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TMI Blog2015 (11) TMI 1038X X X X Extracts X X X X X X X X Extracts X X X X ..... n decided in the appellants own case. It is his submission that the issue involved in this case is whether the price at which the appellant sold the goods has to be considered for discharge of Central Excise duty on LPG or on the invoices raised by the appellant to Oil Marketing Companies. It is also his submission that the demand is for the period June 2002 to December 2004. He would submit that Refinery Transfer Price is the price charged in the commercial invoice, by the Oil &. Natural Gas Corporation Ltd. (ONGC) which is in accordance with the "Administered Price Mechanism" (APM)/"Import Parity Price" which has been worked out by Ministry of Petroleum and Natural Gases. It is his submission that the Referral Bench has opined that in MRPL case wherein identical issue was contested and decided by the Tribunal in favour of the assessee and upheld by the Apex Court is based upon an agreement between the Ministry of Finance and the Ministry of Petroleum and Natural Gas is not binding and law as per Central Excise Act needs to be applied. He would take us through the Referral Bench Order and submit that the Referral Bench has ventured into and took upon itself whether the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07.2000 excise duty needs to be discharged on transaction value. It is his submission that ONGC supplies domestic LPG to Oil Marketing Companies and discharge excise duty on price which is less than the commercial invoice subsequently raised by the Oil Marketing Companies. The departmental representative would submit that the view taken by the Referral Bench that MRPL is sub silentio is correct and the view expressed in the MRPL case as has been upheld by the Hon'ble Supreme Court will not be applicable and hence the Larger Bench has to decide whether transaction value needs to be applied in a situation like the one in this case. He would submit that the concept of valuation of products has undergone a change after 01.07.2000 and excise duty liability needs to be discharged on an amount/value received by the appellant herein. He would submit that in MRPL case heavy reliance was placed by the Counsel for the appellant is based upon the judgement of the Larger Bench which was in respect of the concept of the valuation prior to 01.07.2000. 5. On considering the submissions made by both sides, it is noted that the facts in the case are not much in dispute which has been brought ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... URT-II Date of hearing: 28.7.2008 Date of Pronouncement: 6.8.2008 Central Excise Appeal Nos. 941 to 947 or 2006 Arising out of the order in original No. 19/MP/2005 dated 9.12.2005 passed by the Commissioner, Central Excise & Customs, Surat-1. For Approval and Signature: Hon'ble Mrs. Archana Wadhwa, Member(Judicial) Hon'ble Mr. B.S.V. Murthy, Member (Technical) 1. Whether Press Reported may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3. Whether their Lordship wish to see the fair copy of the order? Seen 4. Whether Order is to be Circulated to the Departmental authorities? Yes Appellants Respondent Oil & Natural Gas Corporation Ltd. Vs. C.C.E., Surat Appearance: Shre S. Suriyananarayan, Advocate for the appellant and Shri Sameer Chitkara, Authorized Departmental Representative (SDR) for the Revenue. Coram: Hon'able Mrs. Archana Wadhwa, Member (Judicial) Hon'able Mr. B.S.V. Murthy, Member (Technical) Order No.A/1535-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s depending upon whether the sale is to the domestic consumers or to industrial consumers. However, w.e.f. 6.9.2004, the duty on LPG is to be paid by the refineries at the time of clearance of LPG. Since it may not be ascertainable in all cases whether a particular consignment is to ultimately sold to domestic consumers or to industrial consumers, the assessment of LPG at the time of removal from the refineries in such cases may have to be done on provisional basis. Alternatively, the refineries may pay the excise duty at the highest of the assessable values and claim refund later on. He submits that this Circular supports his view that even after amendment of Section 4 in the case of goods which are subjected to APM of the Govt. of India, the assessment practice will have to continue as they existed prior to amendment of Section. 3. Learned SDR Shri Sameer Chitkara on behalf of the Revenue submits that after amendment of Section 4, what is relevant is transaction value. It is not disputed that oil marketing companies are paying for the SKO and LPG and there is no ground for differentiating that sale price into two categories, namely, assessable value and other value. According t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Section. It is also to be noted that the Tribunal in the above reproduced detailed order has also considered the judgement of the Tribunal in the case MRPL which has been relied upon by the Referral Bench to hold that transaction value needs to be added with the subsidy if any. In these peculiar facts and circumstances of the case, the Referral Bench should have followed the view expressed by the Tribunal