2018 (4) TMI 211 - AT - Central Excise

Valuation - inclusion of dealers margin which was retained by the respondent in respect of sale thorugh COCO - Held that - while arriving at the assessable value for clearances to COCO, other elements such as sales tax, other local lines and excise duty is deducted from RSP and thus the dealer s margin is already included in the value on which the duty is being paid. The RSP is fixed and to arrive the normal assessable value various deduction are to be granted. It was also found that assessable value of the goods cleared to COCO are higher than the assessable value i.e. normal transaction value in the case of dealers Therefore there is no question of addition or retention of dealer s margin by the appellant. Appeal dismissed - decided against Revenue.

Summary

Issues:
- Appeal against the order passed by Commissioner(Appeals) allowing the appeal of the assessee and setting aside the Order-in-Original.
- Determination of assessable value for clearances through Company Owned Company Operated (COCO) outlets.
- Dispute regarding inclusion of dealer's margin in the assessable value for payment of Central Excise duty.
- Interpretation of Central Excise Valuation Rules, 2000 in relation to related persons.

Analysis:

The appeal before the Appellate Tribunal CESTAT Bangalore involved a dispute over the determination of assessable value for clearances through COCO outlets and the inclusion of dealer's margin in the assessable value for payment of Central Excise duty. The Revenue challenged the impugned order passed by the Commissioner(Appeals) which set aside the Order-in-Original and favored the assessee. The Revenue argued that the assessable value should have been determined under Rule 9 of the Central Excise Valuation Rules, 2000, considering the COCO outlets as related persons of a specific company. They contended that the assessable value should be based on the normal transaction value at which the goods are sold by the related person. However, the consultant for the assessee defended the impugned order, highlighting that the assessable value for COCO outlets already included the dealer's margin, supported by comparative statements submitted by the assessee.

After hearing both parties and examining the submissions, the Tribunal found no infirmity in the impugned order. The Commissioner(Appeals) reasoned that the dealer's margin, not being a recovery as part of the price at which goods are sold to the dealer, is not liable to excise duty. The Commissioner also noted that the assessable value for clearances to COCO outlets, determined under Rule 7 of Central Excise Valuation Rules, already included the dealer's margin, as evidenced by the fixed Retail Selling Price (RSP) at both COCO and retail outlets. The Tribunal concurred with the detailed reasoning in the impugned order and upheld the decision, dismissing the Revenue's appeal.

In conclusion, the Tribunal upheld the impugned order, emphasizing the correct application of Central Excise Valuation Rules in determining the assessable value for clearances through COCO outlets and clarifying the treatment of dealer's margin in the calculation of Central Excise duty. The decision highlighted the importance of considering all relevant factors and documents in assessing excise duty liabilities in transactions involving related persons and retail sales.