TMI Blog2002 (6) TMI 595X X X X Extracts X X X X X X X X Extracts X X X X ..... icating preparations falling under chapter sub-heading 3403.00 of CET. The appellant company since August, 1999 has been clearing the lubricating oil in bulk i.e. in tankers on payment of duty on the value as determined under Section 4 of the C.E. Act, 1944 to M/s. Lubs Greases Guindy for re-packing in smaller containers, packings and then clear it to their depots for further sale to customers. As this was not acceptable to the department and duty should have been paid under Section 4A value at depot, a show cause notice dated 29-2-2000 was issued by the range officer to demand differential duty of ₹ 55,96,547/- for the period from 1-8-99 to 31-1-2000 and to impose penalty and the show cause notice culminated in the original authority passing the order-in-original whereby the original authority has demanded a duty of ₹ 55,96,547/- under Section 11A of the C.E. Act, 1944 besides imposing a penalty of ₹ 5000/- under Rule 173Q of the C.E. Rules, 1944. Against that order, the appellants filed appeal before the Commissioner (Appeals) who by the impugned order upheld the order of the original authority. Aggrieved by the impugned order, the appellants have come ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only when they are removed in packed condition at the time of removal from the factory, as held in their own case as well as in the Savitha Chemicals case (supra). 3. Shri N. Venkataraman, learned Counsel for the appellants argued the matter on the above lines and submitted that the decision of the Tribunal in their own case reported in 2000 (118) E.L.T. 35 and that of the Savitha Chemicals (supra) squarely applies to the facts of the present case and he submitted that the impugned order is not sustainable and is required to be set aside. 4. Shri G.S. Menon, appearing for the department referred to the comments received from the Commissionerate vide C. No. V/27/2/89/2001-C, dated 30-10-2001, a copy of which has been placed in the file. He submitted that in this case the show cause notice was issued under Section 4A of the Act and the order-in-original also was confirmed under the same provisions. Further the arguments that the assessments were provisional was neither advanced before the adjudicating authority nor before the lower appellate authority. He has further submitted that the plea of the appellants that Section 4A will apply for the goods notified under Standards of W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said case was from 1-10-96 to 31-3-97 during which period Section 4(A) was not in vogue. The point of consideration before the Honourable Tribunal in that case was valuation under Section 4 only. The Honourable Tribunal presumably did not consider the applicability of Section 4A as it was not in vogue. The said section came into effect from 14-5-97 only and the disputed period in the present case is after this date only. I take similar view in respect of the case law reported in the matter of Savitha Chemicals. 6. It will be seen from the above findings of the Commissioner (Appeals) that he has very thoroughly analysed the provisions of law under Section 4(1)(a) as also under Section 4A(1) of the Act. He has correctly come to a conclusion that the period of dispute in the present case was after Section 4A(1) came into effect. He has also distinguished the case law in the appellant s own case reported in 2000 (118) E.L.T. 35 (Tribunal) and also that of the Savitha Chemicals [2000 (119) E.L.T. 394] and his conclusion that though the facts in the present case are also identical the said case laws are not applicable in view of the fact that the disputed period involved in the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded by learned brother in his order. Hence, I am recording a separate order. 9. The case was argued by Shri Rajesh Chandra Kumar, ld. Advocate and not by Shri N. Venkatraman, Advocate as noted in the cause title and in the order recorded by my brother. 10. The facts and the grounds of appeal has already been noted by learned brother and hence the same are not repeated here. 11. The main contention of the ld. Counsel was that Section 4A is not attracted to the facts of the case. Although M/s. Castrol India Ltd. is notified under Section 4A but the said provision of law will not apply till the goods are in packed form. He pointed out that provision of process of packing amounting to manufacture was introduced in the chapter by Finance Act on 1-3-2000. He further argued that Section 4A is not applicable to the facts of the case as is clear from the language of the said section. It is his contention that Section 4A would apply only if the products are covered under the Standards of Weights and Measures Act, 1976 and the rate of price is fixed on the retail sales but it is his contention that there is no clearance of goods in package form and therefore the Section 4A is not ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the cost of transportation from the factory gate to the depot. 3. Appellants clear blended lubricating oils from their factory to packing stations in tankers. Excise duty on bulk clearance in tankers was being paid on the basis of the list price of 205 litre barrels. At the packing stations, oil is packed in barrels of 205 litres as also in retail packings of 20 litres, 10 litres, 5 litres and 0.5 litres. Department took the view that assessable item is oil in the smaller packings which are sold to wholesale buyers. Accordingly, they want Central Excise duty to be levied on the price at which the oil was sold from the depot in the smaller packings. This is sought to be done on the premises that depot is the place from where oil is removed and the price of the oil at the place of removal should be the normal price. This stand of the department is presumably on the basis of the amendment which came into force on 28-9-1996 whereby clause (4)(b)(iii) was added to Section 4 of the Act. By this amendment, depot from where the excisable goods are sold after clearance from the factory became a place of removal . As per Section 4(1)(a), normal price should be the price at which goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis for finding the value. If the goods were not packed in smaller containers at the time of removal from the factory, its condition at the time of removal from the depot cannot be of any relevance. In this view of the matter, we are clear in our mind that the nature of packing of the oil at the depot when it was removed is irrelevant in finding out the assessable value for the purpose of charging it with duty of excise. 