in the appellant's own case. 5.3 It is also to be noted that the Board's Circular dated 30.06.2000 which has been reproduced in its entirety by the Referral Bench talks about an agreement reached between two Ministries of the Govt, of India. It is seen that the said CBEC Circular No.563/59/2000-CX dated 21.12.2000 in para 4 records as under:- "As the view taken by Tribunal did not appear to be strictly in accordance with the provisions of Section 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 department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia which is a Larger Bench decision with only condition that Refinery and Oil Company who has already paid the demands will be entitled for refund but no interest is to be paid. The said Circular is not a concession but has been issued after deliberating in detail the issue between the two Ministries of the Govt, of India and such Circular is binding on the Revenue. Revenue could not have argued against such Circular. It is to be noted that when there is an agreement between two Government departments on the same issue as it was in MRPL case, the view taken in the MRPL case will be applicable in the case in hand and more, so when on the same set of facts in the appellant's own case the Tribunal has held in their favour. 5.5 We were informed by the learned Counsel for the appellant that the Ministry of Finance and the Ministry of Petroleum and Natural Gas were in correspondence regarding the very same issue and the said letters are brought to our notice, which we reproduce:- [ ....Images are not reproduced ....] 5.5 It can be seen from the above reproduced letters of the Chairman of CBEC and the reply given by the Secretary of the Petroleum and Natural Gas, Govt, of India, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sumers. In view of the facts the Larger bench has already decided the issue and two Benches of this Tribunal have followed the same, we respectfully follow the same and allow the appeals filed by ONGC." By no stretch of imagination, the above mentioned order of the Tribunal can be considered a detailed order. The issue in the present case relates to the valuation of goods. The whole order does not speak anywhere about the provisions of Section 4 i.e. which deals with the valuation of goods or the Valuation Rules or anything of that type. In few sentences, it comes to particular conclusion in view of Larger Bench decision (which was for period prior to 1.7.2000), Tribunal's decision in MRPL case and RIL case. 8.3 The issue before the Larger Bench in the case of Gas Authority of India Ltd. was whether the LPG gas which when cleared in bulk from refinery/manufacturing place to bottling plant for bottling the same in the cylinder for household use, would be valued in the condition in which it is being cleared or after bottling. It may be mentioned that the price of LPG bulk was higher than the price at which the LPG was being sold to the domestic consumer. It would thus be seen t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 price regime and the producers/marketing oil companies had no choice but to sell the products at prices fixed by OCC. It was also a fact that LPG whether it was cleared in packed condition from refinery or when packed in an outside bottling unit, was sold at same price to consumers as fixed by OCC. It was felt, therefore, that it may not be appropriate to insist on Supreme Court's ruling as to wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot the case here. In case Government finds that Tribunal's decision is not acceptable due to administrative considerations such as subsidy etc., Government is empowered to issue suitable exemption notification or bring change in law to align the law with administrative desirability. 8.5 The second reason for arriving at the conclusion in appellant's case (para 8.1 above) was this Tribunal's decision in the case of MRPL. I have also gone through the Tribunal's decision in the case of MRPL reported in 2007 (78) RLT 508 (T). A perusal of the said decision of the Tribunal will indicate that para 1 of the order gives the brief facts of the case. In para 2, the submissions made by the senior counsel for the appellant and in para 3 that of JDR. The main contention of the senior counsel in the MRPL case was the Larger Bench decision of this Tribunal in the case of Gas Authority of India Ltd. The Tribunal did not independently analyse the issue with reference to Section 4 or Valuation Rules Or any of the Board's circular, but simply reproduced para 7 to 13 of the judgment of this Tribunal in the case of Gas Authority of India Ltd. which was for period prior to 1.7.2000. