2010 (4) TMI 335 - AT - Central Excise

Valuation- the Respondents effected transfer of petroleum products from their installation to their Company Owned Company Operated (COCO) Outlet. The Original Authority held that in respect of sales made from COCO Outlets, the charges collected by them in the name of COCO charges should be added to the assessable value and accordingly, demanded differential duty of i 5,08,355.00 along with the interest and imposed equal amount of penalty under Section 11AC. On appeal by the Party, the Commissioner (Appeals) set aside the Order of the Original Authority and hence, the Department is in appeal. Held that- the COCO Outlets are undisputedly with the knowledge of the Department. In respect of clearances made to the depot (assuming that COCO Outlet has to be treated as a depot), the submission of the Department that the entire extra collection should be added to the assessable value, is contrary to the legal provisions. The assessment of goods transferred to the depot is required to be done at the time and place of removal. The goods removed to the depot may be sold after a lapse of time and it could be considerable time, in some cases. The law envisages that the price of the greatest aggregate quantity of the goods sold on the date of removal should be adopted while paying duty at the time of removal from the factory, in this case, the installation. Subsequent sale at a later point of time and the actual sale price at the later point of time is not relevant for determining the assessable value. This being the case, we do not find any infirmity with the Order of the Commissioner (Appeals) on merits as well as on the aspect of limitation. The Appeal is, therefore, rejected.

Summary

Issues:
Appeal against Order of Commissioner of Central Excise (Appeals) regarding assessable value and duty calculation for petroleum products transferred to Company Owned Company Operated (COCO) Outlets.

Analysis:
The Appellate Tribunal, CESTAT, Kolkata heard an appeal by the Department against the Order of the Commissioner of Central Excise (Appeals) related to the transfer of petroleum products to COCO Outlets. The Original Authority had demanded differential duty, interest, and penalty based on charges collected by the Respondents in the name of COCO charges. The Commissioner (Appeals) set aside the Original Authority's order, leading to the Department's appeal.

The Department sought to set aside the Commissioner (Appeals) order and reinstate the Original Authority's decision, claiming suppression of facts by the Respondents. The Respondents' Advocate argued for considering the period of dispute in three categories based on Board's clarification and previous duty payments. They contended that duty had been paid correctly and no further differential duty was due.

The Tribunal considered submissions from both sides and reviewed the Commissioner (Appeals) decision for each period under dispute. It noted that the factual basis was not disputed by the Department and found no issues with the Commissioner (Appeals) conclusions. The Tribunal emphasized that duty assessment should be based on the price at the time of removal from the factory, not at the later sale point. It rejected the Department's argument to add extra collections to the assessable value for goods transferred to the depot (COCO Outlet), upholding the Commissioner (Appeals) order on merits and limitation aspect.

In conclusion, the Tribunal rejected the Department's appeal, affirming the Commissioner (Appeals) decision.