Custom, Excise & Service Tax Tribunal
M/S Bharat Oman Refineries Ltd vs Cce, Bhopal on 16 June, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
West Block No. 2, R.K. Puram, New Delhi 110 066.
Date of Hearing : 28.3.2014
Date of Pronouncement: 16.5.2014
Appeal No. E/2620/2011-EX(SM)
[Arising out of the Order-in-Appeal No. 164/BPL/2011 dated 2.8.2011 passed by the Commissioner (Appeals), Customs, Central Excise & Service Tax, Bhopal)
For Approval & signature :
Honble Ms. Archana Wadhwa, Member (Judicial)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3.
Whether their Lordships wish to see the fair copy of the order?
No
4.
Whether order is to be circulated to the Department Authorities?
Yes
M/s Bharat Oman Refineries Ltd. Appellant
Vs.
CCE, Bhopal Respondent
Appearance Shri D.P. Bhave, Advocate - for the appellant Shri R.K. Mishra, Jt. CDR - for the respondent CORAM:Honble Ms. Archana Wadhwa, Member (Judicial) Final Order No.52141/2014 Per Archana Wadhwa :
The appellant is engaged in the manufacture of motor spirit, high speed diesel and liquid petroleum gas falling under Chapter Heading No. 2710 of the Central Excise Tariff, 1985. They have a valid registration, granting registration to their factory at village Agasod, Bina Distt. Sagar (M.P.). The appellant filed an application dated 19.3.2008 to amend their approved ground plan of Central Excise registration to include the pipeline laid down from Wadinar (Gujarat) state to the refinery at Bina (M.P.). As per the appellant, the pipelines laid down on various parts of the land and areas in India/used for the ground pipelines were forming of integral part of premises of the refineries.
2. In terms of the remand order of Commissioner (Appeals), the appellants were issued a Show Cause Notice proposing a rejection of the said request on the ground that the various locations of the pipeline are outside the jurisdiction of Central Excise Division, Sagar; that in terms of Rule 9 of Central Excise Rules, 2002, permission as regards registration of the manufacturer is restricted to the premises where manufacturing activity is being carried out. The activity of lying and jointing of pipes does not come under the purview of manufacture of excisable goods and as such the location of pipelines, which runs number of KMs. from Gujarat State to M.P. cannot be regarded as precinct of the noticees refinery.
3. The said Show Cause Notice culminated into an order passed by the original adjudicating authority denying the request and upheld by Commissioner (Appeals). Hence the present appeal.
4. I have heard both the sides duly represented by Shri D.P. Bhave, ld. Advocate for the appellant and Shri R.K. Mishra, ld. Jt. CDR for Revenue, it stands contended before me that the entire area included in the revised ground plan are in the possession and control of the appellant and they have right to use over the said land, duly supported by legally valid documents. My attention also stands drawn to the definition of factory, as appearing in Section 2(e) of the Central Excise Act which means the premises including the precinct. There is nothing in the said definition to suggest that such premises must fall, in its entirety within the jurisdiction of one excise division. Inasmuch as the pipeline areas are required for transportation of the liquid oil from Wadipur to Sagar, they have to be held as connected with the manufacturing process and the lower authorities should have amended their registration.
5. Countering the arguments, ld. Jt. CDR appearing for the Revenue has strongly contested the said prayer of the appellant and by drawing my attention to the definition of factory as appearing in Section 2(e) submits that the premises which are used for manufacture of the goods or connected with the production can be held to be a factory premises and as per the definition of manufacturing appearing in Section 2(f) of the Central Excise Act, the processes incidental or ancillary to the completion of the manufactured products are inclusive. The transportation of the raw material from the port area to the appellants refinery by no stretch of imagination can be held to be ancillary to the completion of the manufacturing process. Reliance stands placed on various decisions of the Tribunal.
6. After appreciating the submissions of both the sides, I fully agree with the ld. Jt. CDR. A combined reading of factory and manufacture, makes it clear that while obtaining registration for carrying out any manufacturing activity, the approval of the ground plan would relate to manufacturing premises or factory. The meaning of the term precinct means :
The area within the boundaries (real or imaginary) of a particular place or building (Oxford Online English Dictionary) an enclosed area or building marked by a fixed boundary such as a wall- Collins Online Dictionary.
7. In various judicial pronouncements, the factory premises and precincts have been interpreted to mean all building or complex with its surroundings where manufacturing activity is taking place. The transportation of the crude oil through the pipelines which travel through various States of India cannot be held to be a process integrally connected with the final manufacturing so as to include the same with the refinery functions. The Larger Bench of the Tribunal in the case of Vikas Industrial Gas Vs. CCE Allahabad 2000 (118) ELT 257 (Tri.-LB) has held that pump used for delivering water from the reservoir through pipeline to factory located a K.M. away from the factory cannot be held to be as falling within the factory precinct nor the bringing water from reservoir to the factory located at a K.M. away constitutes part of the manufacturing process. The definition of factory covers the premises and precincts of factory and not the premises or precincts beyond the factory premises and a dam reservoir located away from the factory cannot be treated as within the factory premises. Similarly in the case of CCE, Coimbatore Vs. Southern Iron & Steel Co. 2000 (121) ELT 164 (Tribunal) it was held that a pump house located 15 Kms. Away from the assessees factory used for drawing and pumping of water cannot be treated as extension of the factory.
8. When the ratio of the above decisions is applied to the facts of the present case, it is seen that the pipelines laid down beneath the land for transportation of the crude, travel through various States and is primarily meant for transportation of the raw material. The entire area of the pipeline is around 900 Kms. of length. To allow the registration of the same by holding the same to be a factory premises or precinct thereof would meant to allowing the road area used by transportation of the raw materials by a truck. I find no justification in the above prayer of the appellant. Accordingly their appeal is rejected.
(Pronounced in Court on 16.5.2014) (Archana Wadhwa) Member (Judicial) RM 6