Chennai Petroleum Corporation Ltd vs Commissioner Of Central Excise

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH CHENNAI

Appeal No.E/80/2009

[Arising out of Order-in-Original No.LTUC/199-201/2008-C dt. 26.12.2008 passed by the Commissioner of Central Excise, LTU, Chennai]

Chennai Petroleum Corporation Ltd. Appellant

Versus

Commissioner of Central Excise, LTU, Chennai Respondent

Appearance:

Shri R. Raghavan, Advocate For the Appellant

Shri L. Paneer Selvam, AC (AR) For the Respondent

CORAM :

Honble Shri R. Periasami, Technical Member Honble Shri P.K. Choudhary, Judicial Member

Date of Hearing/Decision : 13.10.2015

FINAL ORDER No.41425/2015

Per R. Periasami

1. The present appeal is filed against OIO passed by Commissioner of Central Excise, LTU, Chennai.

2. The brief facts of the case is that appellant is a Public Sector Undertaking manufacturing petroleum products and as per agreement with IOCL, the entire products are cleared to IOCL. Appellants have also cleared Carbon Block Feed Stock (CBFS) during the period from Sept04 to Dec05. Adjudicating authority in his impugned order confirmed the differential duty demand of Rs.3,52,31,054/- on CBFS and dropped the demand for other periods. He confirmed the demand for the period from 6.9.2004 to Dec05 under proviso to Section 11A (1) along with interest and also appropriated entire duty amount and interest of Rs.23,02,911/- paid by the CPCL on 31.12.2005,18.1.2006 & 31.1.2006 and also imposed equivalent penalty under Section 11AC and also ordered that appellants are eligible for penalty of 25% of duty. The present appeal is only for waiver of penalty.

3. Heard both sides. Ld. Advocate submitted a written submissions dt.13.10.2015 and reiterated the same and submits that they have paid entire duty amount along with interest before adjudication and also paid 25% of duty towards penalty within 30 days on 30.1.2015. He submits that till 5.9.2004, the clearances of petroleum products were under bond to IOCL under the warehousing provisions and duty to be paid by the installations was withdrawn w.e.f. 6.9.2004 and duty on petroleum products are to be discharged by refinery itself. He submits that immediately after withdrawal of warehousing provisions, the appellant vide letter dt.19.10.2004 informed the jurisdictional AC on the stock of the goods kept under Bond and paid duty by taking the Refinery Transfer Price (RTP). He drew our attention to the above letter which is enclosed at page 4 of synopsis and page 5 wherein at table the Sl.No.6 covers CBFS where they have worked out the duty liability based on the Refinery Transfer Price(RTP). He also relied OIO dt. 30.3.2007 passed by Commissioner of Central Excise, Chennai-I. He drew our attention to paras 10.2, 10.3 of the said OIO and submits that after a detailed discussion, findings the adjudicating authority has dropped further proceedings and accepted RTP for computing transaction value and the RTP has been accepted by the department.

In the present case, SCN was issued for disputing valuation adopted based on RTP. He drew our attention paras 6 & 6.2 of CPCL's reply to SCN vide letter dt. 19.9.08 to the adjudicating authority at pages 37 to 46 of the paper book and refers to Heading (F) and para-7 of the reply. However, the adjudicating authority in the impugned order at para-20 has alleged that there is suppression of facts. He submits that there is no suppression of facts. He also submits that when the department themselves were not able to determine the value on cost computation or which is admitted by the adjudicating authority they have correctly computed the duty on CBFS as per RTP. He pleads for waiver of penalty as there was no suppression of facts or intention to evade payment of duty and also submits that department merely filing appal against Commissioners order where RTP was accepted is not the criteria for invoking the suppression of facts for imposition of penalty for the subsequent period. He relied the Hon'ble Supreme Court decision in the case of Uniworth Textiles Ltd. Vs CCE Raipur - 2013 (288) ELT 161 (SC).

4. On the other hand, Ld. A.R reiterated the findings of OIO. Regarding appellants relying Commissioners order dt. 30.3.2007, he submits that adjudicating authority has given a clear findings at para 16.10 (page 31) and stated that this product CBFS is not covered by earlier OIO. The adjudicating authority has rightly invoked suppression of facts for imposing equal penalty.

5. After hearing both sides and also on perusal of records, we find that the short issue in this appeal is limited to the imposition of penalty under Section 11AC as the appellants have already paid duty and interest which was already appropriated which is not under dispute. The period involved in this appeal relates to 6.9.2004 to December 2005 which relates to the transitional period when the manner of payment of excise duty on petroleum products had undergone major shift from depot/warehouse to refinery itself w.e.f. 6.9.2004. On a perusal of appellants letter dt. 19.10.2004, we find the appellants have clearly informed the jurisdictional AC, Central Excise the quantity of stock which was lying in their bonded tanks as on 6.9.2004 and they worked out the duty liability and submitted the documents for each of the product and paid excise duty also field ER-1 returns for the month of September 2004. On perusal of letter along with enclosure, we find at Sl.No.6 of the table covers CBFS cleared to IOCL and CPCL customers by following Refinery Transport Price. We also find that the jurisdictional Commissioner of Central Excise in his earlier OIO No.4 & 5/07 dt.

30.3.2007 against the same appellant accepted the transaction value of the clearance of CPCL to IOCL/IBP as per the RTP by relying Honble Supreme Courts decision in the case of HPCL Vs CCE Vizag  2006 (196) ELT A72 (SC). Whereas in the instant case, appellants were issued with SCN alleging suppression of facts for the subsequent period after the above OIO dt. 30.3.2007. Once the department has accepted the RTP price determined by the appellants in the above order, there is no justification for invoking the suppression for imposition of penalty. Further considering the period involved relates to the transitional period when all the oil industry, PSUs switched over to different mechanism of payment of excise duty on the petroleum products from ware house to the Refinery itself and also considering the fact that there was no sale of CBFS as it is captively consumed by IOCL there is no suppression of facts with an intent to evade excise duty. In order to invoke suppression of facts for imposition of penalty under Section 11AC, there should be mens rea as settled by the Honble Supreme Court in the case of Uniworth Textiles Ltd. Vs CCE Raipur - 2013 (288) ELT 161 (SC).

Whereas in the present case Revenue has not come out with any evidence on allegation of suppression of facts, whereas it is established beyond doubt that appellants have clearly informed the facts to the department on 19.10.2004 which is on record.

6. In view of above, we find that there is no justification for invoking Section 11AC for imposition of equal penalty liable for imposition of penalty under Section 11AC. Accordingly, we set aside the order to the extent of imposition of penalty under Section 11AC. Appeal is allowed.

(Dictated and pronounced in open court)

(P.K. CHOUDHARY) (R. PERIASAMI) JUDICIAL MEMBER TECHNICAL MEMBER

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