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2015 (11) TMI 1038 - AT - Central ExciseValuation - Determination of transactional value - Whether a manufacturer of LPG selling the product in bulk, post 1.7.2000, to an OMC for further sale in packed form to dealers/domestic consumers and recovering ex-refinery price from the OMC as sale consideration is entitled to adopt ex-storage price (APM price) as the assessable value of the said product in bulk by ignoring the provisions of Section 4 of the Central Excise Act as amended w.e.f 1.7.2000. Held that - Revenue was not in favour of even accepting the Larger Bench decision of this Tribunal in the case of Gas Authority of India Ltd., therefore filed appeal before the Hon ble Supreme Court after taking opinion of Attorney General. However, the Hon ble Supreme Court desired that the matter be resolved by the two Departments and the appeal was dismissed as not pressed. In view of the direction of Hon ble Supreme Court, and various considerations elaborated in the circular, Larger Bench order was accepted. It is clear from the circular that Tribunal s order was not accepted on legal/judicial consideration but administrative consideration. In my considered view, for future dispute, particularly when law itself was amended, in such a situation it is the duty of this Tribunal to examine the legal issues and give a verdict on the legal issue. If the circular was issued based upon legal analysis, this Tribunal will be justified to say that Revenue could not have argued against the circular. But that is not the case here. In case Government finds that Tribunal s decision is not acceptable due to administrative considerations such as subsidy etc., Government is empowered to issue suitable exemption notification or bring change in law to align the law with administrative desirability. Board has not anywhere stated that even when the manufacturer was selling the goods at a price higher than the APM price, then also the APM price is to be taken as the transaction value for purposes of assessment. Similarly, this circular no where states that even wherein manufacturer (like appellant) is selling the gas in bulk at import price parity to OMCs, duty is required to be collected at APM prices. - The OMCs sold, a part of it (which is subject matter of dispute) after bottling in cylinders to domestic consumers through dealers. ONGC sold to the OMCs at a price as indicated in commercial invoices. This price was based upon Import Price Parity. Amount indicated in commercial invoices was collected from OMC. However, excise duty was not paid as per these invoices. OMC in turn sold the same after bottling in cylinders at APM price which was ex-storage price fixed by OCC, Ministry of Petroleum, ONGC paid central excise duty on APM price under cover of central excise invoices issued under Rule 11 of the Central Excise Rules, 2002. The OMCs received compensation/subsidy (i.e. difference between ex-refinery price paid to ONGC and the ex-storage price i.e. APM price collected from the dealers) from the Oil Pool Account/Subsidy maintained by the Ministry of Petroleum. ONGC did not receive any subsidy or compensation from the Govt. Transaction value of excisable goods is the price actually paid or payable for the goods when sold and includes, in addition to such price, any additional consideration which the buyer is liable to pay to, or on behalf of the assessee by reason of, or in connection with the sale. In the present case, the sale amount actually paid by the buyer (OMCs) to the appellant (ONGC) as price of LPG (bulk), ex-refinery, is the one mentioned in the commercial invoice and that only is the transaction value of the goods. - Under the contract of sale between ONGC and the OMCs in this case, the latter was liable to pay the ex-refinery price (i.e. import parity price). Therefore, it cannot be denied that the price actually paid by the OMCs to the appellant is the transaction value as defined in Section 4(3)(d), which is the price mentioned in ONGC s commercial invoices. The fact that appellant s customer i.e. OMCs in turn were selling part of such goods (after bottling) to final consumer at APM price and the differential between their purchase price and APM price was being received by them as subsidy or from Oil Pool Account is of no consequence as far as section 4 of the Central Excise Act is concerned. After 1/7/2000, the appellant has to pay duty of excise on the transaction value in terms of new Section 4 of the Central Excise Act, 1944. It is needless to say that the appellant had collected import parity price (i.e. the transaction value) from its buyers (OMCs) by issuing commercial invoice and not the APM price which was lower than the value declared in the commercial invoice. Only the actual taxes paid from the overall transaction value are required to be deducted. In essence, whatever amount is recovered except the taxes actually paid will be the assessable value. In the present case, there is no dispute that the value recovered by the appellant is as per the commercial invoice and therefore the commercial invoices represent the transaction value, the duty will required to be paid by the appellant on the said transaction value. The APM price recovered by the appellant s customer from the general public or their customer is not relevant for determining the assessable value of the goods sold by appellant to OMCs under Section 4 of the Central Excise Act. Appellant was required to discharge its duty liability on the basis of transaction value which it collected from the OMCs by issuing commercial invoices during the disputed period in terms of provisions of Section 4 of the Central Excise Act as amended w.e.f. 01/07/2000. In other words, post 01/07/2000, the provisions of new Section 4 cannot be ignored for determination of assessable value of LPG sold in bulk to OMCs for further sale in packed form to dealers/domestic consumers. Therefore, the views expressed by the referral Bench are correct and the same are endorsed. - appellant has to discharge the excise duty on the transaction value which is collected from the Oil Marketing Company by issuing commercial invoices during the disputed period. - Decided against assessee.
