, Member (T)]. - M/s. Indian Oil Corporation Ltd. (appellant) was receiving non-duty paid petroleum products from M/s. Reliance Petroleum Ltd./M/s. Reliance Industries Ltd., Jamnagar (M/s. RPL/RIL for short) through underground pipelines in their bonded warehouse. On comparison of invoices under which the petroleum products were received and the invoices under which the same were sold, it was found that the appellants were collecting certain sums as “other charges - LTEU of LIET” = 21.6% of the price + sales tax charged by RIL. While the appellant paid 21.6% towards sales tax to RIL, appellant collected additional amount because of adoption of cum sales tax value of the petroleum products received by them to calculate sales tax amount recoverable under heading “other charges”. Consequently, it was found that the appellant was liable to pay Rs. 1,94,98,643/- during the period from April 2002 to September 2004. The entire amount of duty was paid by the appellant on 3-1-2006 and thereafter, show cause notice was issued to the appellant requiring them to show cause as to why they should not be required to pay interest as applicable and why penalty should not be imposed on them under Section 11AC of Central Excise Act, 1944. The Commissioner, in his impugned order, upheld the liability of interest and imposed penalty equal to the duty paid by the appellant. Hence the present appeal.

2. Learned advocate on behalf of the appellants submitted that in the case of Public Section Undertakings, the question of suppression does not arise. In this case, it was a bona fide mistake on the part of the appellant and there was no intention to evade duty. Therefore, suppression of facts and mis-declaration could not have been alleged. Further, in support of his contention that the extended period could not have been imposed, he submitted that in terms of decision of Hon’ble Supreme Court in the case of Baroda Electric Meters Ltd., (S.C.), admissible deduction recovered in excess of actuals, cannot be included in the assessable value and therefore the appellants were entitled to entertain a bona fide belief regarding the fact that the Excise duty was not payable on excess collection of other charges.

3. We have considered the submissions made by the learned advocate. In this case, the appellant had collected excess amount till September 2004 and the statement of Senior Terminal Manager was recorded on 19-12-2005. Very fact that till the same was detected by the department, the appellant did not pay the tax goes against the appellant. A company like IOCL cannot be said to be ignorant of the law and therefore, has to abide by the law. No explanation has been offered as to how this happens and what steps they had taken. No evidence has been shown that collection of other charges was declared to the department, to show the bona fide of the appellant. The procedure presently available for collection of Excise duty reposes tremendous freight on the assessee and they are expected to know the law and assess the goods correctly. Under these circumstances, we find that the extended period has been rightly invoked and just because the appellant is a PSU, they cannot be exempted from cost of suppression of facts. Therefore, we hold that the extended period has been rightly invoked and penalty has been rightly imposed and appellant is liable to pay duty as well as interest. However, we take note of the fact that in the impugned order, the Commissioner has not given option to pay the interest and penalty to the extent of 25% within 30 days of receipt of the order. Therefore, such option is to be extended now in terms of this Tribunal’s decision in the case of Swati Chemicals & Others as reported in 2009 (94) RLT 684 (CESTAT) = (Tri.). Accordingly, if the appellants deposit interest and penalty to the extent of 25% within 30 days of the receipt of this order, the appellants would not be required to pay balance 75% penalty. It is made clear that if either penalty or interest is not paid within 30 days, the appellant shall be liable to pay penalty equal to duty.

4. [Per : Archana Wadhwa, Member (J)]. - After going through the order passed by my learned brother, I proceed to record a separate order. As detailed facts of the case already stand narrated in the order proposed by my learned brother, the same are not being repeated here to avoid redundancy.

5. I find that though the appellants had deposited the duty of Rs. 1,94,98,643/- on 3-1-2006, on being pointed out by the Revenue, the same was for the period from April 2002 to September 2004. Thereafter, a show cause notice was issued to the appellant on 5-5-2006 requiring the appellant to show cause as to why total Central Excise duty of Rs. 1,94,98,643/- should not be demanded and recovered from them by invoking extended period of limitation of 5 years. The notice further observed that as the amount stand deposited by them, why the same should not be appropriated against same demand. The notice also proposed confirmation of interest and imposition of penalty under Section 11AC of Central Excise Act, 1944. As such, it may be observed here that the show cause notice was issued for confirmation of demand of duty as also of interest and imposition of penalty and the same was not only in respect of interest and penalty as observed by learned Member (Technical). As such, I find that the issue as to whether the demand of duty is required to be confirmed against the appellant or not is also the subject matter of the present appeal.

