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2015 (12) TMI 1003 - AT - Central ExciseDemand of duty - duty on the quantity of 886.65 kiloliters of intermingled/ interface quantity of MS & SKO and downgraded to HSD - Held that:- Appellants are discharging duty from the warehouse on petroleum products as per the practice followed during the relevant period. They received non-duty paid goods through pipelines and stored it in the storage tanks at the warehouse. It is seen from the records that when the petroleum products sent through the pipelines from Kochin, Coimbatore, Karur pipelines, in specific sequence of SKO, MS, SKO, HSD, SKO, MS and the product is changed in the pipeline at regular interval and there will be intermix of two products. In the present case it is SKO & MS. We also find from the order of the adjudicating authority in respect of two of the intermingled/ interfaced quantity, the appellants have already upgraded it. Whereas, in the case of 886.65 kiloliters of interfaced quantity, wherein 50% of MS and 50% of SKO are intermixed, either downgraded or upgraded by the appellants based on the test report of the samples drawn from the intermingled products. It is tested in their own laboratory. On receipt of the test reports, the intermixed product is transferred to the respective main tank containing HSD or MS oil. We also find that the interface quantity is received separately and stored in slop tanks only after the testing and depending upon the report, these goods are transferred to the respective main tank and thereafter cleared on payment of excise duty. There is no dispute on the fact that the interface/intermingle quantity has to be cleared as HSD or MS or SKO. Therefore, higher products MS & SKO once it is intermixed it loses its originality and therefore it cannot be cleared to a consumer as MS or SKO, if it doesn’t meet specification. Therefore, as per the BIS standards and as per the test report, the product if it is higher quality, it is upgraded and if it is lower quality, it is downgraded. It is the general practice followed for all the petroleum products cleared through pipeline where the intermingled/interface quantity emerges and stored separately and subsequently upgraded or downgraded. - there is no dispute on the fact that the interface/intermingle quantity has to be cleared as HSD or MS or SKO. Therefore, higher products MS & SKO once it is intermixed it loses its originality and therefore it cannot be cleared to a consumer as MS or SKO, if it doesn’t meet specification. Therefore, as per the BIS standards and as per the test report, the product if it is higher quality, it is upgraded and if it is lower quality, it is downgraded. It is the general practice followed for all the petroleum products cleared through pipeline where the intermingled/interface quantity emerges and stored separately and subsequently upgraded or downgraded. - Decided in favour of assessee.
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