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TMI Blog2010 (9) TMI 907X X X X Extracts X X X X X X X X Extracts X X X X ..... (BPCL) and Indian Oil Corporation Ltd. (IOCL) during the period from June, 2002 to December, 2004. The appellant sold the goods to the OMCs at a price which was referred to as "Import Parity Price" and the OMCs sold the same, after bottling in cylinders, to their dealers at a price fixed, under a scheme called "Administered Price Mechanism" (APM), by the Oil Co-ordination Committee under the Ministry of Petroleum, Government of India, and the dealers, in turn, supplied the goods in cylinders at the same "APM price" to domestic consumers. The clearance of LPG (domestic) in bulk from the refinery to the OMCs were effected under cover of Central Excise invoices (issued under Rule 11 of the Central Excise Rules, 2002) and on payment of duty on the "APM price" which was shown as the assessable value in such invoices. In respect of these sales, however, the appellant collected the higher price (net of statutory levies and admissible deductions like freight and insurance), namely, "import parity price" (IPP) from the OMCs by issuing commercial invoices. On a perusal of the Central Excise invoices issued under Rule 11 ibid, the department found the appellant to have certified in each invoi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9/2000-CX. dated 21-12-2000 No. 354/55/2002-TRU dated 23-4-2002 No. 796/29/2004-CX. dated 4-9-2004. He argued that the show-cause notices were contrary to the CBEC's circulars and hence ab initio bad in law. In this connection, Shri Hidayatullah referred to a few decisions of the Supreme Court on the binding effect of clarificatory circulars, tariff advices etc. issued by CBEC, such as : Ranadey Micronutrients v. Collector, 1996 (87) E.L.T. 19 (S.C.) Collector v. Jayant Dalal Pvt. Ltd., 1996 (88) E.L.T. 638 (S.C.). 4. The learned counsel, further, referred to a plethora of decisions of the Tribunal and claimed that the valuation issue was no longer res integra. The following are the cited decisions : (i) Gas Authority of India Ltd. v. Commissioner, 2001 (130) E.L.T. 322 (Tri.-LB); (ii) HPCL v. Commissioner, 2003 (162) E.L.T. 391 (Tri.-Mum.); (iii) HPCL v. Commissioner, 2005 (187) E.L.T. 479 (Tri.-Bang.); (iv) HPCL v. Commissioner, 2005 (190) E.L.T. 140 (Tri.-Bang.); (v) BPCL v. Commissioner, 2005 (191) E.L.T. 1128 (Tri.-Bang.); (vi) IOCL v. Commissioner, 2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding to the JCDR, are clearly distinguishable from the facts of the instant case. In GAIL's case, the claim of ONGC was that, though they were clearing LPG in bulk, the price fixed under APM for sale in cylinders should be made the assessable value in respect of the sale of goods in bulk to OMCs. The JCDR pointed out that there was nothing to indicate that ONGC was receiving from the OMCs a price higher than the price at which LPG in cylinders was sold by the OMCs. In the present case, admittedly, the appellant was selling their product to the OMCs at a price higher than the APM price at which the latter sold the goods in cylinders. In HPCLs cases reported in 2003 (162) E.L.T. 391 and 2007 (ECR) 399, the issue was all about recovery of duty under Section 11D of the Central Excise Act and was different from the issue involved in the present case. In HPCLs case reported in 2005 (190) E.L.T. 140 and in RILs case, the question considered by the Tribunal was whether the subsidy received from the Government by these manufacturers was includible as "additional consideration" in the assessable value of the products sold at APM price. In HPCLs case reported in 2005 (187) E.L.T. 479 and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reme Court, argued that the order passed by the Court was not an authority on the issue agitated before it by the Revenue. In the Civil Appeal, it had been contended by the department that the amended Section 4 of the Central Excise Act was applicable to the facts of MRPL case wherein the transaction value was available in the form of "import parity price" which was actually realized by ONGC from the OMCs for LPG sold in bulk (domestic). The law which was in force during the period relevant to MRPL case demanded assessment of duty on transaction value defined under Section 4(3)(d) of the Act. The learned JCDR argued that, on this issue, the apex court's order passed sub silentio and, therefore, it was not a precedent to be followed in the present case. The learned JCDR claimed support from Municipal Corporation of Delhi v. Gurnam Kaur [1989] 1 SCC 101 in the context of invoking the rule of sub silentio. In this connection, he also referred to Collector v. Surgichem, 1987 (27) E.L.T. 548 (Tribunal) and the Apex Court's judgment dated 16-2-2001 in Civil Appeal No. 6459 of 1998 [A-ONE Granites v. State of U.P. & others]. In MRPL case, the department had specifically pleaded in their C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... support of his contention that the aforesaid circular was contrary to statutory provisions and hence non est in law. In the context of discussing the effect of the amendment of Section 4 of the Act, the learned JCDR submitted that a substantial change was decipherable in the replacement of 'normal value' by 'transaction value'. He pointed out that, in the case of Commissioner v. Grasim Industries Ltd., 2009 (241) E.L.T. 321 (S.C.), a Division Bench of the Apex Court had referred the question to a Larger Bench. 8. We have given careful consideration to all the submissions. To recapitulate a few essential facts:- The goods in question is LPG sold and cleared in bulk by ONGC from their refinery to OMCs during the period, June, 2002 to December, 2004. The buyers bottled the commodity in cylinders and sold the same to domestic consumers through dealers at "APM price" which was the ex-storage price fixed by OCC, Ministry of Petroleum, Government of India. It was on the basis of this price that ONGC paid CE duty on LPG cleared in bulk to the OMCs under cover of CE invoices. ONGC, however, collected from the OMCs a higher price by issuing commercial invoices in respect of the same go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on value" means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of the assessee, by reason of, or in connection with, the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter, but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods." The amended Section 4(l)(a) lays down that the assessable value for payment of duty of excise