6. Considering the merits of the case, I find that admittedly, the appellants have recovered more Sales Tax from their clients than what was paid by them to M/s. Reliance Industries Ltd. Such excess recovery of Sales Tax is by adopting the total assessable value i.e. inclusive of the taxes in the value of the goods and then recalculate the Sales Tax on the same. It is not the Revenue’s case that such Sales Tax was required to be paid by them to Government of India, but the Sales Tax actually paid by M/s. Reliance Industries Ltd. was being collected by them from their own customers. In a nut shell, they have recalculated and collected excess Sales Tax from their customers than what was being reimbursed to M/s. Reliance Industries Ltd.

7. It is also not the Revenue’s case that such excess collection of Sales Tax was on account of diversion of assessable value and a part of the same was being collected under the guise of Sales Tax. Such excess recovery by the appellant from their clients is not additional consideration flowing from the buyers to them so as to include the same in the assessable value of their product. It is also not excess recovery of Central Excise so as to invoke provisions of Section 11D of Central Excise Act, 1944. Any such provisions do not stand invoked in fact.

8. The appellant’s contention is that they have collected excess amount of Sales Tax from their buyers, whereas they were required to reimburse lower amount of tax to their sellers. Such excess recovery of tax from the buyers cannot form a part of the value of the goods. Learned Advocate had contended that there was no allegation that such excess recovery was on account of the consideration for sale of the goods. Reliance stand placed on various decisions of the Tribunal as detailed below.

(a)     M/s. Baroda Electric Meters Ltd. v. Collr. of C.E. - (S.C.)

(b)     M/s. Gujarat Guardian Ltd. v. CCE, Surat - (Tri.-Mumbai)

(c)     M/s. Britco Food Co. Ltd. v. CCE, Pune-I - 2003 (55) RLT 359 (CEGAT-Mum.)

(d)    M/s. Hindustan Petroleum Corpn. Ltd. v. CCE, Mangalore - (Tri.-Bang.)

(e)     CCE, Bhubanewar-I v. M/s. Idcol Ferro Chrome & Alloys Ltd. - (Tri.-Kolkata)

(f)      M/s. Rine Engineering Pvt. Ltd. v. CCE, Chandigarh - 2008 (86) RLT 933 (CESTAT-Del.)

(g)     CCE, Mumbai v. M/s. Cable Corpn. of India - 2008 (85) RLT 759 (CESTAT-Mum.)

Ratio of the above decisions is that excess recovery of freight or of insurance amount collected from the buyers than the amount actually incurred, is not required to be added in the assessable value. As such, I am of the view that even if the appellants have recovered excess amount from buyers by calculating the Sales Tax liability on the assessable value, they are not liable to pay any amount on that ground to Revenue, as such excess recovery is on account of non-manufacturing activities and have no nexus to the price of the manufactured goods. Any amount recovered/attributable to other expenses i.e. sales tax is not includible in the transaction value and excess recovery has to be considered as profit on non-manufacturing activities, in the light of the ratio of law declared in the above decisions, especially when the same was not represented to the customers, as payable to Government of India inasmuch as there was no liability on the appellant to pay sales tax.

