2018 (1) TMI 105 - AT - Central Excise

Valuation - transaction value - Whether the duty of Central Excise is payable on the Refinery Gate Price i.e. RGP paid by the OMCs to the appellant or it is payable on the subsidised price at which the OMCs so sell the goods (SKO i.e. Superior Kerosene Oil) under PDS and LPG-Liquefied Petroleum Gas Domestic to their consumers? Held that - identical issue decided in the case of Kochi Refineries Ltd. Versus Commissioner of Central Excise, Cochin 2017 (4) TMI 323 - CESTAT BANGALORE , where it was held that the price or cost paid/received to/by an assessee or manufacturer (from independent buyer) constitutes the assessable value / transaction value for the purpose of levy of Central Excise duty. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
Whether Central Excise duty is payable on Refinery Gate Price or on the subsidised price at which goods are sold to consumers by Oil Marketing Companies.

Analysis:

Issue 1: Central Excise Duty Payment
The appeal challenged an order rejecting the appellant's appeal against the Order-in-Original, which confirmed a demand for differential duty. The appellant, a petroleum products manufacturer, cleared goods provisionally upon withdrawal of warehousing provisions. The dispute centered on whether duty should be paid on Refinery Gate Price or subsidised price.

Issue 2: Appellant's Argument
The appellant contended that duty should be paid on the subsidised price at which Oil Marketing Companies (OMCs) sell goods to consumers, not the price paid by OMCs. They cited a CBEC circular and legal precedents supporting their stance that the subsidy compensating for losses due to Administered Price Mechanism should not be included in assessable value.

Issue 3: Respondent's Argument
The respondent argued that duty should be paid on the full price received from OMCs, not the subsidised consumer price. They emphasized that duty is based on transaction value, i.e., the price paid by OMCs. Legal decisions and a previous Tribunal order rejecting a similar appeal were cited to support this position.

Issue 4: Tribunal's Decision
The Tribunal rejected the appellant's appeal, upholding the impugned order. It clarified that duty is charged on transaction value, as per Section 4(1) of the Central Excise Act, 1944. The Tribunal reasoned that the price paid by OMCs to the appellant, excluding subsidies, constitutes the assessable value for duty calculation. Legal precedents and clear statutory provisions were cited to support this conclusion.

Conclusion:
The Tribunal's decision aligned with legal provisions and precedent, emphasizing that duty is levied on transaction value, not subsidised prices. The appeal was dismissed based on established principles and prior rulings.