Custom, Excise & Service Tax Tribunal
Indian Oil Corporation Ltd vs Commissioner Of Central Excise on 3 April, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No. II APPEAL No.E/209/08 (Arising out of Order-in-Appeal No.SRK/492/RGD/2007 dated 10/12/2007 passed by Commissioner of Central Excise (Appeals), Mumbai) For approval and signature: Honble Mr. P.R. Chandrasekharan, Member (Technical) Honble Mr. Anil Choudhary, Member (Judicial) 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 :Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether Their Lordships wish to see the fair copy :Seen of the Order? 4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================
Indian Oil Corporation Ltd., Appellant Vs. Commissioner of Central Excise, Respondent Raigad Appearance:
Shri.M.H.Patil, Advocate for appellant Dr.B.S.Meena, Addl. Comm. (AR), for respondent CORAM:
Honble Mr. P.R.Chandrasekharan, Member (Technical) Honble Mr.Anil Choudhary, Member (Judicial) Date of Hearing : 03/04/2014 Date of Decision : /04/2014 ORDER NO Per: P.R.Chandrasekharan
1. The appeal is directed against Order-in-Appeal No.SRK/492/RGD/2007 dated 10/12/2007 passed by Commissioner of Central Excise (Appeals), Mumbai.
2. Vide the impugned order, the learned appellate authority has upheld the duty demand of Rs.38,36,525/- along with interest thereon confirmed by the adjudicating authority and also the imposition of equivalent amount of penalty. Aggrieved of the same, the appellant is before us.
3. The facts relevant to the case are as follows:
3.1 The appellant, M/s.Indian Oil Corporation Ltd. were engaged in storage of non-duty paid stock of petroleum product in their approved warehouses under Rule 20 of the of Central Excise Rules, 2002. The warehousing facility for petroleum products was withdrawn vide Notification No.17/2004 (NT) dated 04/09/2004. During the course of stock verification it was found that the appellant/assessee were clearing the excisable goods High Speed Diesel (HSD in short) to their ONGC Nhava Depot where the said goods were sold to their customers. The duty liability was discharged on the stock transfer price at the time of removal from the assessees warehouses. However, on scrutiny of the invoices issued from the said depot, it was found that the assessee was selling the excisable goods from their depot at a higher price than the stock transfer price, resulting in short payment of duty. Accordingly, a show-cause notice was issued vide notice dated 01/02/2006 for the period January 2001 to 05/09/2004 demanding Central Excise duty of Rs.43,72,070/-. The said notice was adjudicated vide order dated 28/02/2007 by the Jurisdictional Additional Commissioner wherein he confirmed a duty demand of Rs.36,36,525/- and the amount paid by the appellant under protest was appropriated and the protest was also vacated. The said order also confirmed recovery of the interest on the above duty amount and also imposed an equivalent amount of penalty. The ground for demanding the differential duty was that the appellant had collected additional amounts from the buyers which were shown in the invoices as other charges, over and above the selling price towards handling, transportation or facilitation. On such additional amounts recovered, the appellant had not discharged any excise duty liability.
4. The learned Counsel for the appellant submits that during the period prior to 14/05/2003, the depot was not a place of removal under Section 4 (3) (c)and therefore, the warehouse from where the goods were cleared is the place of removal and hence, the stock transfer price at the warehouse would be relevant for the purpose of demand of duty. Thus, a demand of Rs.22,25,057/- pertaining to the period prior to 14/05/2003 would not be sustainable in law.
4.1 The learned Counsel for the appellant also submits that they are also selling the same goods to other buyers on which duty liability is discharged and the price adopted for sale to ONGC depot is the same as those adopted for other buyers. The additional recovery of amounts for the sales effected at ONGC Nhava Depot is on account of transportation charges from the warehouse to the depot and the same is not includable in the assessable value of the goods sold under Rule 7 of the Valuation Rules. It is also contended that the demand is barred by limitation as extended period is not invocable in the absence of any suppression, mis-statement, etc. It is also contended that in the periodical returns filed by the appellant, the sale to ONGC was indicated and the department had not raised any objection in this regard. It is also prayed that in the event of duty confirmation being upheld, the consideration received should be treated as cum-tax and abatement towards duty element should be accorded. It is also contended that the appellant being a Public Sector Undertaking no motives can be attributed for evasion of duty and hence, penalty is not imposable under Section 11AC.
