VIDYUT OMBUDSMAN
5th Floor, Singareni Bhavan, Red Hills,
Hyderabad –500 004.
K.Rajagopala
Reddy, Director (Law) and
Vidyut
Ombudsman
Between
Indian Oil Corporation Limited,
Kadapa (Depot) Opp. Railway Station,
Kadapa … Appellant
(rep.by Sri. S.Srinivas, Senior Depot Manager)
1.
Senior Accounts Officer/Circle Office/Kadapa
3.
C.G.M /P&Comm/Corporate Office/TPT ...
Respondents
The representation dated 18.12.2006 of the Appellant has come up for final settlement before the Vidyut Ombudsman on 07.09.2007 in the presence of the representative of appellant and respondents and stood over for consideration till this day, the Vidyut Ombudsman passed/issued the following:
AWARD
This
representation (Appeal) is filed
against the order dated 21.11.2006 passed by the Forum for the Redressal of Consumers Grievances of APSPDCL (for shot
Forum) in C.G.No.80/2006-07/Kadapa Circle (wherein the complaint filed by the
appellant herein before the Forum was dismissed) stating that the Memo.No.520,
dtd.28.12.2004 issued by the Chairman and M.D of APSPDCL reclassifying
S.C.No.CDP-075 of the appellant along with some other similar nature of
services from HT category-I to HT category-II is in order. In the representation (appeal) it is
requested that the unit of the appellant may be categorized as HT category-I
stating that:-
a)
The unit of the appellant manufactures branded
fuels by doping the generic petroleum products with imported additives by use
of electric power and sophisticated machinery.
Apart from receipt, storage and delivery of BS-II petrol, diesel and
Kerosene, the unit of the appellant undertakes blending of 5% ethanol with
petrol as per Govt., of India directive, using electrically operated pumps.
b)
The unit of the appellant is recognized as an
industry and therefore, governed by the Factories Act, 1948 and the rules
therein categorizing the said unit under the Shops and Establishments Act is
contradictory.
c)
Change in category by APSPDCL is not legally
valid as the power to change category vests with the Electricity Regulatory
Commission. Hon’ble High Court of
Kerala in the case of M.Sainalabdeen Vs Kerala State Electricity Board &
Others reported in ILR (2006)1, Ker 162 held that after coming into force of
the Electricity Act, 2003 State Electricity Board is divested of the power to
decide under which category a particular establishment falls.
d)
In a similar case, the request of Indian Oil
Corporation Ltd., Chennai for change of category from HT-III to I (Industrial)
was approved by the Tamilnadu Electricity Boad.
2. In order to promote settlement by mutual
agreement, the Ombudsman conducted re-conciliation meeting on 03.02.2006. However, inspite the endeavor made by the
Ombudsman, Parties could not arrive at a settlement.
3. On 06.03.2007 R-3 filed written
submission stating that:-
a)
There is no manufacturing, processing and/or
preserving goods for sale in the premises of the appellant as mentioned in the
Tariff Order issued by the A.P.Electricity Regulatory Commission, but the unit
of the appellant is only preserving petroleum products for distribution to
various places in bulk loads. The
contention of the appellant that blending of ethanol or mixing additives or dye
cannot be termed as process as in a process, raw material will be changed into
finished product changing its original properties fully or partly. .
b)
As the memo dated 28.12.2004 clarified that HT
services engaged in Oil/Gas filling for Commercial use should be interpreted as
industrial and should be categorized as HT Category-II, the S.C.No.CDP-075 is
changed from HT Category-I to II with effect from consumption month of
December, 2004 under intimation to the appellant by R-2 in his letter dated
06.01.2005.
c)
As the action of the respondents in
classifying the service of the appellant under HT Category-II is in order, it
is prayed that the representation (appeal) may be dismissed.
