1998 (12) TMI 223 - AT - Central Excise

Summary

Issues Involved:
1. Relationship between M/s. Cochin Refineries Ltd. and M/s. Bharat Petroleum Corporation Ltd.
2. Price of petroleum products fixed by the Ministry of Petroleum.
3. Deductions for surcharge on sales tax and turnover tax on sales tax.
4. RPO charge and its exclusion from the assessable value.
5. RPO surcharge and its exclusion from the assessable value.

Summary:

1. Relationship between M/s. Cochin Refineries Ltd. and M/s. Bharat Petroleum Corporation Ltd.:
The Tribunal set aside the findings on the relationship between M/s. Cochin Refineries Ltd. and M/s. Bharat Petroleum Corporation Ltd. as they were beyond the scope of the show-cause notice. The order-in-original did not discuss this issue, and there was no record of the Commissioner (Appeals) receiving a prayer from the revenue to raise this new ground.

2. Price of petroleum products fixed by the Ministry of Petroleum:
The Tribunal held that the prices of petroleum products are not fixed by law. The Petroleum Products (Supply & Distribution) Order, 1972, does not empower the government to fix prices. The prices fixed by the Ministry of Petroleum are administrative orders and not statutory law. Therefore, the assessable value of these products is governed by Section 4 of the Central Excise Act, 1944, not Section 4(1)(a)(ii).

3. Deductions for surcharge on sales tax and turnover tax on sales tax:
The Tribunal found that state surcharges concerning sales tax and turnover tax are deductible from the assessable value. It was undisputed that these taxes were actually paid by the appellants to the Kerala State Government. The Tribunal applied the ratio of the decision in Peico Electronics & Electricals Ltd., holding that such taxes are deductible even if recovered from customers and paid to the Oil Coordination Committee (OCC).

4. RPO charge and its exclusion from the assessable value:
The Tribunal concluded that the entire RPO charges, which include transport charges and maintenance of outlets, are to be excluded from the assessable value. The transport charges are deductible as they are incurred beyond the factory gate, and the maintenance charges for retail outlets do not have any nexus with the wholesale value of the goods.

5. RPO surcharge and its exclusion from the assessable value:
The Tribunal held that RPO surcharges are in the nature of quantity-cum-cash discounts and are deductible from the assessable value. The dealers are buyers and not selling agents, and the discounts are known in advance and available to all qualifying dealers. The Tribunal applied the case law of Bombay Tyres International, which allows deductions for discounts known beforehand but paid later.

Conclusion:
The Tribunal set aside the impugned orders and allowed the appeals with consequential relief as per law, affirming that the RPO charges, RPO surcharges, and state surcharges are deductible under Section 4 of the Central Excise Act, 1944.