HPCL Vs. COMMISSIONER OF C. EX., VIZAG

JUDGEMENT

(1.) THE appellants received Natural Gasoline Liquid (NGL) during the period August 1994 to March 1997 from M/s. (ONGC), through M/s Indian Oil Corporation Ltd., (IOCL) who are the canalizing agents. Show Cause Notice, dated 22 -3 -1999 was issued alleging that the price of Rs. 1830.36 was not the normal price as that it appeared from the invoices issued by the ONGC and IOCL that NGL was cleared at the rate of Rs. 6483.26 (from August 94 to December 95) and Rs. 7534.90 (from January 96 to May 96 and August 96 to March 97) which according to the Department was the normal price at which the goods were normally sold in the course of wholesale trade to the wholesale buyer. It was further alleged that the HPCL did not inform the department about the rates at which M/s. IOCL was supplying NGL to other buyers hence the Appellants had deliberately suppressed this fact with intention to evade payment of duty. The extended period of limitation under Section 11A was invoked and penalty equal to duty demanded under Section 11AC, penalty under Rule 173Q (1) and also interest under Section 11AB (1). It was also alleged that part of the duty on NGL was debited to RG 23A part II and RG 23C part II and that duty liability in respect of the goods received under warehousing provisions cannot be discharged through RG 23A part II and RG 23C part II.

(2.) THE Appellants replied that the Ministry of Petroleum and Natural Gas (MOP and NG) determines the selling price to various classes of buyers. If the product was sold to refineries, then applicable selling price is the retention price of the ONGC, which is Rs. 1830.36 per MT. If the product is sold by IOCL to fertilizer Industry a higher rate of Rs. 6000/ - to 7000/ - was applicable. IOCL raised debit notes on the Appellants at Rs. 1830.36. The Appellants had declared the same assessable value which was declared by ONGC/IOCL, as determined by MOP and NG. The Refineries should be treated as separate class of buyers when compared to Fertilizer Industry, who form a separate class. The assessable value for supplies to the refineries shall not be based on the price charged to Fertilizer Industry to pay duty on the price sold to Fertilizer Industry. The Appellants are also not bound to inform the department about the rate quoted by IOCL to Fertilizer Industry. There was no suppression by the Appellants. As regards utilization of credit available in RG 23A part II and RG 23C part II, it was submitted that it was revenue neutral and it could be reversed by making payment through PLA. The department was aware of this fact as the same was reflected in their RT 12 and RG 23 submitted to the Department periodically. Hence, there was no suppression of facts or mis -declaration with an intention to evade payment of duty and the demand was barred by limitation.

(3.) THE Commissioner found that -