5. The learned Additional Commissioner (AR) appearing for the Revenue on the other hand contends that duty liability was discharged by the appellant on the stock transfer prices at which the sale took place at the depot. From the invoices issued by the appellant, it can be seen that a flat rate is charged from the buyers and it is not indicated therein that the extra amounts collected is towards handling or transportation. Therefore, the total amount charged by the appellant from the buyers is the transaction value and therefore, the appellant is rightly liable to discharge duty liability on the total consideration received. Revenue also placed reliance on the decision of this Tribunal in the case of CCE Nashik Vs. VIP Industries Ltd. 2012 (275) ELT 602 (Tri-Mum) wherein it was held that with effect from 01/07/2000, in terms of Rule7 of the Valuation Rules, while arriving at the transaction value for the purpose of charging excise duty, the cost of transportation from the factory to the depot is to be included and no abatement is permitted. Reliance is also placed on the decision of this Tribunal in the case of CCE, Chennai Vs. Madras Refineries Ltd. 2007 (207) ELT 582 (Tri Chennai) wherein also it was held that transfer charges incurred in relation to storage tanks and pipelines are includible in assessable value of the goods sold by the assessee. Therefore, it is prayed that the impugned order be upheld.
6. We have carefully considered the submissions made by both the sides.
6.1 Rule 7 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 reads as follows:
Rule 7 - Where the excisable goods are not sold by the assessee at the time and place of removal, but are transferred to a depot, premises of a consignment agent or any other place or premises (hereinafter referred to such as such other place) from where the excisable goods are to be sold after their clearance from the place of removal and where the assessee and buyer of the said goods are not related and the price is the sole consideration for sale, the value shall be the normal transaction value of such goods sold from such other place at or about the same time and where such goods are not sold at or about the same time, at the time nearest to the time of removal of goods under assessment. 6.2 A plain reading of the above Rule makes it abundantly clear that while arriving at the transaction value for the purpose of charging excise duty, the cost of transportation from the factory to the depot or any other place or premises from where the excisable goods are sold have to be included and no abatement in respect of such charges is permitted. In the present case, the goods have been sold and delivered at the ONGC Nhava Depot and on the total value charged, Sales Tax has been collected. In other words, the sales take place at the ONGC Nhava Depot. We have perused invoices in respect of supplies made by the appellant at the ONGC Depot and these facts also become very clear from the invoices. Further, in these invoices the total amount charged is indicated and there is no bifurcation as to what is the amount charged for towards the price of the goods, the excise duty element, the cost of transportation, handling, etc. and one lumpsum amount is charged which is inclusive of excise duty. The appellants claim to the contrary is not evident from the invoices raised as there is no mention in these invoices of any charges towards transportation, handling, etc. In these circumstances, the contention of the appellant that these are towards transportation and handling charges cannot be accepted. Since the sale takes place at ONGC Nhava Depot, that is the place relevant for determination of the transaction value in terms of Section 4 (1) (a) read with Rule 7. Therefore, notwithstanding the fact that depot was not included as a place of removal, prior to 14/05/2003, the appellant has no case at all. After 14/05/2003, the price at the ONGC depot is clearly the value on which duty liability has to be discharged. The decisions of this Tribunal in the case of VIP Industries Ltd. (supra) and also the Madras Refineries Ltd. case (supra) clearly support this view. Once the duty demand is confirmed, the interest liability is automatic and consequential and has to be confirmed.
6.3 As regards the invocation of extended period of time, merely because the appellant is a Public Sector Undertaking, it does not mean that the appellant is liable to pay duty only for the normal period of limitation. If the appellant does not comply with the provisions of law and the documentary evidences available on record does not support the appellants contention, the presumption that the appellant suppressed the facts would naturally arise. The law does not make any distinction between a PSU or non-PSU. In this view of the matter, invocation of extended period of time in the present case is fully justified. Consequently, the assessee is also liable to penalty under the provisions of Section 11AC of the Central Excise Act, 1944. Therefore, we do not find any infirmity in the impugned order passed by the lower adjudicating and appellate authorities.
7. Thus, the appeal is dismissed as devoid of merits.
(Pronounced in Court on ..
(Anil Choudhary) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) pj 1 8