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TMI Blog2019 (6) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... made use of pipeline of M/s. Oil India Ltd. To avoid inter mixing of the petroleum products while transporting through pipeline, the appellant used SKO to act as a product plug between MS and HSD. During this process , some inter mixing happens between MS, HSD and SKO. The resultant product received at the other end of the pipeline is a mixture of MS or HSD with SKO. Such product is sold, depending upon the quality of the product as MS or HSD. 2. After the withdrawal of the warehousing facility, for petroleum products vide Notification No. 17/2004-CE (NT) dated-4/9/2004, the appellant was required to pay the Central Excise Duty at the time of clearance of such products from the refinery. Since the sale of petroleum products took place from the depot situated at the other end of the pipeline, the appellant adopted such depot prices for payment of duty at the refinery as per the provisions of Section 4 (1) (b) of the Central Excise Act, read with Rule 7 of the Central Excise Valuation Rules. 3. The dispute arose with the Department, since the quantity of SKO cleared from the refinery was not fully accounted for at the other end of the pipeline. A part of the SKO was lost in the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e circular was issued prior to withdrawal of warehousing provisions on 6/9/2004. He also relied on the recent decision of the Ahmedabad Bench of the Tribunal in the case of IOCL Vs. Commr. of Central Excise, Vadodara by final order No. A/11838-11841/2018 dated 31/08/2018 in which the identical dispute was decided by the Bench. The Tribunal held that the circular dated 22/04/2002 was not applicable and duty is not payable as per the circular. Finally, the appeal of IOCL was allowed by the Tribunal. 7. He submitted that the said decision is applicable to the present facts of the case and the differential duty demanded by the adjudicating authority will be liable to be set aside. 8. The Ld. Authorised representative supported the impugned order. He raised the following arguments : The SKO which has got inter mixed with MS/HSD has been received at the other end of the pipeline into the tanks wherein MS/HSD are stored. In view of this fact, a portion of the SKO lost in inter-mixing, has been sold at the price as applicable to MS/HSD from the depot. In view of this fact, in terms of Section 4 (1)(b) of the Act read with Rule 7 of the Central Excise Valuation Rules, the appellant s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of IOCL (Supra). We find that the Tribunal has decided a case involving the very same dispute which is before us. Further, the dispute relates to the period after the withdrawal of the warehousing facility. As such, we consider it as precedent for the present dispute. The observations of the Tribunal in that case are reproduced below: "4. We have carefully considered the submissions made by both the sides and perused the record. We find 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. As regards MS and HSD, the duty was paid on the transaction value. As regards SKO, since the same was not sold, the duty was paid on the prevail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, the situation can be reverse also. Furthermore, it is a fact that the SKO imported under concessional duty is not fully utilised for the intended purpose and in such case, the concessional duty cannot be extended. The Board is therefore, of the view that in the event of inter mixing of the products, the higher of the two duties i.e. duty payable on SKO not used for intended purpose and duty payable on surge/gain in MS or HSD shall be payable for the intermixed/interface quantity. In other words, the duty of inter mixed part of SKO and MS/HSD as the case may be, may be quantified and higher of the two values may be accepted. The existing instructions on the subject stand modified to the above extent." On careful reading of the above Circular, we find 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 Hon'ble Supre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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