9. At this stage, I may draw some support from the decision in the case of M/s. Mather & Platt Ltd. as reported in [1983] 53 STC 0104, wherein while dealing with the provisions of sub-section 2 of Section 46 of Mumbai Sales Tax Act, 1959, which is pari materia to Section 11D, it was observed that if the purchaser of the goods from whom his seller recovered the amount of tax, recoups such amount paid by him from his purchaser when he comes to re-sell the goods, he is not prohibited from collecting excess tax so long he does not represent to his own purchaser that this is the amount of tax which he was liable to pay by way of tax. So long as the purchaser is not led to believe that the amount charged to him is the amount which the seller would be liable to pay as tax to Government, when he is not liable to pay it, there would be no contravention of Section 46(2) of Mumbai Sales Tax Act. Applying the above observation to the facts of the present case, M/s. IOCL vas not required to pay any Sales Tax to Government of India. They were only recouping and reimbursing themselves the Sales Tax liability by M/s. Reliance Industries Ltd. to Government of India. They never represented to their purchaser that such Sales Tax is required to be paid by them to Government of India. As such, no duty of Excise can be levied on the excess amount of Sales Tax recovered by them from their customers than the actual reimbursed to their seller.

10. Apart from the merit, I also find that the demand is hit by bar of limitation. The same is for the period April 2002 to September 2004, whereas the show cause notice was issued on 5-5-2006. The Commissioner has invoked the extended period of limitation by observing that the appellants have suppressed the fact that they were collecting extra amount from their customers and not including the same in the assessable value. I am afraid that such type of bald statement cannot put the appellant under the allegations of suppression/mis-statement with intent to evade payment of duty. Admittedly, such excess charges were being shown on the Central Excise invoices issued by the appellant. In fact, the entire case of the Revenue is based upon the verification of Central Excise record during audit and notice itself is to the effect that verification of the Central Excise invoices revealed excess recovery of Sales Tax. If the excess Sales Tax was being recovered by reflecting the same in Central Excise invoices, I fail to understand as to how the charges of suppression or mis-statement with intent to evade payment of duty, can be alleged against the appellant so as to invoke longer period of limitation. The issue is admittedly capable of two different interpretations and if the appellant have re-calculated the Sales Tax on the total which value including the value of Sales Tax, which calculations have come on higher side, the appellant cannot be held guilty of any suppression. The issue is definitely a bona fide dispute as regards interpretation of the relevant valuation provisions. In such a scenario, the ratio of the law declared by Hon’ble Supreme Court in number of decisions including their judgment in the case of M/s. Padmini Products v. CCE - (S.C.) and M/s. Chemphar Drugs & Liniments - (S.C.), would fully apply to the facts of the instant case. Accordingly, the demand is barred by limitation. The confirmation of the same is required to be set aside along with setting aside of confirmation of demand.

11. In any case, the appellant is a Public Sector Undertaking and cannot be said to have any mala fide intention to evade duty. This stand held in the case of M/s. Hindustan Petroleum Corpn. Ltd. v. CC, Kolkata as reported in is fully applicable to them. The imposition of penalty upon them in any case is not justified.

12. In view of the above, the impugned order is set aside and appeal is allowed with consequential relief.

1.      Whether the proposal in the show cause notice was only in respect of interest and penalty as held by learned Member (Technical) or whether the proposal also related to the confirmation and appropriation of demand of duty already deposited by the appellant, as observed by Member (Judicial).

2.      Whether an order is required to be passed on duty confirmation also as observed by Member (Judicial) or the dispute is only of interest and penalty as held by learned Member (Technical).

3.      Whether the excess recovery of Sales Tax made by the appellant is required to be added in the assessable value of their final product and the duty is required to be confirmed on the same or not.

4.      Whether the excess recovery of Sales Tax than the actual quantum of tax paid to M/s. Reliance has to be as held as profit on non- manufacturing activity in the light of the decision of Hon’ble Supreme Court in the case of M/s. Baroda Electric Meters Ltd., (S.C.) and others, in absence of any allegation and evidence that the same represented a part of assessable value.

5.      Whether the appellants have to be held as guilty of suppression or mis-statement with intent to evade payment of duty.

6.      Whether the extended period is invocable against the appellant as held by learned Member (Technical) or demand has to be held as hit by bar of limitation as observed by Member (Judicial).

7.      Whether the interest is required to be confirmed against the appellant as held by learned Member (Technical) or as the demand has been held as barred by limitation, the interest cannot be confirmed as held by Member (Judicial).

