2018 (7) TMI 990 - AT - Central Excise

Adjustment in respect of excess supplies - Excesses/shortage of goods - the receipt quantity did not match the despatched quantity from the refinery for various reasons - Department took the view that differential excise duty is required to be paid for the amount removed from the refinery but not received by the Oil Manufacturing Companies (OMCs) - Held that - The issue stands decided in the case of BHARAT PETROLEUM CORPORATION LTD. VERSUS COMMISSIONER OF C. EX. KOCHI 2010 (7) TMI 961 - CESTAT BANGALORE where it was held that The assessments made on invoices is final w.r.t. value and quantity. Assessee cannot make suo motu adjustments contrary to the assessment on the invoices. Right course for the assessee would have been to follow provisional assessment. Notwithstanding the discrepancy between quantities ascertained by the assessee and the buyer then the transaction value would have been that as agreed mutually in a contract and paid by the OMC. Appeal dismissed - decided against appellant.

Summary

Issues:
Refund claims for excise duty on petroleum products based on quantity despatched vs. quantity received by Oil Manufacturing Companies (OMCs).

Analysis:
The case involved manufacturers of petroleum products who cleared goods to OMCs through pipelines. The issue revolved around excise duty payment discrepancies arising from the difference between the quantity despatched from the refinery and the quantity received by OMCs. The department contended that excise duty should be paid on the amount removed from the refinery but not received by the OMCs. The assessees initially paid the differential duty but later filed refund claims. Refund claims for different periods were rejected by the original authority and the Commissioner (Appeals), leading to appeals by the assessees (E/429/2009 & E/430/2009) and the Revenue (E/59/2012).

The assessees argued various reasons for the quantity mismatch, including technical constraints, moisture content variations, measurement discrepancies, human errors, transit issues, density variations, and temperature differences. They emphasized that excise duty should be based on the transaction value, where the department should consider the receipt quantity if it is less. The assessees also highlighted that adjustments were available for excess supplies to OMCs, but the department's disagreement led to the perceived differential duty payment requirement. They contended that the price received should be the transaction value for supplied quantities, indicating higher excise duty where OMCs received less than despatched.

During the hearing, the AR supported the impugned orders, citing a previous decision involving BPCL, which supported the Revenue's stance. The Tribunal, after considering both sides, referred to the BPCL decision, emphasizing that the unit value for each transaction was not disputed, and adjustments contrary to the invoice assessments were not permissible. Following the BPCL decision, the Tribunal dismissed the assessees' appeals (E/429/2012 & E/430/2012) and allowed the Revenue's appeal (E/59/2012), thereby upholding the original authority's order in the Revenue's case.

In conclusion, the Tribunal dismissed the assessees' appeals and allowed the Revenue's appeal based on the principles established in the BPCL decision, which guided the determination of excise duty based on agreed transaction values without room for unilateral adjustments by the assessees.