2023 (4) TMI 258 - AT - Central Excise

Valuation - price based on Import Parity Price can be expected as a transaction value for indigenously manufactured petroleum product or not - Place of sale or delivery was factory i.e. refinery gate and not depot of OCMs - respondent sold to OOMCs refinery gate adopting IPP as transaction value under Section 4(1)(a) of CEA - HELD THAT - Though this Tribunal ordered for sine die adjournment but on pointing out by the learned counsel for respondent, it is found that firstly the appeal is of 2005, the issue is settled as of now by various decisions of the Tribunal. Though the revenue s appeals are pending before the Hon ble Supreme Court but in none of the appeal there is any stay. In this position, the wheel of justice should not stop, accordingly we take up this appeal for disposal. As of now the issue is no longer res integra as in the majority of decisions cited by the respondent, it has been held that even though there is a difference of price between sale made through OMC on depot and in case of sale made to OMC even though at lower price, the same has been held under Section 4(1)(a) as transaction value and the demand of duty has been dropped. Though the revenue is in appeal before the Hon ble Supreme Court but no stay has been obtained as per available records. There is no infirmity in the impugned order hence, the same is upheld, revenue s appeal is dismissed.

Summary

Issues:
The issues involved in the judgment are the interpretation of Administered Pricing Mechanism (APM) for petroleum products, determination of transaction value under Section 4(1)(a) of the Central Excise Act, 1944, and the under-valuation of excisable goods due to oil exchange agreements.

Administered Pricing Mechanism (APM) for Petroleum Products:
The Government of India resolved to phase-wise dismantle the APM for petroleum products, leading to full deregulation by 2002. This involved advising Oil Marketing Companies (OMCs) to enter into Memorandum of Understanding (MOU) to ensure uniform pricing and availability of petroleum products across the country. The resolution aimed to prevent unreasonable price differences for consumers based on their proximity to refinery locations. Subsequently, pricing of petroleum products was decontrolled, except for specific products, leading to the establishment of the Petroleum Planning and Analysis Cell (PPAC). Oil Marketing Companies entered into agreements to maintain consistent consumer prices nationwide, ensuring no price disparity between OMCs at different locations.

Determination of Transaction Value under Section 4(1)(a) of the Central Excise Act, 1944:
The adjudicating authority examined show cause notices related to the transaction value of petroleum products under Section 4(1)(a) of the Central Excise Act, 1944. It was determined that the import parity price was notional but based on international transactions. Transactions between OMCs were considered sales at the factory (refinery gate) and not depots, falling under the purview of Section 4(1)(a) of the Act. The duty paid by the respondent, adopting Import Parity Price as the transaction value, was deemed correct and lawful. The Chief Commissioner reviewed the case under Section 35E(1) of the Act, leading to an appeal by the revenue.

Under-Valuation of Excisable Goods due to Oil Exchange Agreements:
The revenue contended that the MOUs between oil companies resulted in under-valuation and evasion of excise duty. It was argued that the agreed prices charged on a bartered basis did not represent the transaction value under Section 4 of the Central Excise Act, 1944. The revenue alleged that by exchanging products at reduced prices, the oil companies evaded excise duty, and the adjudicating authority failed to recognize this under-valuation. The respondent, supported by legal precedents, defended the impugned order, emphasizing the settled legal position on similar issues.

Separate Judgment:
The Appellate Tribunal, comprising Mr. Ramesh Nair, Member (Judicial), and Mr. C.L. Mahar, Member (Technical), dismissed the revenue's appeal on 5th April 2023. Despite pending appeals before the Hon'ble Supreme Court, the tribunal upheld the impugned order, citing settled legal positions from various decisions. The tribunal emphasized the need for the justice system to proceed without delay, considering the age of the appeal and the absence of stays on the revenue's appeals.