Custom, Excise & Service Tax Tribunal
The Commissioner Of Central Excise vs Preeti Petrochem Industries on 22 October, 2008
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No.II APPEAL No.E/1972/03 (Arising out of Order-in-Appeal No.PKA/69-70/Belapur/2003 dated 24/03/2003 passed by Commissioner of Central Excise & Customs (Appeals), Mumbai) For approval and signature: Honble Mr. M.V.Ravindran, Member (Judicial) Honble Mr. K.K.Agarwal, Member (Technical) ====================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
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 Lordships wish to see the fair copy :
of the Order?
4. Whether Order is to be circulated to the Departmental :
authorities?
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The Commissioner of Central Excise,
Mumbai Appellants
Vs.
Preeti Petrochem Industries Respondents
Appearance:
Shri.N.A. Sayyed, JDR for Appellants
Shri.D.B. Shroff, Advocate for Respondents
CORAM:
Shri. M.V.Ravindran, Member (Judicial)
Shri. K.K. Agarwal, Member (Technical)
Date of hearing : 22/10/2008
Date of decision : 22/10/2008
O R D E R No:..
Per: Mr. M.V. Ravindran, Member (Judicial)
1. This appeal is preferred by Revenue against order-in-appeal No. PKA/69-70/BELAPUR/2003 dated 24.03.2003.
2. The necessary facts that arise for consideration are that respondent is engaged in the manufacture of Calcium Petroleum Sulphonate(CPS) falling under chapter 38111.00. Respondent manufactures this product out of waste filter cake of detergent plant arising in the plant of Lubrizol India Ltd. M/s Lubrizol India Ltd., supply this waste filter cake free of cost to respondent. Respondent under a contract with Lubrizol India Ltd., has to recover Calcium petroleum Sulphonate from waste filter cake and supply the same to Lubrizol India Ltd., on payment of duty on the assessable value declared. Excise authorities after investigations came to the conclusion that there is mis-declaration of assessable value, as respondent has not included the cost of Waste Filter Cake while declaring the assessable value of the Calcium Petroleum Sulphonate. Adjudicating authority after considering the submissions made before him came to the conclusion that the allegations in the show cause notice stand proved, confirmed the differential duty payable and also imposed penalties on the respondent. Aggrieved by such an order assessee preferred an appeal to Commissioner (Appeals), who after going thru the submissions made set aside the order-in-original.
3. Ld. JDR submits that the impugned order is erroneous. It is his submission that as per the contract entered with Lubrizol India Ltd., respondent is supposed to lift the waste filter cake on his own, recover the product CPS and supply the same to Lubrizol India Ltd., only. It is his submission that the entire exercise of recovering CPS is done at the behest of Lubrizol India Ltd., and hence the cost of waste filter cake has to be included in the value of CPS. It is the submission that since Lubrizol India Ltd., was giving all the technical knowledge and supervision, waste filter cake free of cost, hence the3 sale of CPS to Lubrizol India Ltd., is not on principal-to-principal basis. The assessable value of CPS should have been arrived at on the basis of comparable goods manufactured by Lubrizol India Ltd. It is the submission that value of waste filter cake has been arrived by the Commissioner in the case of Lubrizol India Limited and the addition of such value of waste filter cake to the value of CPS manufactured by respondent is justified. It is his submission that impugned order be set aside and order in original be upheld.
4. Ld. Counsel on the other hand submits that the issue of addition of value of waste filter cake does not arise in this case. He would submit it is decided by tribunal that waste filter cake is held to be non-excisable by tribunal in the case of Lubrizol India Ltd. It is the submission that value that is sought to be added is erroneous as the declaration filed by the respondent is under rule 6 (b) (ii) of the erstwhile Central Excise Rules, 1944. He would in the alternative submit that the recovery of CPS in itself is not amounting to manufacture. Hence the value arrived for CPS is correct.