8.      Whether the penalty has to be imposed on the appellant as observed by learned Member (Technical) with an option to them to pay the same to the extent of 25% within 30 days from the receipt of the order or penalty is required to be set aside in its totality as held by Member (Judicial).

9.      Whether the appeal has to be rejected in terms of order proposed by learned Member (Technical) or the same has to be allowed as held by Member (Judicial).

(Pronounced)

13. [Per : M.V. Ravindran, Member (J)]. - I have been nominated by Hon’ble President for deciding the points of difference arose between the Bench while deciding the appeal No. E/527/2007 of the assesssee.

14. Following Difference of Opinion are indicated :-

(i)      Whether the proposal in the show cause notice was only in respect of interest and penalty as held by learned Member (Technical) or whether the proposal also related to the confirmation and appropriation of demand of duty already deposited by the appellant, as observed by Member (Judicial).

(ii)    Whether an order is required to be passed on duty confirmation also as observed by Member (Judicial) or the dispute is only of interest and penalty as held by learned Member (Technical).

(iii)   Whether the excess recovery of Sales Tax made by the appellant is required to be added in the assessable value of their final product and the duty is required to be confirmed on the same or not.

(iv)   Whether the excess recovery of Sales Tax than the actual quantum of tax paid to M/s. Reliance has to be as held as profit on non-manufacturing activity in the light of the decision of Hon’ble Supreme Court in the case of M/s. Baroda Electric Meters Ltd. - (S.C.) and Others, in absence of any allegation and evidence that the same represented a part of assessable value.

(v)     Whether the appellants have to be held as guilty of suppression or mis-statement with intent to evade payment of duty.

(vi)   Whether the extended period is invocable against the appellant as held by learned Member (Technical) or demand has to be held as hit by bar of limitation as observed by Member (Judicial).

(vii)  Whether the interest is required to be confirmed against the appellant as held by learned Member (Technical) or as the demand has been held as barred by limitation, the interest cannot be confirmed as held by Member (Judicial).

(viii) Whether the penalty has to be imposed on the appellant as observed by learned Member (Technical) with an option to them to pay the same to the extent of 25% within 30 days from the receipt of the order or penalty is required to be set aside in its totality as held by Member (Judicial).

(ix)   Whether the appeal has to be rejected in terms of order proposed by learned Member (Technical) or the same has to be allowed as held by Member (Judicial).

15. I have heard Shri M.H. Patil, ld. Advocate appearing on behalf of the assessee and Shri R. Nagar, ld. SDR.

16. Ld. Counsel for the appellants submit that from perusal of the Show Cause Notice, it was demanding differential Excise duty allegedly short paid by the above assessee by not discharging duty liability on sales tax collected by them from their purchaser. He would draw my attention to the annexure to the Show Cause Notice and submitted that it is clearly indicated that the demand of differential duty is for excess sales tax collected. It is his submission that the judgment of Hon’ble Supreme Court in the case of Baroda Electric Meter Ltd., (S.C.), would be applicable in this case, which has been correctly followed by ld. Member (Judicial). He would draw my attention to the said decision and also various other decisions which were delivered by the Tribunal, post amendment to the provisions to Section 4 of Central Excise Act, 1944. He would submit that the decision of the Tribunal in the case of Cable Corporation of India Ltd., 2008 (85) RLT 759 (CESTAT-Mum.) is one such decision and submits that the amount which was collected even if is in excess of actual, need not be included in the assessable value is the decision.

16.1 It is his submission that the appellant being a Public Sector Undertaking, has no intention to evade duty. It is well settled by the Tribunal in the case of Markfed Refined Oil & Allied Indus., (Tri.-Del.). It is his submission that aggrieved by the said decision of the Tribunal, Revenue took up the matter before Hon’ble Punjab & Haryana High Court in the case of Markfed Refined Oil & Allied Indus. in Appeal No. 46/2009(O & M), wherein Hon’ble High Court has clearly held that it is not easy to infer any evasion of duty much less its intention to do so as reported in (P & H). It is also his submission that this Bench in the case of Hindustan Petroleum Corpn. Ltd., (Tri.-Kolkata) has held that the assessee being a Public Sector Undertaking, there cannot be mala fide intention to evade payment of duty. It is also his submission that in the case of Hindustan Petroleum Corpn. Ltd. in Final Order No. A/661/2011/EB/C-II, dated 23-6-2011, similar views were expressed. It is further submitted that the adjudicating authority has not given option of reduced penalty of 25% of the duty confirmed.