4. On
07.03.2007 counter affidavit was filed on behalf of R-2 stating that:-
a)
As per the schedule of Retail Tariff Rates, HT
Category-I tariff is applicable for supply of electricity to all HT Industrial
Consumers. However, Industrial purpose
shall mean manufacturing, processing and/or preserving goods for sale, but shall not includes shops, business
houses, offices, Public buildings, hospitals, hotels, hostels, choultries,
restaurants, clubs, cinemas, railway stations and other similar premises not
withstanding any manufacturing, processing or preserving goods for sale.
b)
Even as per the definition of HT Category-I
provided in BP.Ms.No.32, dated 29.07.1996, SC.No.CDP-075 cannot be classified
under HT category-I as no manufacturing,
processing or preserving of goods is involved. As there is no change in original properties of the products
received, stored and distributed by the appellant its contention that blending
of ethanol or mixing additives or dye comes under process cannot be accepted.
c)
As per clause 35 of the Terms & Conditions
of Supply (New Clause 3.4) respondents are empowered to reclassify category of
service connections.
5. The rejoinder filed by the appellants
states that:-
a)
In the process of manufacturing branded fuels
by doping the generic petroleum products as explained supra, properties of the
finished products are different from that of the raw materials. Hence, there is difference in pricing of
these products in the market. Moreover
5% ethanol is blended with petrol as per Govt.of India directive, using electrically
operated pumps and flow meters. To
prevent misuse and adulteration, kerosene is doped with blue dye and
marker. In view of the above, the unit
of the appellant falls under definition of HT category-I as per the tariff
applicable to industrial consumers mentioned in the Tariff Order issued by
APERC. For all these reasons, it is
requested that categorization of the appellant’s service connection is reverted
to Industrial Category.
6. On 07.09.2007, during the course of
hearing, the representative of the appellant submitted oral arguments
reiterating the averments made on behalf of the appellant in the representation
(appeal) dated 18.12.2006 and further contended that service connection of the
appellant would come under HT category-I and re-categorization of the said
service as HT category-II is not correct and the unit of the appellant may be categorized as HT category-I. In response to the oral arguments submitted on behalf of the
appellant, the R-1 and R-3 submitted oral arguments reiterating the averments
made in the written submissions filed on behalf of the respondents and further
contended that re-categorization of the service connection of the appellant
from HT category-I to II is justified.
7. The short point that falls for
consideration before the Ombudsman is “whether the order dated 21.11.2006
passed by the Forum below is in order or suffers from any defect.”
8. As per the Tariff Order dated 23.03.2004
passed by A.P.Electricity Regulatory Commission for FY 2004-05, HT category-I
tariff is applicable for supply of electricity to all HT Industrial
consumers, and it is further clarified
that industrial purpose shall mean manufacturing, process and/or preserving
goods for sale, but shall not include shops, Business Houses, Offices, Public Buildings,
Hospitals, Hotels, Hostels, Choultries, Restaurants, Clubs, Theatres, Cinemas,
Railway Stations and other similar premises not withstanding any manufacturing,
processing or preserving goods for sale.
9. After careful consideration of the material
placed before it, the Ombudsman is of the opinion that there is force in the
contention of the respondents that doping the generic petroleum products with
imported additives by use of electric power by the appellant does not amount to
manufacturing or processing. An
‘additive’ is a substance that is added in small amount to something in order
to improve it, give it colour, make it last longer, etc. Even though the appellant vehemently claimed
that it manufactures branded fuels by doping the generic petroleum products
with imported additives by use of electric power and sophisticated machinery,
it can not get away from the fact that there is no change in the finished
products, except that chemical additives are added by the appellant to the raw
material for the purpose of making it as a branded product of the
appellant. Except that the finished
product becomes a branded product of the appellant, there is no other change to
the raw material used by it for the said purpose. As admitted by the appellant,
blue dye and markers are doped with Kerosene to prevent misuse and
adulteration. Such doping will not
alter the basic chemical properties of kerosene and therefore, it cannot be
termed as manufacturing or processing.
Therefore, the Forum below has rightly observed that the contention of
the appellant herein that blending of ethanol or mixing additives or dye cannot
be termed as processing.
10. The citation relied upon by the appellant
will not help its cause. The
categorization for purposes of tariff is being done by the Andhra Pradesh
Electricity Regulatory Commission. In
terms of such classification done by the Commission, respondents have
interpreted that the service connection of the appellant falls under HT category-II. Categorization as such is not done by
respondents.
11. For all these reasons, the Ombudsman is of
the opinion that the order of the Forum below is in order and it need not be
interfered. Hence the representation
(appeal) preferred by the appellant herein is dismissed.
This order is corrected and signed on 18th day of September, 2007.
VIDYUT OMBUDSMAN