7. In the instant case, blended lubricating oils of various grades were removed from the appellant s factory in bulk in tankers as also in barrels of 205 litre capacity. Bulk removal was also assessed and tax paid on the basis of the list price of 205 litre barrels. Some grades of lubricating oil are not sold in barrels of 205 litre capacity. They are sold in smaller packing of 20 litres, 10 litres etc. The price of such grade should, therefore, be on the basis of the price of the largest of the small packings. Under no circumstance can value of oil in smaller packings be the basis for assessment. Then the question that arises is whether the value of the packing can be included in the assessable value? As stated earlier, the price at the time and place of remo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , if the sale price from the depot is higher than the price at which the stock transfer is made, the department cannot demand differential duty. 13. Nowhere in the proceedings had the department claimed that the price at which the sale of lubricating oil in bulk made to independent buyers as contrived or fake. Therefore, those prices would form the basis for valuation of the goods cleared for repacking. 14. In this situation, it is not material, whether the goods are sold or not. In the case of Collector of Central Excise v. Ashok Leyland Ltd. [1987 (29) E.L.T. 530] the Tribunal was examining the valuation of stock transferred to regional sale offices. Such stock transfer could not be called as sale . However, the Tribunal ruled that such stock transfer should also be assessed at price at which such goods were sold to wholesale dealers. Therefore, not much can be made of the fact that the transfers of lubricating oil in tankers sent to M/s. Unique Packers were not sale. 15. In fact the scheme of Section 4 does not require that each clearance or removal should be a sale. In fact Section 4(1)(b) advises recourse to the Valuation Rules where the goods are not sold and theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and where they were later repacked and sold in packing, the valuation should be made in the form in which it was removed from the factory and that its subsequent repacking in containers was not a material aspect. The assessees had cited two other judgments also viz. in the case of EID Parry Ltd. v. U.O.I. [1978 (2) E.L.T. (J18)] and Prabhat Packaging Corpn. [1990 (47) E.L.T. 102]. The ld. Commissioner overcame this hurdle by holding in Para 44 as under : Therefore, what was done by the job worker was packing and not repacking . 20. In specific circumstances by virtue of Section notes and Chapter notes, packing is equated to the activity of repacking where the goods in bulk form would pay duty and thereafter would be liable to duty when later packed. As the ld. Advocate stated, there are no such provisions in Chapter 27. Therefore, the activity of packing or repacking of bulk lubricating oil cannot be held to amount to manufacture. 21. Shri Lakshmikumaran points out an anomaly in the Commissioner s order. If it is held that the bulk oil cleared by the appellants was not manufactured, then it would appear that the department had wrongly charged the duty from them and if it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for these goods from the depots after getting these repacked from M/s. Unique Packers. As the assessable value of the said goods i.e. Lube oil as per amended provi sions of Section 4 of Central Excise Act, 1944, should be the invoice price charged at depot for the retail packs. Therefore, for the purpose of determin ing Central Excise duty under Rule 173F read with Rule 9(i) depot should be considered as a place of removal and duty should be determined accordingly as such they have contravened the provisions of Rule 9(i) read with Rule 173F by not determining the duty correctly at the factory gate. 23. To determine the merit in the charge, it is necessary to see the relevant provisions which are reproduced below : Section 4(1)(a) : Where under this Act, the duty of excise is chargeable on any excisable goods with reference to value, such value, shall, subject to the other provisions of this section, be deemed to be - the normal price thereof, that is to say, 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 price is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at any of these places of removal will be the normal price for levy of excise duty and there can be different assessable values for the same excisable goods depending upon the place of removal. It also means that duty will be required to be paid at the time of clearance of goods from the factory for those goods which are sold by the manufacturer at depot, consignment agents or any other place etc. at a sale price of the place of removal i.e. depot, consignment agents etc. Where the goods are sold at the factory gate, there would be no problem. 27. This amendment has taken away the basis of the judgments which dictated that where the factory gate price was available that price would apply to all clearances, including those made from the depots. The effect of the amendment would be that at the factory gate itself the same goods would be valued differently, depending upon their final place of removal. The findings of the Collector reproduced in Para 22 above would seem to suggest that the goods which are destined to be sold from the depots would be leviable to the duty at price charged at such depots when assessed at the factory gate. Where the goods so moved from the factory g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would become such goods as far as the other goods in the same category or group are concerned. When these goods are placed in juxtaposition with the goods from another group they would not remain such goods but would become comparable goods. 31. Following these guidelines, oil packed in containers of different sizes also would not become such goods in relation to each other but would become comparable goods. Continuing this logic further, the goods which are cleared in bulk cannot be even comparable goods, let alone by entitled to the term such goods . 32. Therefore, in the present case the attempt of the Commissioner to apply the price at which containerized goods are sold from the depot gate to the bulk oil sold at the factory gate has no basis in law. 33. Where the oil is sold in bulk only at the factory gate and not at the depot gate, there shall be a single price that is prevelant at the factory gate. That price being available has to be adopted. 34. In view of this clear findings in law, we do not find it necessary to dwell on the other submissions of Shri Laxmikumaran. 35. In the result the appeals succeed and are allowed with consequential relief. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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