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TMI Blog2019 (8) TMI 1910X X X X Extracts X X X X X X X X Extracts X X X X ..... sue listed today. This appeal can be taken-up for hearing along with the other appeals. In view of the submission 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 falling under Chapter 27 and 29 of the schedule to the Central Excise Tariff Act. 1985. During scrutiny of the records, department noticed that the appellant determined the interface quantity of Superior Kerosene Oil (SKO for short) which was supplied through pipeline with Motor Spirit (MS for S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. 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 off the goods. Therefore, duty on SKO was correctly paid on the quantity and as per nature of the goods. He further submits that the adjudicating authority has held that the intermixing of SKO with MS/HSD amounts to manufacture in terms of Section 2 (f)(iii) of Central Excise Act, 1944. In this regard, he submits that there is no charge in the show cause notice that there is any activity after removal of the goods which amounts to manufacture, therefore, findings regarding manufacture of goods i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty 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 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 Systems. 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" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard's letter F. No. 21/13/66- CX.III, dated20.03.67 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 intermixing of the products, the higher of the two duties i.e. duty payable on SKO not used for intended purpose and duty payable on sur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intermixing of SKO with MS/HSD amounts 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 (5of 1986) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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