales tax (a-), 27.31 % Rs. 34857.04 Rs. 4643.46 H Price billed to the customers (F+G) Rs. 162491.76 Rs. 31268.78 Total price for MS and HSD Rs. 193760.54 I. Dealers Commissioner as declared in the Invoice Rs. 1216.00 Rs. 212.00 Total Rs. 1428 J** Price received from customer as declared in the Invoice Rs. 192333.00 * Excise duty is paid on the entire assessable value without claiming any deduction towards dealer's commission **The price received from the Customer is after deducting the dealer's commission. We find that the above submissions are valid and acceptable. 9. As regards siding and shunting charges, it has been held that the same are not deductible. However, the appellants submitted that even assuming that the siding and shunting charges are not deductible, after eligible deductions are taken into account and deducted from cum-duty price, value adopted would be still higher than the ex-storage price fixed by the Ministry. They drew our attention to the illustration which is reproduced below:- Invoice No.104498 Quantity sold 8KL of HSD 1. Net price charged to the customer -- Rs.62670.71 2. Sales Tax -- Rs.9306.75 3. Cum-duty value (1-2) -- Rs.53363.96 4. Permissible deduction as per BPCL decision (i) Delivery charges -Rs.406.39 (ii)Actual Rly. Charges -Rs.4221.92 (iii)Dealers commission -Rs.552.00 ----------------
Total deduction -- Rs.5180.31 5. Net Invoice Value (3-4) -- Rs.48183.65 6. Net value per KL (E/quantity sold) -- Rs.6022.96 7. Assessable value per KL -- Rs.5475.41
However, the ex-storage price as fixed by the Ministry of Petroleum Products and Natural Gas which has been adopted by the appellants for the purpose of payment of duty is Rs.5717.28 which is much higher than the assessable value.
Further it was submitted that the Commissioner(Appeals) for subsequent periods on the very same issue has allowed the appeals and set aside the demands as detailed below:
a. Order-in-appeal No.43/2004 dt. 31/03/2004.
b. Order-in-appeal No.11/2004 dt. 26/01/2004.
c. Order-in-appeal No.12/2004 dt. 26/02/2004.
The appeals filed by the Revenue against these Orders-in-Appeal were dismissed for want of COD clearances. It was also submitted that in similar circumstances, the Tribunal has allowed the appeal on merits vide Final order No.25265 and 25266/2013 dt. 29/04/2013.
10. In view of the above discussion we find that the impugned order cannot be sustained. Accordingly, the impugned order is set aside and appeal is allowed with consequential relief, if any, to the appellant.
(Operative part of this order was pronounced in the court on conclusion of the hearing) S.K. MOHANTY JUDICIAL MEMBER B.S.V.MURTHY TECHNICAL MEMBER Raja 8