9911796707
TMI BlogDetermination of assessable value of the petroleum products-under- erstwhile Sec. 4 - addition of compensation received from Oil Pool account-reg.X X X X Extracts X X X X X X X X Extracts X X X X ..... oreover number of petroleum products falling under this category are generally transported from the refineries to the warehouses, known as storage points. The Central Excise duty is discharged at the time of removal from the storage point. It has been reported that in respect of bulk petroleum products sold from the storage points, excise duty was paid on the assessable value declared as ex-storage points selling price. As a general practice that is being followed since 1994 when ad valorem rates of duty were prescribed for petroleum products and in view of above said Circular, the ex-storage point prices have been taken as the price for determination of assessable value. The prices of bulk petroleum products, motor spirit, HSD Kerosene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter whether there is any case for adding compensation received by Oil companies from Oil Pool Account, to assessable value of S.K.F. based on ex-storage point prices has been, examined by the Board in consultation with the Ministry of Law. The Law Ministry has inter alia opined that in case of administered prices of SKO, the present contribution from the Oil Pool Account cannot be added to the dutiable value. A copy of the opinion of the Ministry of Law, Department of Legal Affairs dated 27.01.2000 is enclosed. The Board has accepted the advice of Ministry of Law and you are requested to keep in view this advice of Ministry of Law while finalising the assessment of Petroleum products. Receipt of this Circular may please be acknowledged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is incurred till the final stage of sale should go to enrich the value of a product and it should form part of the assessable value of the product. 4. The matter may be examined from two angles, i.e., (i) 'Whether the administered price is a price fixed under a law for the purpose of Sec. 4(l)(a) and, if yes, whether no addition can be made to the price so fixed ; and (ii). Whether otherwise the contribution from PPA can be added to the normal price under Sec. 4 of the Act. 5. The Parliament has used the expression "price fixed under any law". Kerosene is an essential commodity finding place" at clause (viii) as "petroleum and petroleum products", in Sec.Q of the Essential Commodities Act, 1955 (EC Act). Sec. 3 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the maximum price fixed under the law at which SKO can be sold. The Order does not require a Gazette Notification of the prices fixed by the Central Government. Still the price fixed would not lose its character a price fixed under the l aw, since it owes its authority to the Act. Recently the MRTP Commission in Director General (l R) Vs. INFAR (India) Ltd. reported at (2000) 1 Comp LJ 158 (MRTPC) observed in the context of prices fixed under the Drug (Prices Control) Order, 1995: " If pricesare fixed under the Drug Control Order which is made under the Essential Commodities Act, it can be said to have a force of law and it can be said that it is expressly authorised by law." Even if a view is taken that the actual price fixation is by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia recently held in the case of Mysore Mineral Ltd. Vs. CIT, (1999)239 ITR 775 "We do not think such a benefit to no one situation to have been intended by the Legislature." Similarly, the Courts are not likely to accept the argument that whenever the administered prices are higher than the cost plus profit the second proviso will be applied but would be ignored in the reverse case. 10. In Aluminium Industries Ltd. Vs. CCE, 1998(99) ELT 486 (S.C) the assessee realised extra amount of ' RS. 805 per M.T. as conversion charges in addition to the 'price fixed under the Aluminium (Control) Order.-The Hon'ble Supreme Court deleted the addition and held that by virtue of the second proviso, a legal fiction has been created. The price fixed und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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