17. Ld. SDR, on the other hand, would draw my attention to the provisions of Section 4 of Central Excise Act, 1944 and more specifically to the transaction value defined under Section. He would submit that the appellant herein used to get petroleum products without payment of duty from Reliance Industries Ltd. on which sales tax was paid by Reliance Industries Ltd. He would submit that the assessee herein would consider amount paid by them as cum-duty price and work out back the actual amount on which Excise duty is discharged i.e. as a bonded warehouse. It is his submission that while calculating the said cum-duty price, the appellant had collected excess amount from their purchaser in the guise of sales tax. It is his submission that if the transaction value definition is read carefully, it excludes from the amount of duty of Excise, sales tax and local taxes, if any, actually paid or payable on such goods. It is his submission that in this case, the excess amount of sales tax collected by the appellant was not actually payable or paid by them to Government authorities, hence the question of retaining amount without discharging duty liability is incorrect. It is his submission that the assessee did not indicate collection of such excess amount from the supplier, due to which there is suppression of facts. It is his submission that Hon. Member (Technical) was correct in coming to the conclusion that that the company like IOCL cannot be said to be ignorant of law and no explanation has been offered as to how this happened and what steps have been taken. It is his submission that in the absence of any information of collection and in the absence of any evidence that such collection was informed to the department, the extended period invoked in the Show Cause Notice was correct. He would also draw my attention to the Order-in-Original and more specifically to the defence taken by them before adjudicating authority and submit that appellant had only contested the interest liability and the penalty liability and had not congested the duty demand. For this purpose, he would draw my attention to the Page 7 of Order-in-Original. He would submit that the order of the ld. Member (Technical) is correct.

18. In the rejoinder, ld. Counsel, drew my attention to the Para 9 of Order-in-Original and submits that during the personal hearing, the appellant had clearly taken plea that there is no suppression of fact and the duty paying documents like invoices and returns were submitted which indicated the amount of sales tax collected and hence invocation of extended period of 5 years under proviso to Section 11A of Central Excise Act, 1944 is not justified. It is his submission that the judgment of co-ordinate Bench of the Tribunal in the case of Mercedes Benz India Pvt. Ltd. v. CCE, Pune - (Tri.-Mumbai), will also be considered for this proposition, as the said judgment has followed the decision of the Hon’ble Supreme Court in the case of Baroda Electric Meters Ltd., (S.C.) post 1-4-2000, wherein the transaction value concept was incorporated in the statute. It is his submission that the decision of Hon’ble High Court of Bombay in the case of Mather & Platt Ltd. v. State of Maharashtra in respect of Section 46(2) of the Sales Tax Act would also be applicable in this case.

19. I have considered the submissions made by both sides and various records.

20. I find that in the case of Baroda Electric Meters Ltd. (supra) Hon’ble Supreme Court has set aside the finding of Tribunal, that wherever freight actually paid was less than the amount collected by way of freight and transportation charges the difference was appropriated by the appellant and, therefore, the same would be a part of the assessable value. In other words, the Hon’ble Apex Court has held that when the freight actually paid was less than the amount collected by way of freight, the difference if retained by the appellant, it would still not form a apart of the assessable value. This judgment has been followed by the various Benches of the Tribunal in following cases :

(i)      Gujarat Guardian Ltd. v. CCE, Surat - (Tri.-Mum)

(ii)    Britco Food Co. Ltd. v. CCE, Pune - 2003 (55) RLT 359 (Tri.-Mum)

(iii)   Hindustan Petroleum Corpn. Ltd. v. CCE, Mangalore - (Tri.-Bang.)

