2001 (2) TMI 355 - AT - Central Excise

Issues: Valuation of Bitumen manufactured and sold by the appellants during March 1994 to December 1995.

Analysis:
1. The dispute revolved around the valuation of Bitumen sold by a public sector oil refinery under the Administered Price Mechanism during the period in question. The contention was specifically related to the pricing of packed Bitumen sold in barrels, which included various cost components such as Ex-Refinery Price, Marketing Margin, Filling Charges, Drum Cost, Excise duty on drum, P & F Surcharge, C & F Surcharge, Product Price Adjustment, and Ex-Storage Point Price. The appellant argued that the assessable value of the goods was in conformity with the provisions of Section 4 of the Central Excise Act, 1944, as the sale price under the Administered Price Mechanism represented full realization for the goods.

2. The appellant emphasized that they were compelled to sell the goods at the fixed price under the Administered Price Mechanism and that the sale price already included the cost of the drum as permitted under the pricing formula. It was highlighted that the appellant did not receive any additional consideration beyond the sale price from the buyers. Reference was made to Circular No. 549/45/2000-CX. I, dated 18-9-2000, issued by the Central Board of Excise & Customs, which clarified that compensation received by Oil Companies from Oil Pool Account should not be included in the assessable value of goods under the Administered Price Mechanism.

3. The Tribunal examined the records and concluded that the appellant had paid duty on the sale price realized, which encompassed the cost of the drum as per the pricing formula. As per Section 4 of the Central Excise Act, 1944, the assessable value of excisable goods is the normal price at which such goods are ordinarily sold. Since the sale price under the Administered Price Mechanism represented the normal sale price of Bitumen, the duty paid was in accordance with the law. The Tribunal found that the assessment made initially was correct, and there was no underpayment of duty. Consequently, the demand for duty in the impugned order was deemed unjustified and was set aside, along with any associated interest or penalty.

4. In light of the above findings, the Tribunal ruled in favor of the appellants, setting aside the impugned order entirely and granting relief to them. Furthermore, since the demand for duty was deemed unjustified, the Tribunal ordered the return of the deposit made by the appellant for the appeal. The decision underscored that the assessable value of the goods under the Administered Price Mechanism had been appropriately determined, and there was no basis for the duty demand raised by the Revenue.

This comprehensive analysis addresses the valuation issues concerning Bitumen sales, the application of the Administered Price Mechanism, compliance with the Central Excise Act, and the Tribunal's decision to set aside the duty demand based on the findings presented during the proceedings.

← Previous Next →