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2012 (12) TMI 471 - AT - Central ExciseAssessable value - Place of removal company owned company outlets (hereinafter referred as COCOs) - Oil companies were receiving Petroleum products from various refineries located at different places in India, under bond without payment of duty at their terminal points and storing at the Terminal Points without payment of duty. They were clearing the products on payment of duty from the said place. Held that - There is no basis to consider the COCO outlets as the place of removal . It is not the case of the department that the petroleum products were received in COCO outlets without payment of duty and sold from the said COCO outlets only on payment of duty. Therefore, there is no justification to treat the COCO outlets as the place of removal - place of removal is the factory gate and the sale has taken place at the factory gate and the delivery charges are in the nature of transportation charges for transporting the petroleum products through pipeline. The sale prices from the terminal points to the dealers were based on APM prior to 01.04.2002 (that is as determined by a different authority and adopted by the oil marketing companies) and from 01.04.2002 the same have been determined by the oil marketing companies themselves. For valuation purposes, it is immaterial as to whether the transaction value was based on APM or self-determined by OCM. Since in respect of transfers to COCO outlets, the price applicable to dealers at the place of removal (that is terminal points) has been adopted, the same is legal and proper.
Issues:
1. Appeals by the department against common Orders-in-Appeal 2. Assessable value determination for petroleum products transferred to COCO outlets 3. Inclusion of delivery charges in assessable value 4. Interpretation of "place of removal" under Central Excise Act 5. Application of Administered Price Mechanism (APM) in valuation Analysis: 1. The appeals by the department were against common Orders-in-Appeal involving Bharath Petroleum Corporation Ltd., IOCL Ltd., and HPCL Ltd. The issue revolved around the assessable value determination for petroleum products transferred to COCO outlets and sold from there. The department contended that COCO outlets should be treated as "depot" and delivery charges should be added to the assessable value. 2. The facts in the appeals indicated that petroleum products were transferred from terminal points to COCO outlets on payment of duty. The original authority included transportation charges in the assessable value, leading to differential duty demands and penalties. However, the Commissioner (Appeals) held that these charges should not be added to the assessable value, resulting in appeals by the department. 3. The department argued that COCO outlets should be considered as the "place of removal," justifying the inclusion of delivery charges. On the contrary, the respondents highlighted the definition of "place of removal" under the Central Excise Act, stating that COCO outlets did not qualify as such. They relied on various legal decisions to support their stance. 4. The Tribunal analyzed the definition of "place of removal" under the Central Excise Act applicable during the periods in question. It was observed that COCO outlets could not be considered as the "place of removal" based on the prevailing regulations. The Tribunal also emphasized that the treatment of COCO outlets as depots was unjustified, as they functioned as retail outlets, not wholesale depots. 5. Regarding the application of the Administered Price Mechanism (APM) in valuation, the Tribunal noted that the sale prices were determined by different authorities before and after the dismantling of APM. However, for valuation purposes, the method of determining prices for transfers to COCO outlets based on dealer prices at the terminal points was deemed legal and appropriate. 6. In Appeal No. 917/2006, where propylene was transferred through a pipeline, the Tribunal concluded that the delivery charges were akin to transportation charges from the factory gate, not COCO outlets. Therefore, the order of the Commissioner (Appeals) was upheld, rejecting the department's appeals in all instances.
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