(iv)   CCE, Bhubaneshwar v. Idcol Ferro Chrome & Alloys Ltd. - (Tri.-Kolkata)

(v)     Rine Engineering Pvt. Ltd. v. CCE, Chandigarh - 2008 (86) RLT 933 (CESTAT-Del.)

(vi)   CCE, Mumbai v. Cable Corpn. Ltd. - 2008 (85) RLT 759 (CESTAT-Mum.)

21. I find that in the case of Gujarat Guardian Ltd., the amount collected was in respect of freight, in the case of Britco Food Co., the amount collected was in respect of Insurance charges, in the case of Hindustan Petroleum Corpn. Ltd, the amount collected by the appellant was in respect of delivery charges charged by bottling plants for delivery of LPG cylinder up to dealer premises, in the case of Idcol Ferro Chrome & Alloys, the amount collected was in respect of transportation charges, and in the case of Rine Engineering Ltd., the issue was collection of freight charges and in the case of Cable Corporation of India Ltd., the issue was freight charges. I would like to mention here in the case of Cable Corporation of India Ltd., there was a difference of opinion and the matter was referred to 3rd Member. The 3rd Member, following the judgment of Hon’ble Apex Court in the case of Baroda Electric Meters Ltd., agreed with the view taken by ld. Member (Judicial). It is also seen that in the recent judgment of co-ordinate Bench in the case of Mercedes Benz India Pvt. Ltd. (Tri.-Mumbai), the co-ordinate Bench has taken a view that post 1-4-2000, when the provision of transaction value was brought into, the law position remains the same. I may respectfully reproduce the relevant portions of the judgment.

“6. ……………We are also of the view that the decision of the Hon’ble Supreme Court with regard to the nature of the excess freight would not have been different, had their lordships considered the case for any period after 1-7-2000. The reason is that the crucial question is one of fact rather than of law. The question of fact as to the nature of the excess freight stands determined for all times by the Apex Court and accordingly, we hold that the excess freight collected from the dealers was only a profit on transportation and not an “additional consideration” within the meaning of this expression used in Rule 6, nor an “additional amount” within the meaning of the definition of “transaction value” under Section 4(3)(d) of the Act. In this view of the matter, we further hold that the distinction drawn by the learned Consultant for the Revenue between “normal value” and “transaction value” is not relevant in this case.”

It can be seen from the above reproduced portion of Para 6 of the judgment, the nature of excess freight has been held as profit on transportation and not as additional consideration, was the ratio followed, will be applicable in the case before me as the nature of the amount collected by the assessee was in respect of sales tax which is paid to the supplier of the goods i.e. Reliance Industries Ltd. I find that the ratio of the judgment relied upon by the ld. Counsel clearly indicate that any amount excess collected from the buyer is not required to be added in the transaction value. I also find that reliance placed by ld. Member (Judicial) on the judgment in the case of Mather & Platt Ltd. is correct and there was no claim made by current appellant to that purchaser that the sales tax is required to be paid by them to Govt. of India or otherwise.

22. As regards the reliance placed by ld. SDR on the definition of transaction value, it is seen that said definition, the exclusion of duty of Excise and other taxes actually paid or actually payable, would be applicable only in the cases where the taxes collected are payable but not paid. That is not the issue in the case before me. In view of the above, reliance placed by ld. SDR on the definition of transaction value will not carry the case of Revenue any further.

23. The difference in this case can be solved by another angle by reading the Show Cause Notice. The Show Cause Notice, in Para 7, directs the appellant herein to show cause as to why the differential Central Excise duty should not be demanded and recovered from them under the proviso to Section 11A of Central Excise Act, 1944 read with Rule 4 of Central Excise Rules, 2002 by invoking period of limitation. The argument of the ld. Counsel that it is immaterial whether the appellant had discharged Central Excise duty liability prior to issuance of Show Cause Notice or otherwise, but he can challenge the duty liability on limitation, is a correct proposition of law. The fact remains that the Show Cause Notice has demanded the duty from the appellant by invoking extended period, and they are well within their legal right to challenge the same before adjudicating authority and/or before Tribunal. It is seen that the appellant has taken this plea in the personal hearing before adjudicating authority, wherein it was clearly argued that the demand of duty is time barred, as there is no suppression of fact and hence the claim of SDR that the appellant did not contest the demand of duty before the authorities seems to be incorrect.