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel for the appellant in that case of ONGC (present appellant) and the Tribunal did not discuss anything about the said circular. Be that as it may, one has to understand the circular with reference to the context in which it is issued. Till 6.9.2004 the petroleum products were covered under the warehousing provisions which implied that all petroleum products after manufacture were moving from one warehouse to the other warehouse without payment of duty and it is only near the final consumption destination that the duty was being paid. On 6.9.2004, the Government withdrew the facility of warehousing in respect of the petroleum products and when the facility was removed with immediate effect, in order to ensure that there is no obstruction in the movement or clearance of petroleum products thereby causing shortage of such items in different parts of the country, the Board had issued a general circular. This circular was not meant to examine the valuation aspect of the petroleum products. In any case, this circular does not analyse about the sale of LPG by a manufacturer to an oil marketing company wherein the manufacturer is recovering the price corresponding to the import price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot discuss anything about the legal aspect but only speaks about the administrative aspect and speaks that the oil marketing companies will have to be. compensated by the Government in case the view taken by the CBEC is accepted. 8.9 A perusal of circular dated 21.12.2000 as also the letter of the Chairman, CBEC, clearly indicates the Revenue's stand all along, more particularly after 1.7.2000. 8.10 Ld. Sr. Counsel for the appellant invited attention of the Bench to para 26 of the Board's Circular dtd. 30/06/2000 and submitted that the Board has clarified that even after new Section 4 of the Central Excise Act, 1944 was brought into force, the present practice of assessment of price administered petroleum products should be continued. For the sake of convenience, para 26 of the circular is reproduced below: "26. The Application of new Section 4 and the valuation rules made thereunder to petroleum products may now be mentioned. Under the provisions of the existing Section 4 and rules made thereunder, the practice being followed is to assess the price administered petroleum products like motor spirit, HSD, SKO (domestic) and LPG to duty on the ex-storage sale prices that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dinate Bench is not correct or the coordinate Bench has not taken into consideration certain aspects, there cannot be a bar not to follow the earlier order. In this connection, I may usefully rely upon the judgment of the Hon'ble Supreme court in the case of Union of India v. Paras Laminates (P) Ltd. 1990 (49) ELT 322. In para 9 of this judgment, the Hon'ble Supreme Court has held as follows: "9. It is true that a Bench of two members must not lightly disregard the decision of another Bench of the same Tribunal on an identical question. This is particularly true when the earlier decision is rendered by a larger Bench. The rationale of this rule is the need for continuity, certainty and predictability in the administration of justice. Persons affected by decisions of Tribunals or Courts have a right to expect that those exercising judicial functions will follow the reason or ground of the judicial decision in the earlier cases on identical matters. Classification of particular goods adopted in earlier decisions must not be lightly disregarded in subsequent decisions, lest such judicial inconsistency should shake public confidence in the administration of justice. It is, how ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 6.8.2008 [2015] 320 ELT 614); (ii) Civil Appeal No. D24746 of 2009 which has been converted into Civil Appeal No.4197-4199 of 2010 (Order of CESTAT bearing No. A/2587-2589/WZB/AHD/2008 dated 26.11.2008), there is no reason for the Bench to take any view in the matter. I am unable to agree with the said view. In fact, recently in the case of Standard Chartered Bank & others vs. CST, Mumbai-I reported in 2015-TIOL-1713-CESTAT-DEL-LB, similar issue has come up wherein the Revenue had taken similar objection and wanted that Larger Bench should not decide the issue. In that context, the Larger Bench in the said case has observed as under:- "46. Preliminary Objections by Revenue to hearing of the Reference : The Principal Commissioner, Service Tax (Mumbai-I and IV) has filed miscellaneous application No. ST/MA(ORS)/93629/15-Mum seeking adjournment hearing of this reference until final disposal of "this matter" by the Hon'ble Supreme Court of India. It is pleaded that against the Tribunal decision in ABN Amro Bank Limited, the successor to this Bank i.e. Royal Bank of Scotland N.V. filed Central Excise Appeal No. 693 of 2012 before the Allahabad High Court. The High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Bench of this Tribunal disagreed with an earlier decision of a special Bench of this Tribunal and referred the matter to the President for constitution of a Larger Bench of five Members, for reconsideration of the earlier decision of the three Member Bench, while an appeal against the three Member Bench decision was pending before the Supreme Court. The President constituted a five Member Bench and this was challenged before the Delhi High Court. In Paras Laminates (Pvt.) Ltd., v. CEGAT 1990 (45) ELT 521; the Delhi High Court quashed the order of the President referring the case to a five Member Bench and inter alia observed: Judicial propriety demanded that before the constitution of the Larger Bench, the President should have waited for the decision of the Supreme Court which would have been binding on all the Courts. The order of the special Bench and the order of the President referring the case to the Larger Bench were quashed for a plurality of reasons including jurisdictional. Against this order, an appeal was preferred which was allowed by the Supreme Court in Union of India v. Paras Laminates (Pvt.) Limited 1990 (49) ELT 322 (SC) 2002-TIOL-48-SC-CUS.The Supreme Court r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igation and not brush aside any such argument. Case laws are not above law. Law should be respected more than case law. The coordinate referral bench has just done that. We will be failing in our duty if instead of examining the matter, particularly the points raised by the referral bench, we brush aside the reference or arguments. 