2017 (1) TMI 1353 - AT - Central Excise

Valuation - petroleum products cleared from terminal point to company owned and company operated (COCO) outlets - Rule 7 - Held that - provisions of Rule 7 are not attracted, in the light of the Larger Bench decision of the Tribunal in Ispat Industries Ltd. vs. CCE, Raigad 2007 (209) ELT 185 , wherein it has been held that transfer of part of production to another plant of the same assessee and balance production sold to independent buyers would not attract Rule 8 of Central Excise Valuation Rules, 2000 which is applicable only in a situation where entire production of a particular commodity is captively consumed - appeal allowed - decided in favor of appellant.

Summary

Issues: Valuation of petroleum products cleared to company-owned and company-operated (COCO) outlets under Central Excise Act, 1944.

Analysis:
The appeal involved a dispute regarding the valuation of petroleum products cleared by the appellants to their COCO outlets. The Revenue contended that the valuation should be done under Section 4(1)(b) of the Central Excise Act, 1944, using the Central Excise Valuation Rules, as the COCO outlets were considered sale depots. The appellants were accused of short-paying duty amounting to ?6,45,679 by not correctly determining the assessable value for clearances to COCO outlets. The adjudicating authority confirmed the demand and imposed an equal penalty, a decision upheld by the Ld. Commissioner (Appeals), leading the appellants to appeal to the CESTAT Chandigarh.

The Ld. Advocate for the appellant argued that the issue had already been settled by the Tribunal in previous cases involving similar circumstances. Citing cases like Indian Oil Corporation Ltd. vs. CCE, Hyderabad and Bharat Petroleum Corp. Ltd. vs. CCE, Chennai, the appellant contended that the valuation method adopted by the Revenue was incorrect.

After hearing both parties and examining the records, the Tribunal found that the issue of valuation for petroleum products to COCO outlets was no longer res integra, as previously decided by the Tribunal in the cases referenced by the appellant's Advocate. The Tribunal referred to the decisions in the Indian Oil Corporation Ltd. and Bharat Petroleum Corp. Ltd. cases, where it was held that the valuation method adopted by the appellants based on the Ministry of Petroleum and Natural Gas's price mechanism should be accepted. Additionally, the Tribunal noted that the demands were barred by time as the department was aware of all relevant facts within the statutory period, leading to the conclusion that the appeal should be allowed.

In line with the above decisions and reasoning, the Tribunal set aside the order of the Ld. Commissioner (Appeals) as unsustainable and allowed the appeal filed by the appellants.