2013 (10) TMI 892 - AT - Central Excise

Determination of Assessable Value Waiver of Pre-deposit of Duty and Penalty - The issue is determination of assessable value of stock-transferred petroleum products by the Applicant from the Refinery to their Marketing Division - The dispute centers around the liability to duty on Terminalling Charges shown in the Stock-Transferred Invoices by the Applicant when from their Refinery to their Marketing Division, on which no excise duty is paid Held that - The clearance of the petroleum products from their Refinery to their Marketing Division is only a stock-transfer and not sale and since the sale is affected from their Marketing Division in the transaction value with their customer, the Terminalling Charges are included - mere Terminalling Charges shown in the stock-transferred invoices would not itself attract excise duty, unless it is shown that the same are also recovered from the customers by their Marketing Division, but on which no duty has been paid by the Applicant - No evidences had been brought on record by the Revenue to rebut the claim of the Applicant, as made out by the Applicant in their reply to the show cause notice that the Terminalling Charges are included in the transaction value at which the petroleum products are sold by their Marketing Division - the Applicant could able to make out a prima facie case for total waiver of the pre-deposit of all dues adjudged Stay granted.

Summary

Issues: Determination of assessable value of stock-transferred petroleum products; Liability to duty on 'Terminalling Charges' shown in stock-transferred invoices.

In this case, the Applicant sought waiver of predeposit of duty and penalty imposed under the Central Excise Rules. The Applicant had cleared petroleum products to their Marketing Division during a specific period, mentioning 'Terminalling Charges' in the invoices without paying duty on them. The Applicant argued that since the products were sold by the Marketing Division with 'Terminalling Charges' included in the transaction value, no additional duty should be levied. The Revenue contended that duty should be paid on these charges, as they represent additional consideration received by the Applicant. The Tribunal analyzed the dispute focusing on the liability to duty on 'Terminalling Charges' shown in the stock-transferred invoices. The Applicant maintained that the transfer was a stock-transfer, not a sale, and that the charges were accounted for in the final sale price by the Marketing Division. The Tribunal agreed with the Applicant, stating that the mere presence of 'Terminalling Charges' in the invoices does not automatically attract excise duty unless it is proven that these charges were also recovered from customers by the Marketing Division. Since the Revenue failed to provide evidence to counter the Applicant's claim, the Tribunal granted a total waiver of the predeposit of all dues adjudged, allowing the stay of recovery during the appeal process.

This judgment highlights the importance of establishing a direct link between charges mentioned in invoices and their actual recovery from customers to determine the liability to duty. It emphasizes the need for concrete evidence to support claims made by parties involved in excise duty disputes. The decision underscores the principle that excise duty should be levied based on the actual consideration received for the goods, especially when charges are internal to a company's operations and do not represent additional consideration in the sale transaction.