13. With above in view, I proceed to record my views on the merits of the reference. 14. There is no dispute that appellant ONGC sold and cleared LPG (bulk) from its refinery to OMCs during the period, June, 2002 to December, 2004. The OMCs sold, a part of it (which is subject matter of dispute) after bottling in cylinders to domestic consumers through dealers. ONGC sold to the OMCs at a price as indicated in commercial invoices. This price was based upon Import Price Parity. Amount indicated in commercial invoices was collected from OMC. However, excise duty was not paid as per these invoices. OMC in turn sold the same after bottling in cylinders at 'APM price' which was ex-storage price fixed by OCC, Ministry of Petroleum, ONGC paid central excise duty on APM price under cover of central excise invoices issued under Rule 11 of the Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd other taxes, if any, actually paid or actually payable on such goods." As per the amended Section 4(1)(a) .of the Act, 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 are not related and the price is the sole consideration for the sale. As per this provision, for the transaction value to be reckoned as the assessable value, three conditions are required to be satisfied, namely, (i) sale of goods by the assessee for delivery at the time and place of removal, (ii) the assessee and the buyer are "not related and (iii) the price is the sole consideration for the sale. In the present case, admittedly, the appellant satisfied all these conditions. Therefore, the assessable, value of LPG which was sold in bulk, ex-refinery, to the OMCs should be its transaction value' as defined in new Section 4(3)(d) of the Act. 14.3 From the definition of 'transaction value', it is quite clear that the 'transaction value' of excisable goods is the price actually paid or payable for the goods when sold and includes, in addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 4 of the Central Excise Act, 1944. The said Section was amended in the year 2000 which amendment came into effect on 1-7-2000. The legal position relating to identical sales tax incentives Scheme which would prevail in view of the unamended provision as well as amended provision, came up for consideration before this Court in Commissioner of Central Excise v. Super Syncotex (India Ltd.) 2014 (301) E.L.T. 273 (S.C.). This Court took the view, after analysing the provision of Section 4 which provided prior to the amendment, that the assessee would be entitled to claim deductions towards sales tax from the assessable value and sales tax incentive which is retained by the assessee namely 75% sales tax amount in this case. The Court also held that this position changed after the amendment in section 4 with effect form 1-7-2000 and in arriving "the transaction value" the amount of 75% which was retained by the assessee, will be included. As per the aforesaid decision, the assessee/respondent herein will not be liable to pay any excise duty on the sales tax amount which was retained under the Incentive Scheme, up to 30th June, 2000. However, this component of sales tax which was reta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the definition of transaction value to reflect the legislative intention as explained above. The words "actually payable" in the context of the amount of 11. duty of excise, sales tax and other taxes would normally come into play only in those situations where the amount of excise, sales tax or other taxes is not paid at the time of transaction but paid subsequently, for example, sales tax payable under a deferment scheme." 27. Insofar as the present case is concerned, there is no doubt that 50% of the sales tax collected was retained by the assessee and was not actually paid to the exchequer nor was it actually payable since the HPC permitted the assessee to retain that amount. 28. Therefore, whichever way the issue is looked at, the fact remains that the assessee retained with it 50% of the sales tax collected from its customers and it was neither actually paid to the exchequer nor was it actually payable to the exchequer. That being the position, the transaction value was required to be calculated by including the amount of about Rs. 22.44 crores retained by the assessee. 29. In our opinion, the Tribunal misdirected itself in law on several counts and erroneously decided the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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