2018 (12) TMI 338 - AT - Central Excise

Valuation - petroleum products cleared by the appellant to other OMCs - appellant adopted Import Parity Price as the assessable value for payment of Central Excise duty - Revenue is of the view that they are required to pay Excise duty on the price at which they are selling petroleum product to independent buyers through the appellant s own Depot/Dealer - demand of differential duty. Held that - In the decision of the Tribunal in the case of M/s BPCL 2009 (6) TMI 166 - CESTAT, MUMBAI , the Tribunal had taken a view that the price as per MoU with other OMCs, cannot be considered as transaction value under Section 4 of the Central Excise Act, 1944. Accordingly, the issue was decided in favour of the Revenue. But we note that this decision has been distinguished by the Tribunal in the later decision in the appellant s own case 2014 (8) TMI 220 - CESTAT MUMBAI . In this decision, the Tribunal has held that Import Parity Price agreed between one OMC and another based on MoU reached between them, can be considered as transaction value for assessment purpose in terms of Section 4 of the Central Excise Act, 1944. Thus, Import Parity Price agreed between one OMC and another based on MoU reached between them, can be considered as transaction value for assessment purpose in terms of Section 4 of the Central Excise Act, 1944 - appeal allowed - decided in favor of appellant.

Summary

Issues: Valuation of petroleum products for Central Excise duty payment based on Import Parity Price; Discrepancy in price leading to demand for differential duty; Interpretation of transaction value under Section 4 of Central Excise Act, 1944.

The judgment by the Appellate Tribunal CESTAT KOLKATA involved a dispute over the valuation of petroleum products for Central Excise duty payment based on Import Parity Price. The appellant had a refinery in Barauni and cleared products to various Oil Marketing Companies (OMCs) under an arrangement for reciprocal supply. The Department alleged a price disparity between clearances to OMCs and independent buyers, leading to a show-cause notice for payment of differential duty. The appellant argued that Import Parity Price could be considered as transaction value under Section 4 of the Central Excise Act, citing precedents. The Revenue, however, relied on a pending appeal before the Supreme Court and a circular to keep such cases on hold.

The Tribunal considered the conflicting decisions in the case of M/s BPCL, where initially, the price under MoU with OMCs was not deemed transaction value, favoring the Revenue. However, in a subsequent decision in the appellant's case, it was held that Import Parity Price based on MoU could be considered as transaction value. The Tribunal emphasized that Import Parity Price was not artificially fixed but an actual price at the time and place of import, thus rejecting the Revenue's argument. Referring to a previous decision upheld by the Apex Court, the Tribunal dismissed the Revenue's appeal as lacking merit and set aside the impugned order, allowing the appellant's appeal.