Custom, Excise & Service Tax Tribunal
M/S. Hpcl vs Cce, Mangalore on 14 May, 2013
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench Division Bench
Court I
Date of Hearing:14/05/2013
Date of decision:14/05/2013
Application No.E/Stay/433, 813/2005
Appeal No.E/642, 1188/2005
(Arising out of Order-in-original No.09/2005 dt. 30/03/2005 & No.23/2005 dt. 23/09/2005 passed by CCE, Mangalore)
For approval and signature:
Honble Mr. P.G. Chacko, Member(Judicial)
Honble Mr. B.S.V. Murthy, 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?
Yes
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, Mangalore
..Respondent(s)
Appearance Mr. G. Shivadass, Advocate for the appellant.
Mr. A.K. Nigam, Addl. Commissioner(AR) for the respondent.
Coram:
Honble Mr. P.G. Chacko, Member(Judicial) Honble Mr. B.S.V. Murthy, Member(Technical) FINAL ORDER No._______________________ [Order per: P.G. Chacko] These applications seek waiver of predeposit and stay of recovery against the adjudged dues which include duty of Rs.54,62,430/- demanded from the appellant for the period from December 2003 to March 2004 and the connected penalty (both under challenge in the first appeal) and duty of Rs.1,07,29,461/- demanded for the period from April to September 2004 and the connected penalty (both under challenge in the second appeal). After perusing the records and hearing both sides, we find prima facie case for the appellant and, accordingly, dispense with predeposit. Further, as the substantive issue is squarely covered by a decision of this Bench affirmed by the apex court, we are inclined to dispose of the appeals also at this stage.
2. The appellant is engaged in the manufacture of various petroleum products. They have a bonded warehouse at Mangalore where they receive and store both imported LPG and indigenous LPG supplied in bulk by its manufacturers. From this warehouse, HPCL clear LPG in bulk, on payment of duty, to their own bottling plants and also the bottling plants of other Oil Marketing Companies like IOCL and BPCL, from where the LPG (bottled in cylinders) is sold to retail dealers who, in turn, sell the product to the ultimate consumers. The Department issued show-cause notices to HPCL alleging that the delivery charges collected for delivery of the bottled(packed) LPG to the distributors were also liable to be included in the assessable value of the LPG(bulk) cleared from the warehouse and that HPCL had short-paid duty during the material period on account of non-inclusion of the delivery charges in the assessable value. These show-cause notices alleged that the entire amount (called Company Billing Rate[CBR]) collected by HPCL from their customers (dealers) represented the assessable value of the LPG (bulk) sold to the bottling plants, in terms of Section 4(1)(b) of the Central Excise Act read with Rule 7 of the Central Excise Valuation (Determination of Prices of Excisable Goods) Rules, 2000. As HPCL had not paid duty on the aforesaid delivery charges though these charges were also part of the CBR, the show-cause notices demanded the differential duty and interest thereon besides proposing penalties. These demands and proposals were contested. The adjudicating authority confirmed the demands of duty (with interest) against the assessee and imposed penalties on them. The present appeals are directed against the orders passed by the Commissioner of Central Excise.
3. The adjudicating authority found from the figures certified by the assessees Chartered Accountant that the freight actually incurred in the transport of LPG to the dealers premises was far less than the freight claimed by HPCL for abatement as average freight. The adjudicating authority also found that no freight was separately shown in the invoice nor charged separately. It held that only the actual freight charged and separately shown in the invoice could be abated from the selling price for determining the assessable value. Proceeding on this basis, the learned Commissioner confirmed the demands of duty against the assessee.
4. After hearing both sides on the valuation issue, we have found that the same issue was considered by this Bench in the assessees own case for a comparable period viz. HPCL Vs. Commissioner [2007(207) ELT 605 (Tri. Bang.)], wherein it was held as follows:
5. We have gone through the records of the case carefully. It is seen that the Revenue has issued show-cause notice to charge duty on CBR price which includes among other things such as delivery charges from the Bottling Plants to the dealers premises. We find that this amount represents the cost of transportation from the Bottling Plants to the dealers premises. Even though this cost may not be equal to the actual, it cannot be included in the assessable value as transportation is entirely different activity from manufacture. It is seen that the freight charges from MLIF to Bottling Plants has already been included and on this point, there is no dispute. The issue is also covered by the decision of the Tribunal decisions cited by the learned Advocate. As the issue is well settled by a plethora of decisions, we hold that the delivery charges should not be included for the purpose of Central Excise duty. Hence there is no merit in the impugned orders. We set the impugned orders and the appeals are allowed with consequential relief. We further note that a Civil Appeal filed by the Department against the said decision of this Bench was dismissed by the Honble Supreme Court vide Commissioner Vs. HPCL [2007(213) ELT A116(SC)]. The learned Additional Commissioner(AR) has fairly conceded that the issue is already covered against the Revenue by the Honble Supreme Courts decision.
5. In view of the cited case law, we have to set aside the impugned demands of duty and the connected penalties. It is ordered accordingly. In the result, both appeals stand allowed. The stay applications also stand disposed of.
(Operative part of this order pronounced in open court on conclusion of the hearing) (B.S.V. MURTHY) MEMBER (TECHNICAL) ( P.G. CHACKO ) MEMBER (JUDICIAL) Nr 5