2017 (4) TMI 323 - AT - Central Excise

Valuation - transaction value - Whether duty of Central Excise is payable on the Refinery Gate Price (RGP) paid by the Oil Marketing Companies (OMC) to the appellant or it is payable on the subsidized price at which the Oil Marketing Companies so sell the goods to SKO (Superior Kerosene Oil) under PDS and LPG (Liquid Petroleum Gas) (Domestic) to their consumers? Held that - the transaction value would be the price, where above three elements/conditions are present or fulfilled. We find that above three elements are present in the case of the amount/the price paid by OMCs (other than the BPCL). The price which is charged by the appellant-KRL from the Oil Marketing Companies (other than the BPCL) is the price as per the provisions of Section 4(1) of the Central Excise Act, 1944. The price charged by the appellant - KRL from BPCL cannot be called as transaction value , when BPCL is related to the appellant as KRL is said to be the subsidiary company of the BPCL. - It is to be noted that the price being paid by the Oil Marketing Companies (other than BPCL) includes the terminal charges also. Therefore, for the purpose of Central Excise duty, the assessable value which is now called the transaction value after the amendment made in Section 4 of the Central Excise Act, 1944 by the FA (w.e.f. 1-7-2000) is the price that is charged by the KRL from OMCs for the subject goods. Whether terminal charges being the amount collected by the appellant from the Oil Marketing Companies is to be included in the transaction value of SKO (PDS) and LPG (Domestic) for the purpose of assessment of Central Excise duty? - Held that - the price or cost paid/received to/by an assessee or manufacturer (from independent buyer) constitutes the assessable value/transaction value for the purpose of levy of Central Excise duty. The Hon ble Supreme Court in the case of C.C.E., Jaipur-II v. Super Synotex (India) Ltd. 2014 (3) TMI 42 - SUPREME COURT observes that the price or cost paid to the manufacturer constitutes the assessable value on which Central Excise duty is payable - the words that gain signification are actually paid . Appeal dismissed - decided against appellant.

Summary

Issues involved:
1. Whether duty of Central Excise is payable on the Refinery Gate Price (RGP) or on the subsidized price at which goods are sold by Oil Marketing Companies (OMCs) to consumers?
2. Whether terminal charges collected by the appellant should be included in the transaction value for assessment of Central Excise duty?

Analysis:
1. Main Issue - Duty Payment:
The appellant, M/s. Kochi Refineries Ltd., contested the duty payment based on the price charged by them under the Administered Price Mechanism (APM). The Commissioner held that duty should be paid on the price received from OMCs. The appellant argued for the subsidized price citing C.B.E. & C. Circular and various decisions. However, the Tribunal clarified that duty is to be charged on the transaction value as per Section 4(1) of the Central Excise Act, emphasizing the elements of sale, non-related parties, and price as sole consideration. The Tribunal rejected the appellant's claim that subsidized price should be considered, stating it does not meet the criteria of transaction value.

1.1 Minor Issue - Terminal Charges:
The appellant raised a minor issue regarding inclusion of terminal charges in the transaction value. However, the Tribunal noted that since the payment by OMCs already included terminal charges, a separate decision on this issue was unnecessary. The Tribunal emphasized that the transaction value is determined by the price paid by OMCs for the goods, as per the amended Section 4 of the Act.

2. Legal Interpretation:
The Tribunal relied on legal precedents, including Supreme Court and Tribunal decisions, to support its conclusion that the actual price paid by independent buyers constitutes the assessable value for Central Excise duty. The Tribunal dismissed the appellant's reliance on C.B.E. & C. Circulars, stating that clear provisions of Section 4(1) govern valuation. The Tribunal highlighted the significance of "actually paid" in determining assessable value, rejecting the appellant's argument for subsidized price as transaction value.

3. Conclusion:
In light of the legal analysis and precedents, the Tribunal rejected the appellant's appeal, upholding the Commissioner's order to pay duty on the price received from OMCs. The decision was based on the clear provisions of the Central Excise Act and established principles of valuation for duty payment.

This detailed analysis of the judgment highlights the legal arguments, interpretations, and conclusions reached by the Tribunal in addressing the issues raised by the appellant regarding duty payment and inclusion of terminal charges in the transaction value for Central Excise assessment.