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TMI BlogDetermination of Assessable value (AV) of Petroleum ProductsX X X X Extracts X X X X X X X X Extracts X X X X ..... s is concerned, they can be divided into two categories, namely, (a) Formula products; and (b) Free pricing products 2. The prices of petroleum products falling under the category of 'Formula Products' are determined by the Ministry of Petroleum Natural Gas. The prices of petroleum products in the category of 'Free Pricing Products' are examined by the individual oil companies. In the case of 'free pricing petroleum products' generally ex-factory price is available and there may not be problem to determine the assessable value (AV) of such products. Selling price 'Formula products' is determined taking into account number of factors. Moreover, number of petroleum products falling under this category are also generally transported fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charges 4. The matter has been considered and as regards determination of assessable value for petroleum products, where excise duty is paid at the ex-storage point, I am directed to clarify as follows: 4.1 State Surcharge 4.1.1 In addition to ex-storage point selling price declared to the Central Excise Department for the purpose of levy of excise duty, oil companies are also collecting specified amount from the buyers under the head 'State Surcharge'. The amount collected under this head is surrendered to the 'Oil Pool Account'. Though this amount is collected as 'State Surcharge', it has not actually been remitted to the concerned Sales Tax Department. Sales Tax Act specifically prohibits the seller from collecting curcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivering the product from the exstorage point to their dealers' premises; and (b) Operating cost of the RPO and return on investments.The oil companies supply Motor Spirit (petrol) and HSD oil at the RPOs without charging additional amount for transportation as long as the RPOs are situated within the limit known as free delivery zone. Actual cost of transportation incurred from warehouses to the delivery point is liable to be excluded form the assessable value subject to verification. As regards the portion of the amount collected under the head 'Operating cost and return on investments' the fact remains that the buyer has got no option except to pay these amounts as determined by the oil companies and in the absence of any explicit arr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... together which in turn is used to meet the expenditure of this incentive scheme. Quantity discount discount is a discount given uniformly to all the buyers based on the quantity. In the present case, the said amount is collected uniformly from all the dealers. How and for what purpose this amount is utilised may not be material to determine the inclusion of this in the assessable value. So long as the amount is collected from the buyer, such amount allowed to be deducted from the normal price and not the amount collected from the buyer for any specified purposes. 4.3.2.In view of the above, the amount collected under the head 'RPO Surcharge' is liable to be included in the assessable value. 4.4 Railway siding Charges/ Shunting Char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion subject to verification. 5. In view of the foregoing, it is hereby clarified that the following amounts collected by the oil companies from the buyers on the sale of petroleum products are liable to be included in the assessable value. (a) State Surcharge; (b) RPO Charge, excluding the amount relating to cost of transportation incurred for delivering the products from the warehouses to the storage point, subject to verification; (c) RPO Surcharge; (d) Railway siding charges/ shunting charges; and (e) Air field charge, excluding the amount relating to cost to transportation incurred for delivering the product from the warehouses to the storage point, subject to verification, 6. All pending assessments / disputes may be final ..... X X X X Extracts X X X X X X X X Extracts X X X X
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