2012 (9) TMI 860 - AT - Central Excise

Waiver of pre deposit - appellants are invoicing to HPCL and pay applicable sales tax/VAT - Held that - No doubt the margin available to HPCL has been referred to as commission in the agreement. However, the records reveal that it is clearly a case of sale by the appellant to HPCL, who in turn sells the products to various customers. Further applicable sales tax/VAT has been paid on such sales. Under these circumstances, to include the so-called commission in the assessable value would lead to treating the HPCL as related person which is beyond the scope of show cause notice - we waive pre-deposit of balance amount of dues as per the impugned order and stay recovery thereof till the disposal of the appeal - Stay granted.

Summary

Issues:
Interpretation of assessable value in relation to the margin referred to as 'commission' in an agreement between the parties.

Analysis:
The case involved a joint venture company selling Compressed Natural Gas (CNG) to parties directly and through outlets maintained by another company. The Department treated the margin as part of the assessable value, leading to a demand for differential duty, interest, and penalties. The Chartered Accountant for the appellant argued that the inclusion of the margin as 'commission' in the assessable value would imply duty on the sale price of the other company, which was not the case. He also highlighted that applicable sales tax/VAT had been paid on the sales. The Superintendent (AR) contended that since the companies were significant, the use of the term 'commission' was accurate, justifying the demand.

Upon reviewing the submissions and records, the Tribunal found that it was indeed a case of sale by the appellant to the other company, which then sold the products to customers. The Tribunal noted that sales tax/VAT had been paid on these transactions. The inclusion of the 'commission' in the assessable value would incorrectly treat the other company as a related person, which was not alleged in the show cause notice. Therefore, the Tribunal ruled in favor of the appellant, waiving the pre-deposit of the balance amount of dues and staying the recovery until the appeal's disposal.