TMI Blog2019 (6) TMI 1605X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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 adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (s) Shri K. Choudhari, Suptd. (AR) for the Respondent (s) ORDER The appellant/applicant has filed Misc. application for out of turn hearing of their appeal No. E/75388/2015. The Ld. Representative of the appellant company submits that there are more appeals on the self-same issue listed today. This appeal can be taken-up for hearing alongwith the other appeals. In view of the submissions made by the Ld. Representative, the Misc. application for early hearing of the appeal is allowed. With the consent of both sides, the appeal alongwith the other appeals of the appellant company are taken-up together for hearing. 2. Brief facts of the case are that the appellant is engaged in the manufacture of various petroleum products fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Therefore, the present appeals. 3. Shri Chandan Kumar, Deputy General Manager (Finance) and Shri Romi Agarwal, Assistant Manager of the appellant Company appeared and submitted that the entire demand was confirmed on the basis of the Board Circular. He submits that the Board Circular is not supported by any statute therefore, the same is not binding on the assesse. He submits that the excise duty was paid on the actual quantity of SKO cleared from the factory. Therefore, subsequent intermixing of HSD/MS, the nature of the goods cleared from the factory does not change as it was at the time of removal of the goods. Therefore, duty on SKO was correctly paid on the quantity and as per nature of the goods. He further submits that the Adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 prevailing price of SKO on the basis of sale price prevailing for SKO naturally which is higher than the price of SKO sold under Public Distribution System. Therefore, the correct price was adopted by the appellant while clearing the interface quantity of SKO. The sole reliance of the Adjudicating Authority is on the Board Circular dated 22.02.2002, which is reproduced below:- Petroleum products movement through pipeline Rate of duty on intermixed quantity Clarifications Circular No. 636/27/2002-CX., Dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... II, dated 20.03.67 and F. No. 11A/9/70-CX.9, dated 27-03-1973 accept the offsetting of gain observed in one product against loss observed in another product. Though in the scheme of accountal of one product for the other, the duty payable on the interface SKO (comingled products) taken as MS or HSD is presently more than the duty liability on Furthermore, it is a fact that the SKO imported under concessional duty is not fully utilized for the intended purpose and in such case, the concessional duty cannot be extended. The Board is therefore, of the view that in the even 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 pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts to manufacture, we find 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 adjudicating authority has relied upon clause (iii) of Section 2 (f) for holding that activity amounts to manufacture, which reads as under:- 2(F) Manufacture includes any process:- i) Incidental or ancillary to the completion of a manufactured product; ii) Which is specified in relation to any goods in the Section or chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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