Issues Involved:
1. Whether the ex-storage price (APM price) can be adopted as the assessable value for LPG sold in bulk post-1.7.2000. 2. Whether the transaction value should be considered for excise duty discharge post-1.7.2000. 3. Whether the previous Tribunal decisions and Board's Circulars are applicable to the present case. Issue 1: Ex-Storage Price (APM Price) as Assessable Value The primary issue was whether the ex-storage price (APM price) could be adopted as the assessable value for LPG sold in bulk to Oil Marketing Companies (OMCs) for further sale in packed form to dealers/domestic consumers post-1.7.2000. The appellant argued that the price at which they sold the goods to OMCs should be considered for excise duty discharge, as per the Administered Price Mechanism (APM) worked out by the Ministry of Petroleum and Natural Gas. The Tribunal previously decided in favor of the appellant, considering the government-fixed prices and the fact that excise duty was discharged on such prices. The appellant contended that the Referral Bench did not adequately consider the Tribunal's earlier decision in their own case and the agreement between the Ministry of Finance and the Ministry of Petroleum and Natural Gas. Issue 2: Transaction Value Post-1.7.2000 The respondent argued that post-1.7.2000, excise duty needs to be discharged on the transaction value as per the amended Section 4 of the Central Excise Act, 1944. The Referral Bench noted that the concept of valuation of products changed after 1.7.2000, and excise duty liability should be discharged on the amount/value received by the appellant. The Tribunal's earlier decision in the MRPL case, which was based on pre-1.7.2000 valuation concepts, was not applicable post-amendment. The respondent emphasized that the transaction value, which includes the price actually paid or payable for the goods, should be considered for excise duty. Issue 3: Applicability of Previous Tribunal Decisions and Board's Circulars The Tribunal considered whether the previous decisions in the appellant's own case and the Board's Circulars were applicable. The Tribunal had earlier ruled in favor of the appellant, considering the Administered Price Mechanism and the agreement between government departments. However, the Referral Bench highlighted that the Tribunal's previous decisions did not adequately address the amended Section 4 and the concept of transaction value. The Referral Bench also noted that the Board's Circular dated 21.12.2000, which accepted the Tribunal's decision in the GAIL case, was based on administrative considerations rather than legal analysis. Detailed Analysis: Ex-Storage Price (APM Price) as Assessable Value: The Tribunal noted that the appellant sold LPG to OMCs at the Import Parity Price and paid excise duty based on this price. The Tribunal's earlier decision in the appellant's own case had favored the appellant, considering the Administered Price Mechanism and the agreement between the Ministry of Finance and the Ministry of Petroleum and Natural Gas. However, the Referral Bench argued that the Tribunal should have followed the amended Section 4, which emphasizes transaction value. Transaction Value Post-1.7.2000: The Tribunal considered the amended Section 4 of the Central Excise Act, 1944, which introduced the concept of transaction value. The transaction value includes the price actually paid or payable for the goods and any additional consideration. The Tribunal noted that the appellant collected the Import Parity Price from OMCs, and this price should be considered the transaction value for excise duty purposes. The Tribunal emphasized that the amended Section 4 requires the transaction value to be the basis for excise duty, irrespective of the Administered Price Mechanism. Applicability of Previous Tribunal Decisions and Board's Circulars: The Tribunal examined the previous decisions in the appellant's own case and the Board's Circulars. The Tribunal's earlier decisions favored the appellant, considering the Administered Price Mechanism and the agreement between government departments. However, the Referral Bench argued that these decisions did not adequately address the amended Section 4 and the concept of transaction value. The Tribunal noted that the Board's Circular dated 21.12.2000 was based on administrative considerations and did not align with the legal requirements of the amended Section 4. Conclusion: The Tribunal concluded that the appellant must discharge excise duty based on the transaction value, which is the price collected from OMCs as per the commercial invoices. The Tribunal emphasized that the amended Section 4 of the Central Excise Act, 1944, requires the transaction value to be the basis for excise duty, and previous decisions based on the Administered Price Mechanism were not applicable post-1.7.2000. The Tribunal's majority decision held that the appellant must discharge excise duty on the transaction value collected from OMCs, endorsing the views expressed by the Referral Bench.
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