2006 (11) TMI 637 - AT - Central Excise

Summary

Issues:
The issues involved in the judgment are related to the levy of excise duty on Petroleum Products under Chapter 27 of the Central Excise Tariff Act, 1985, specifically Liquified Petroleum Gas (LPG) and Superior Kerosene Oil (SKO) for domestic use and Public Distribution System. The main contention is whether duty should be paid based on the price fixed by the Administered Price Mechanism (APM) or the Transaction Value as per Section 4 of the Central Excise Act.

Issue 1: Interpretation of Duty Levy Criteria

The appellant, a PSU Unit, contested the excise duty levy on LPG and SKO based on the price fixed by the APM. The Revenue argued that duty should be paid on the Transaction Value as per Section 4 of the CE Act. The Tribunal referred to the Larger Bench judgment in Gas Authority of India Ltd. case, which held that the APM price should be the criteria for levy of duty. The Tribunal also cited the Hindustan Petroleum Corporation Ltd. case where the same principle was applied independently. It was noted that the demands were time-barred as all facts were known to the department and clarified by the Board.

Issue 2: Application of Larger Bench Judgment

The Tribunal considered the findings of the Larger Bench in the Gas Authority of India Ltd. case, which emphasized that the price fixed by the APM for Petroleum Products should determine the duty levy. The Tribunal highlighted that the assessable value of goods should depend on the end user and the price fetched at the sale, as per the law laid down by the Supreme Court. The Tribunal rejected the argument that price should depend on the form of removal (packed or bulk), emphasizing that the use of the product determines the price. The Tribunal also criticized the lack of resolution by the High Power Committee in disputes between the PSU and the Revenue Ministry.

Issue 3: Compliance with Board Circular and Judicial Discipline

In the case of HPCL, the Tribunal upheld the assessees' contention based on the Board Circular, which clarified that certain considerations should not be included in the assessable value for duty calculation. The Tribunal criticized the Commissioner's order for not applying relevant judgments and for alleging suppression of facts. It was emphasized that duty should be collected based on the price fixed by the government, and additional considerations should not be part of the price. The Tribunal found the Commissioner's order to be unacceptable and allowed the appeal with consequential relief.

In conclusion, the Tribunal ruled in favor of the appellants, holding that excise duty on LPG and SKO for domestic consumption should be based on the price fixed by the APM, as per the Larger Bench judgment and relevant legal principles. The Tribunal emphasized the importance of following established legal interpretations and criticized any deviation from such principles.