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2019 (6) TMI 1605 - AT - Central ExciseDuty on Superior Kerosene Oil (SKO) - duty was paid on Interface quantity of SKO by adopting assessable value of SKO (non-Public Distribution System (PDS) at the prevalent rate - case of the department is that the appellant, instead of paying excise duty on the interface quantity of SKO as per rate prevalent for SKO, they should have paid excise duty higher of the two duties, after determining the duty payable on SKO and duty payable on MS/HSD - CBEC Circular No. 636/27/2002-CX dated 22.04.2002 - HELD THAT:- The fact is not in dispute that while clearing the goods, the appellant have cleared from the factory quantities of MS, HSD and SKO separately. Since all the three goods are supplied through a pipeline, the SKO get mixed with either MS or HSD. As per the provisions of Section 4, the excise duty is payable on the transaction value at the time of removal of the goods from the factory. In the present case, the goods cleared from the factory is MS/HSD and SKO. Accordingly, the duty on these products is payable as per price of the respective product prevailing at the time of removal of the goods. Removal of goods, intermixing of SKO with MS/HSD amounts to manufacture or not - HELD THAT:- There is no charge in the Show Cause Notice that the activity of supplying HSD/MS with interface SKO amounts to manufacture. Therefore, on this point, the adjudication order travelled beyond the scope of show cause notice which is not permissible in the law - the activity specified in the said clause (iii) will amount to manufacture only in respect of the goods specified under Third schedule. It is undisputed that the products of the appellant are not specified under third schedule, therefore, whatever activity mentioned in clause (iii) shall not apply to the goods which are not specified in Third schedule. For this reason, intermixing of SKO with HSD/MS does not amount to manufacture. Applicability of CBEC Circular No. 636/27/2002-CX dated 22.04.2002 - HELD THAT:- The Circular suggests that even on clearance of SKO, the price of HSD/MS should be applied. However, this proposal of the Board Circular does not flow from any statutory provision. As discussed above, the appellant have correctly applied the price of respective goods cleared from the factory at the time of removal. Therefore, we do not find any support of any statutory provisions in the Board Circular. The differential duty demand raised on interface quantity of SKO is clearly not sustainable - Appeal allowed - decided in favor of appellant.
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