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2016 (10) TMI 568 - AT - Central ExciseValuation - transaction value u/s 4(1)(a) of the Act - place of removal - delivery charges and transportation cost beyond the place of removal includible in the assessable value or not - whether the petroleum products cleared from warehouse to Company Owned Company Operated Outlets (COCOO) are to be valued in terms of Section 4(1)(b) of the Central Excise Act 1944 read with Rule 7 of the Central Excise Valuation Rules? - Held that - the decision in the case of CCE Viskahapatnam vs. BPCL 2012 (12) TMI 471 - CESTAT Bangalore relied upon where it was held that valuation based at the time of removal of petroleum products from installation is only material for charging duty of Central Excise subsequent sale from COCOO being immaterial. CESTAT Bangalore has given the meaning of place of removal for the period prior to 14.5.2003. The case in hand is for the period March 1999 to November 2001 which is prior to 14.5.2003 for which old definition of place of removal is relevant. For the period prior to 14.5.2003 the place of removal did not include the premises like COCOO. The price charged by these outlets from the ultimate buyer therefore cannot be included in the transaction value for arriving at the duty of Central Excise for the subject goods. Appeal allowed - decided in favor of appellant.
Issues:
Valuation of petroleum products cleared from warehouse to Company Owned Company Operated Outlets (COCOO) under Section 4(1)(b) of the Central Excise Act, 1944 read with Rule 7 of the Central Excise Valuation Rules. Analysis: The appellant, M/s. HPCL, challenged the Order-in-Appeal dated 30.11.2004, which upheld the demand of duty amounting to ?12,59,557 imposed by the Additional Commissioner of Central Excise, Bangalore. The dispute revolved around whether the petroleum products cleared from the warehouse to COCOO should be valued under Section 4(1)(b) of the Central Excise Act, 1944 read with Rule 7 of the Central Excise Valuation Rules. The appellant contended that prior to 1.7.2000, clearances to COCOO were valued at the dealer price under the Administered Price Mechanism (APM). The appellant argued that Rule 7 was not applicable as COCOO outlets were not places of removal, citing various cases where similar issues were settled in favor of the appellant. The appellant maintained that they had adopted the transaction value under Section 4(1)(a) of the Act, fulfilling all conditions for its adoption. They also argued that delivery charges and transportation costs beyond the place of removal should not be included in the assessable value. Furthermore, the appellant contended that the entire demand was time-barred. On the other hand, the Revenue, represented by Shri N. Jagadish, reiterated the findings of the lower authorities, asserting that duty was payable based on the price charged by COCOO in accordance with Section 4(1)(b) of the Central Excise Act, 1944 read with Rule 7 of the Central Excise Valuation Rules. After considering the submissions and relevant case laws, the Tribunal found that the issue was squarely covered by a previous decision of CESTAT, Bangalore in a similar case. The Tribunal referred to the definition of "place of removal" under Section 4(4) of the Central Excise Act before and after 14.5.2003. It was emphasized that for the period in question (March 1999 to November 2001), the old definition of place of removal applied, which did not include premises like COCOO. Therefore, the price charged by COCOO outlets to the ultimate buyers could not be included in the transaction value for determining Central Excise duty. The Tribunal also cited a decision where it was held that duty was payable on the ex-terminal price and not on the price charged by COCOO outlets to retail buyers. Additionally, the Tribunal referred to a decision by CESTAT, Kolkata, which supported the appellant's position that valuation at the time of removal from the installation was material for determining Central Excise duty, and subsequent sales from COCOO were immaterial. This decision was endorsed by the Hon'ble Supreme Court. Consequently, the Tribunal allowed the appeal in favor of the appellant, granting any consequential benefits.
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