24. As regards extended period of limitation, I find that there is no dispute that the worksheet attached to Show Cause Notice had calculated the amount of differential duty which has to be demanded from the appellant, was in respect of excess sales tax collected. The said details were worked out from the invoices which were raised by the appellant during the relevant period. On perusal of the said invoices, I find that the appellants were showing the amount which has been collected by them in form of sales tax. These will indicate that there was some kind of information given on the invoices to the authorities. Be that it may be, I find strong force in the contention of the ld. Counsel that the appellant being a Public Sector Undertaking, there cannot be mala fide for non-discharge of excise duty, if any and there cannot be allegation of intention to evade duty. I find fortified in my view, by decision of this Tribunal in the case of Markfed Refined Oil & Allied Indus, (supra), wherein the Tribunal held that “We are of the view that in the absence of any material showing any positive intention on the part of the appellant, which is a Government undertaking, to evade duty or fraud, collusion, etc., imposition of penalty was not justified.” I find that the Revenue took up the matter in the case of Markfed Refined Oil & Allied Indus. in appeal to Hon’ble High Court of Punjab & Haryana and their Lordships, while dismissing the appeal, passed the following order :

“The revenue has filed the instant appeal under Section 35G of the Central Excise Act, 1944 challenging order dated 28-3-2008 passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (for brevity ‘the Tribunal’). The Tribunal has recorded a categorical finding that there is no material brought on record which may lead to an inference that there was any intention to evade duty by playing fraud or collusion. The dealer-respondent is a government undertaking namely Markfed. After recording the aforesaid finding, the order of penalty has been set aside by the Tribunal.

Having heard learned counsel, we find that no exception is provided to interfere in the impugned order in which pure findings of fact have been recorded. Once the dealer-respondent is a Government organisation like Markfed it is not easy to infer any evasion of duty much less its intention to do so. There is thus no merit in the appeal as no question of law warranting its admission would arise. Dismissed”.

25. In the case in hand, it is undisputed that the appellant herein had purchased the petroleum products from Reliance Industries Ltd. and have further sold it to their customers as a dealer. It is also undisputed that the appellant is a Public Sector Undertaking. In my considered view, the ratio of case-laws cited by ld. Counsel would squarely apply to this case and I hold that there cannot be any intention of the appellant to evade payment of duty.

26. In view of the foregoing, the Difference of Opinion is answered as under :

(i)      The proposal in the Snow Cause Notice was for confirmation of demand of duty and the appropriation of duty already deposited by the appellant.

(ii)    Since there is a proposal in the Show Cause Notice for confirmation and appropriation of demand of duty, an order is required to be passed for duty confirmation on the appellant.

(iii)   Excess recovery made by the appellant is required to be added in the assessable value of the final product and duty is not required to be confirmed based upon the various decisions and reasoning given hereinabove.

(iv)   In the light of various decisions and judgment of Apex Court in the case of Baroda Electric Meters Ltd., it has to be held that difference between excess recovery of sales tax and actual quantity of tax paid to Reliance Industries Ltd. has to be held as profit of non-manufacturing activity.

(v)     I find no reason to hold that the appellant was guilty of suppression or mis-statement with intent to evade payment of duty.

(vi)   There is no reason for invoking extended period against the appellant.

(vii)  Since the entire demand of duty is hit by limitation and also on merit not liable to be demanded, there is no need to confirm demand on the appellant.

(viii) Since there is no confirmation of duty on merit as well as on limitation, the question of imposition of penalty does not arise.

(ix)   Appeal has to be allowed as held by ld. Member (Judicial).

27. In sum, I agree with the order recorded by ld. Member (Judicial). Registry is directed to place the papers before original Bench for passing majority order.

(Pronounced in Court on 15-9-2011)

28. [Per : B.S.V. Murthy, Member (T)]. - In view of the majority opinion on points of difference, the appeal is allowed.