2024 (6) TMI 493 - AT - Central Excise

Valuation of goods - inclusion of trade discount in the assessable value - HELD THAT - It is found that a strange concatenation of facts here the facilities offered by the buyer for installation of equipment which is, actually, to the benefit of such buyer and the discount offered by appellant which, certainly, is not gain to the seller and contrived hyphenating of the two without any justification for concluding that the amount of trade discount is money value of the facilities at premises of customer. The benefit derived by each from burdening cost/loss on themselves are different and that there are two separate transactions does not appear to have crossed the minds of the lower authorities. The appellant has similar arrangements with oil marketing companies (OMC) and Thane Municipal Transport (TMT), to name a few. In MAHANAGAR GAS LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI II 2024 (3) TMI 341 - CESTAT MUMBAI , it has been held that ' the appellants case is squarely covered under new Section 4(1)(a) of CEA which essentially permit different transaction values, unlike normal sales price existed prior to 1-7-2000, which has also been explained by C.B.E. C., vide its Circular No. 354/81/2000-TRU, dated 30-6-2000.' There are no reason to sustain the order now impugned and is set aside - appeal allowed.

Summary

Issues involved:
The judgment involves a challenge to the order of the Commissioner of Central Excise (Appeals) regarding duty liability, interest, and penalties under various sections of the Central Excise Act, 1944, related to the supply of compressed natural gas (CNG) by M/s Mahanagar Gas Limited to M/s BEST.

Details of the Judgment:

1. The appeals by M/s Mahanagar Gas Limited challenged the order of the Commissioner of Central Excise (Appeals) upholding the duty liability of Rs. 67,10,171 under section 11A of the Central Excise Act, 1944, along with interest under section 11AA and penalties under section 11AC and rule 25. The issue pertained to the inclusion of a trade discount in the computation of duty liability based on the Central Excise Valuation Rules.

2. The appeals covered different periods and the supply of CNG to M/s BEST with trade discounts. The first appellate authority upheld the inclusion of the trade discount in the assessable value, considering it as the money value of facilities provided by M/s BEST, leading to a higher selling price at the dispensing stations.

3. The appellant argued that the lower authorities did not apply the valuation provisions properly and referred to a Tribunal order in their own matter regarding agreements with bulk consumers for long-term commitments justifying discounts based on commercial considerations.

4. The Learned Authorised Representative referred to the findings in the impugned order during the hearing.

5. The Tribunal noted a discrepancy in the treatment of facilities offered by the buyer and the trade discount offered by the appellant. The lower authorities failed to distinguish between the two transactions and did not apply the valuation rules correctly, leading to an incorrect determination of the assessable value.

6. The Tribunal referred to a previous case involving the appellant and oil marketing companies (OMCs) where the valuation of goods for excise purposes was based on commercial considerations. The Tribunal found that the transactions with OMCs were on a principal-to-principal basis, different from transactions with other parties, and set aside the demand based on the differential value.

7. The Tribunal found no reason to sustain the order challenged by the Revenue, as it was set aside to allow the appeal based on the findings in a similar dispute over an identical transaction.

*(Order pronounced in the open court on 11/06/2024)*