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2015 (12) TMI 1003 - CESTAT CHENNAI

2015 (12) TMI 1003 - CESTAT CHENNAI - 2016 (333) E.L.T. 460 (Tri. - Chennai) - Demand 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 p .....

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tity, 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 ar .....

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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 con .....

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Dated:- 24-11-2015 - Shri R. PERIASAMI, Technical Member And Shri P.K. CHOUDHARY, Judicial Member For the Petitioner : Shri S. Muthuvenkataraman, Adv., For the Respondent : Shri K.P. Muralidharan, AC (AR) ORDER Per: R. Periasami The present appeal is filed against the order dated 16.08.2011 passed by the Commissioner of Customs, Central Excise and Service Tax, Coimbatore. 2. The brief facts of the case are that the appellant is a PSU having warehouse for storage of petroleum products like Motor .....

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-up of products either MS-SKO or HSD-SKO. After testing the interface quantity, the same was either upgraded or downgraded and accordingly, cleared the same on payment of duty. The appellants have cleared the intermingled quantity of SKO - MS as downgraded as HSD. The adjudicating authority issued a SCN dated 6.11.2007 demanded differential duty of ₹ 79,35,959/- as duty by classifying the intermingled product as MS. The adjudicating authority in the impugned order confirmed the demand and .....

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2 and submits that the Boards circular was issued in respect of interface quantity of SKO/MS and not applicable to excisable goods cleared from the warehouse. He further submits that the adjudicating authority by relying the Board s circular concluded that the product of interface quantity upgraded to MS. Further, he drew attention to OIO dated 25.01.2004 passed by the Addl. Commissioner of Central Excise, Tiruchirapalli in their own case on identical issue, dropped the proceedings and the said .....

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He also submitted a copy of the test reports of interface quantity tested in their BPCL laboratory. Only after the receipt of the test reports, they either downgraded or upgraded the intermingled products. Since, the test report confirms HSD specification, the said quantities of intermix was downgraded and cleared on payment of duty. Further, he submits that in petroleum industry in case of mixture of petroleum products, the product is downgraded and cleared as HSD as per BIS standards. He drew .....

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The adjudicating authority has rightly confirmed the demand. 5. After hearing both sides and on perusal of the records, we find that the short issue involved in this appeal relates to demand of duty on the quantity of 886.65 kiloliters of intermingled/ interface quantity of MS & SKO and downgraded to HSD. We find that the 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 .....

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uantity, 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 rec .....

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d circular has not laid down any criteria/guidelines on how to determine/classify the intermingled products. The said circular relates to imports of petroleum products where one product is chargeable to concessional rate of duty and the Board has classified that in the case of mixing of two products, higher the value is accepted. It does not say that the products should be downgraded or upgraded. The said Board Circular does not apply to the facts of the present case. We also find that in the ap .....

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