shall be the transaction value in a case where the goods are sold by the assessee for delivery at the time and place of removal, the assessee and the buyer of goods are not related and the price is the sole consideration for the sale. This provision of law makes it clear that, for the transaction value (as defined supra) to be reckoned as the assessable value, there are three conditions to be satisfied viz. (i) sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave perused the text of the Civil Appeal. The relevant pleadings of the appellant are as follows :- "It is submitted that M/s. MRPL had raised the actual amount in their Bill but had paid duty on the Subsidized Value. It was also found that they had collected a higher transaction value from their Oil Marketing Companies (i.e. actual cost) whereas they had discharged duty only on the APM price. The oil companies had sold the SKO (PDS-Public Distribution Scheme) and LPG (Domestic) under a subsidized price to the consumer as fixed by the Government. It is further submitted that the Assessee had not received any compensation from the Oil Pool Account. They were recovering the entire transaction value from the Oil Marketing Company. It is respectfully submitted that the Tribunal failed to appreciate that when the assessee M/s. MRPL were receiving the full compensation value from their buyers, at the time of clearance from their factory gate, the same should be the Assessable Value for payment of duty in terms of Section 4 of the Central Excise Act, 1944. It is therefore respectfully submitted that for the clearances effected directly from the Refineries on or after 6-9-04, the transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessable value of LPG (bulk) sold to OMCs for bottling for domestic consumption should be the value fixed by OCC for LPG packed in cylinders for distribution to domestic consumers. The Circular also explained the circumstances in which the Civil Appeal filed by the Department in GAIL's case came to be withdrawn. Paragraphs 4, 5 and 6 of the above Circular are reproduced below: "4 As the view taken by Tribunal did not appear to be strictly in accordance with the provisions of Sec. 4, the Department filed a Civil Appeal in the Supreme Court, after obtaining the clearance from the Committee on Disputes and also after obtaining the opinion of the learned Attorney General. The Hon'ble Supreme Court, however, during the course of hearing, desired that the matter should be resolved by the two Departments i.e. Department of Revenue and Ministry of Petroleum. The matter was accordingly recently discussed first in the Board and thereafter in a meeting held between the representatives of Department of Revenue and Department of Petroleum & Natural Gas. The various aspects of the dispute were examined and it was inter alia noted that the product was being marketed under administered pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The Circular also held that the principle would also apply "in all other disputes on same issue". In this connection, it is pertinent to note that the period of dispute in GAIL's case was prior to 1-7-2000 when the "deemed normal price" concept of the erstwhile Section 4(1)(a) of the Act was in force. Clause (ii) of the proviso to the said Section 4(1)(a) read as follows : (ii) Where such goods are sold by the assessee in the course of wholesale trade for delivery at the time and place of removal at a price fixed under any law for the time being in force or at a price, being the maximum, fixed under any such law, then, not withstanding anything contained in clause (iii) of this proviso, the price or the maximum price, as the case may be, so fixed, shall, in relation to the goods so sold, be deemed to be normal price thereof;" (underlining added) The "APM price" fixed by OCC and considered by the Tribunal in GAIL's case was seemingly covered by the above proviso to the erstwhile Section 4(1)(a) of the Act. In other words, under the pre-1-7-2000 provisions of Section 4, there was room for accommodating "APM price" as assessable value. The issue dealt with by the Tribunal in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic outcome, the decision is not an authority on point B. Point B is said to pass sub silentio." In MRPL's case, the Apex Court decided in favour of the assessee on the basis of the agreement between the Department of Revenue and the Ministry of Petroleum as disclosed in the Board's Circular dated 21-12-2000. The substantive issue as to what should be the assessable value of LPG (bulk) sold by MRPL to the OMCs during the relevant period post-1-7-2000 - whether it should be the transaction value as per the law made by Parliament or the lower price fixed by Executive for LPG (packed) meant for domestic consumption - was not argued before, or considered by, the court. It, therefore, passed sub silentio as rightly submitted by the learned JCDR. We also note that the rule of sub silentio was applied in the cases of Surgichem (supra) and A-ONE Granites (supra). In the case of A-ONE Granites, the Hon'ble Supreme Court also held that a judgment which passed sub silentio was not a binding authority on the point under Article 141 of the Constitution. We quote from the said case :- "Precedents sub silentio and without argument are of no moment. This rule has ever since been followed. In Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [AIR 1980 SC 674], "A case is decided on its particular conspectus of facts. When the facts materially vary, the law selectively shifts its focus". The following observations of the Hon'ble Supreme Court in Commissioner v. Srikumar Agencies [2008 (232) E.L.T. 577 (S.C.) = 2009 (13) S.T.R. 3 (S.C.) are also quite apposite to this context: "Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases. Disposal of cases by blindly placing reliance on a decision is not proper." The significant factual difference between the present case and the cases of GAIL, HPCL, BPCL and IOCL referred to by the learned Advocate is that, in the instant case, the assessee did not receive any compensation or subsidy from the Oil Pool Account and they recovered ex-refinery price from the buyers (OMCs) by issuing them commercial invoices in respect of LPG (bulk) on which duty was paid on a lesser value (APM price) under statutory invoices. On account of this factual difference, the decisions rendered by Co-ordinate Benches in different Oil Companies' cases cit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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