2009 (3) TMI 139 - AT - Central Excise

Valuation supply through related parties held that - in terms of Rule 10(a) of the Valuation Rules, when the excisable goods are not sold except through an interconnected undertaking the value should be determined as per Rule 9 of the Valuation Rules. As per this rule, the assessable value shall be the price charged by the related person when the excisable goods are arranged to be sold through a related person - the appellants followed the above provisions and paid duty on clearances of HSD during the material period correctly - impugned demand arises from a wrong reading of the provisions - There is no legal sanction to demand duty from CPCL in cases where the RTP charged on IOC is higher than the corresponding sale price of IOC - demand is not sustainable

Summary

The Appellate Tribunal CESTAT, CHENNAI, consisting of Ms. Jyoti Balasund and Shri P. Karthikeyan, heard an appeal from M/s. Chennai Petroleum Corporation Ltd. (CPCL) against a demand for differential duty, interest, and penalty imposed by the Commissioner. The case involved the valuation of excisable goods manufactured by CPCL and sold to M/s. Indian Oil Corporation Ltd. (IOCL), a related entity. The Commissioner demanded duty on the difference between the Refinery Transfer Price (RTP) charged by CPCL to IOCL and the sale price at which IOCL sold the goods to unrelated buyers. However, the Tribunal found that CPCL correctly followed the valuation provisions under Rule 9 and 10(a) of the Central Excise Valuation Rules, 2000, by considering the price charged by the related person (IOCL) as the assessable value. The Tribunal cited relevant case law to support their decision that the impugned demand was not legally sustainable. Consequently, the Tribunal vacated the Commissioner's order and allowed the appeal filed by CPCL. The judgement was dictated and pronounced in open court by Member (T) P. Karthikeyan.