2017 (8) TMI 15 - AT - Central Excise

Valuation - petroleum products - The case of the Department is that transfer from warehouse to COCO does not involve any sale and the sale transaction arises only from the COCO - whether the petroleum products cleared from warehouse to company owned and company operated outlets are to be valued in terms of Section 4(1)(b) of the CEA, 1944 read with Rule 7 of the Central Excise Valuation Rules? - Held that - this issue has been settled in favour of the respondent by various decisions of the Tribunal specifically, in the case of BPCL 2007 (8) TMI 137 - CESTAT, BANGALORE , where it was held that Appellant PSU unit had removed goods to their sales outlets under Administrative Pricing Mechanism but revenue rejected the same and demand raised by applying Section 4(4)(b)(iii) of CEA,1944 and Section 4(1)(b)ibid in two distinct period for valuation purpose - appeal dismissed - decided against Revenue.

Summary

Issues:
Valuation of petroleum products cleared to company-owned outlets under Central Excise Act, 1944.

Analysis:
The Department filed an appeal against the impugned order passed by the Commissioner(Appeals) demanding duty on FDZ charges and COCO sales. The respondent, engaged in refining and marketing petroleum products, claimed deductions for freight and FDZ charges. Show-cause notices were issued for inclusion of these charges in assessable value. The adjudicating authority demanded duty under Section 11A of the Central Excise Act, 1944. The Commissioner(Appeals) set aside the demand on FDZ charges and upheld the duty on COCO sales, leading to the Department's appeal.

The main issue was whether petroleum products cleared to company-owned outlets should be valued under Section 4(1)(b) of the Central Excise Act, 1944. The Department argued that the sale transaction arises only from the COCO outlets, making their sales price the assessable value. However, the respondent cited various precedents where similar issues were settled in their favor. They contended that COCO outlets are not the place of removal and that transaction value conditions were fulfilled. They also argued that delivery charges and transportation costs beyond the place of removal should not be included in the assessable value.

After reviewing submissions and previous decisions, the Tribunal found that the issue had been settled in favor of the respondent by precedents like the BPCL case. The Tribunal upheld the impugned order, dismissing the Department's appeal regarding the demand of duty on FDZ charges and SSLF charges. The decision was based on the settled legal position and the application of previous judgments. The appeal was thus dismissed, and the operative portion of the order was pronounced in open court on 05/05/2017.