Morex Petrochem Ltd vs Commissioner Of Central Excise, ...

(Arising out of Order-in-Appeal No. PII/BKS/131/2005 dated 28.2.2005 passed by Commissioner of Central Excise (Appeals), Pune-II)

For approval and signature:

Honble Mr. P.K. Jain, Member (Technical) and Honble Mr. S.S. Garg, Member (Judicial)

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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 : Seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities?

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Morex Petrochem Ltd. Appellant Commissioner of Central Excise, Pune-II

Vs. Commissioner of Central Excise, Pune-II Respondent Morex Petrochem Ltd.

Appearance: Shri A.S. Sakpal, Advocate, for appellant-assessee Shri N.N. Prabhudesai, Superintendent (AR), for Revenue

CORAM: Honble Mr. P.K. Jain, Member (Technical) Honble Mr. S.S. Garg, Member (Judicial)

Date of Hearing: 26.6.2015 Date of Decision: 2.7.2015

ORDER NO

Per: P.K. Jain

Brief facts of the case are that the appellant-assessee was clearing their goods availing the SSI Exemption Notification No. 9/99-CE dated 28.2.1999, 9/2000-CE dated 1.3.2000 and 9/2001-CE dated 1.3.2001. They were paying the duty on the assessable value as per factory gate price. However, some of the goods were being sold from their depot at a value which was either higher or lower than the value at which the goods were originally traded from the factory. Thereafter they were paying on monthly basis the differential excise duty corresponding to the goods which were sold at a value higher than the factory gate value. The period of dispute is from April 1999 to March 2003. A show cause notice was issued to them on 5.3.2004 invoking the extended period of limitation and demanding differential duty. The differential duty was demanded mainly on two grounds. The first was that once the goods are sold at a value higher than the factory value, thus the SSI slab changes and hence the appellant-assessee was to pay a higher duty. Secondly, the cum-duty price at depot was taken as the value for consideration of calculation of central excise duty.

After getting the reply from the appellant-assessee, the original authority adjudicated the case and confirmed a demand of Rs.10,32,451/- along with interest and penalties. Aggrieved by the said order, the appellant-assessee filed appeal before the Commissioner (Appeals) who vide the impugned order, examined the matter and extended the benefit of cum-duty price and also recomputed the duty and as per recomputation, the differential duty of the goods works out to Rs.2,03,619/-. He reduced the interest and penalty also correspondingly. The Commissioner (Appeals), however, confirmed invocation of extended period of limitation. The appellant-assessee has filed appeal against the said order confirming the demand, interest and penalty. Revenue has also come in appeal against the said order on the grounds that prior to 1.7.2000, place of removal included the depot and the time of removal in respect of goods removed from the place of removal was deemed to be the time at which the said goods are cleared from the factory. Further, w.e.f. 1.7.2000, according to Rule 7 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, value of goods transferred to depot shall be the normal transaction value of such goods sold from depot at or about the same time.

Further, normal transaction value has been defined as transaction value at which the greatest aggregate quantity of goods are sold.

2. Learned counsel for the appellant-assessee submitted that they are not disputing the duty confirmed by the Commissioner (Appeals). However, they are disputing the penalty imposed under Section 11AC as the extended period of limitation is not invokable in the facts and circumstances of the case. It was his submission that right from 1999 onwards, the appellant-assessee themselves were computing the differential duty on the goods sold at a value higher than the value at which they have paid the duty at the time of clearance from the factory. The details were being informed to the range Superintendent every month. In fact, they were not even claiming the refund of duty on the goods which were sold at a value less than the value on which they have paid the duty at the time of clearance from the factory. No objection was raised by the department at any point of time and all the facts were known to the department and imposition of penalty under Section 11AC is therefore not sustainable. He further submitted that the Revenues appeal is not maintainable on the limitation as also on merits. He further submitted that the Revenue has demanded the duty on the sale value of the goods from the depot which includes the duty paid by them. Thus, the Revenue is demanding duty twice. He further submitted that the Commissioner (Appeals) has correctly given the benefit of cum-duty.

3. Learned Superintendent (AR) takes us through the grounds of appeal and submits that the order of the Commissioner (Appeals) is incorrect as he has not determined the place of removal and thereafter determined the duty.

4. We have considered the rival submissions. We have gone through the papers. We find the period of dispute in this case is from April 1999 to March 2003 and the show cause notice was issued on 5.3.2004. We also note that the appellant-assessees contention that extended period cannot be invoked has merit as the appellant-assessee was submitting the returns. They were also submitting the price declaration at the relevant time. Further, every month they were computing the differential duty on the value of the goods which they had sold from the depot at a value higher than the value on which they have paid the duty. They were also informing the details to the range Superintendent every month. We also note that the appellant-assessee was not even claiming the refund of duty in cases where they had sold the goods at a lower price.

5. Keeping in view these facts, in our considered view, invoking the extended period or imposition of penalty under Section 11AC is not correct. However, we note that the learned counsel for the appellant-assessee has submitted that they are not disputing the duty determined by the Commissioner (Appeals) which they have already paid.

6. We also note that as per definition of place of removal under Section 4 of the Central Excise Act, it was factory gate in the facts of present case.

7. In view of the above analysis, we dismiss the appeal filed by the Revenue and allow the appeal of the assessee in above terms.

(Pronounced in Court on 2.7.2015)

(S.S. Garg) Member (Judicial) (P.K. Jain) Member (Technical)

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