We have considered the submissions made in detail by both sides and perused the records. It is undisputed that Lubrizol India Ltd. supplies waste filter cake, free of cost, as also technical support to recover CPS from such waste. It is also undisputed that respondent is discharging duty liability on CPS manufactured and cleared after filing appropriate declaration with the authorities. It is also undisputed that value arrived at by respondent includes the cost of transportation of waste filter cake and the job charges paid by Lubrizol India Ltd. On this factual matrix, the findings of Commissioner (Appeals) is as under :
I have carefully gone through the case records and the submissions made on behalf of M/s.Preeti Petrochem Industries. It is seen that the adjudicating authority has failed to consider the submissions of the appellants that
i) The Waste Filter Cake (WFC) being environmentally hazardous, could not be dumped by M/s.Lubrizol (I) Ltd. was actually had a negative value as earlier they were spending for transportation in order to dump it at some distance. However, due to the prohibition of such dumping by the Maharashtra Pollution Control Board they had given it free to the appellant company in order to recover the absorbed Calcium Petroleum Sulphonate (CPS) of second quality @ Rs.34,500/- PMT by solvent extraction process, convert the hazardous material into harmless silica & overco0me the restrictions placed by the Maharashtra Pollution Control Board. The tender and the purchase order placed by M/s.Lubrizol revealed that there was clearly a sale by the applicants to Lubrizol at a price determined in the Purchase Order. The transaction was on principal basis and it was not a job work.
ii) The OIO No.35/2000-Commr-VI dated 30/05/2000 passed by the Commissioner of Central Excise, Mumbai-VI was set aside by the Honble Tribunal vide their Order No.CI/3806/WZB/2001 dated 13/12/2001 relying upon the Larger Bench decision of the Honble Tribunal in the case of Markfed Vanaspati & Allied Industries Vs. CCE Chandigarh 2000 (116) ELT 204 (T-LB) holding that the spent earth was not dutiable, hence the sale value of WFC fixed by the Commissioner of Central Excise, Mumbai-VI Commissionerate was redundant since the WFC was prima facie not liable to duty.
iii) As all the material facts were revealed to the Range Supdt vide appellants letter dated 12/07/1995 & 29/01/1997 in which CL &Price Declaration was filed incorporating the cost free receipt of WFC & manufacture of various grades of CPS for M/s.Lubrizol (I) Ltd. There was no incentive to evade duty as whatever duty was paid by the appellant company was available to M/s.Lubrizol (I) Ltd., as Modvat credit.
As there was no suppression of facts with an intention to evade duty, the major portion of the demand for the period from 02/96 to 01/98 was hit by the limitation of time bar. Even otherwise also, on merits of the case, the entire demand is not sustainable as on perusal of the tender & purchase order, it is clear that the contracted value is deemed to be the normal price i.e. the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal where the buyer is not a related person and the price is the sole consideration for the sale as defined in Section 4 (1) (a) of CEA 1944. Thus, the OIO No.M.VII/Addl.Commr./75/Preeti/2001-2002 dated 28/03/2002 passed by the Additional Commissioner of Central Excise of Mumbai-VII Commissionerate is to be held as legally not proper and correct.
Therefore, taking into consideration all the facts, I set aside the OIO No.M.VII/Addl. Commr/75/Preeti/2001-2002 dated 28/03/2002 passed by the Additional Commissioner of Central Excise of Mumbai-VII Commissionerate.
5. It is seen that tribunal vide order no. A/1738 & 1739/WZB/2005/ C-II/ EB dated 9.12.2005, was considering an appeal filed by revenue. In that case Commissioner (Appeals) had held that waste filter cake generated in the factory of Lubrizol India Ltd., is a not excisable commodity. While disposing appeal filed by revenue, tribunal in order-dated 9.12.2005 held that the conclusion arrived by commissioner (Appeals) is correct. If that be so, then the agreement entered by respondent, clearly states that waste filter cake is to be supplied free of cost by Lubrizol India Ltd.
6. Accordingly we find that the impugned order is a well-reasoned one and does not require any interference. Impugned order is upheld and appeal is rejected.
(Pronounced in Court) (K.K. Agarwal) Member (Technical) (M.V.Ravindran) Member (Judicial) pj 1 6 2