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TMI Blog2023 (11) TMI 1165X X X X Extracts X X X X X X X X Extracts X X X X ..... in various aspects. The impugned order set aside - appeal allowed. - HON'BLE MR. ANIL CHOUDHARY , MEMBER ( JUDICIAL ) And HON BLE MR. A. K. JYOTISHI , MEMBER ( TECHNICAL ) Shri Karthik Raman , Advocate for the Appellant Shri V. R. Pavan Kumar , AR for the Respondent ORDER [ Order per : ANIL CHOUDHARY ] The issue involved in this Appeal is valuation for the levy of Central Excise duty. 2. The Appellant is a PSU and is a Joint Venture between (i) Hindustan Petroleum Company Ltd (HPCL), (ii) GAIL (India) Ltd (GAIL), (iii) Kakinada Seaports Pvt Ltd (KSPL) and (iv) the Government of Andhra Pradesh. The Appellant manufactures Compressed Natural Gas (CNG). The Appellant was registered with the department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has procured the CNG, it effects further sale to the end-customers. 6. While the Appellant charges, for instance Rs.28.63/- to HPCL for the sale of CNG (including the excise duty and VAT applicable); the price at which the HPCL may sell to the end-customer is also fixed in the agreement, owing to the sensitive nature of CNG. Accordingly, in this illustration, HPCL sells the CNG to the end-customers at Rs.30/- including VAT of Rs.3.8/-, leaving a profit-margin of Rs.1.20/- for HPCL. 7. It is a matter of record that this profit margin of Rs.1.20/- per Kg that is made by HPCL is retained by HPCL alone and it is never passed on to Appellant. There is no allegation or finding in the assessment order or in the Appellate Order that the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the mark-up retained by HPCL is not a commission, but HPCL s own profit-margin. Even otherwise, the Agreement must be read as a whole and not in isolation to suit one party or the other. A comprehensive study of the Agreement would show that there was no intention of agency. 11. The Appellate Authority has observed that there is no sale of CNG between the Appellant and HPCL when it is cleared at the factory gate, since the Appellant has installed equipment at HPCL s retail stations and they are also maintaining them in proper conditions and paying electricity charges as applicable. It was held that the relation between the parties is not on principal to principal basis, and what is paid to HPCL, is indeed commission. It was also held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In consequence thereof, the trade profit/commission/discount given to OMC was excluded from the RSP by way of backward calculation. In other words, Excise duty was being paid by Mahanagar Gas Ltd on the sale price to OMC, which was the transaction value. Similar objection was raised by the Revenue for demanding differential duty with respect to sales made to OMC alleging that all parameters like ownership of equipment, manner of production, product RSP, etc., remained in the control of Mahanagar Gas Ltd till the point of sale to the retail customers. This Tribunal held that Mahanagar Gas Ltd have charged the mutually agreed price, which was the transaction value with respect to sale to OMC in the normal course of their business, and no ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been pleased to set aside the demand and allow the Appeal under similar facts and circumstances. Accordingly, learned Counsel prays for allowing their Appeal with consequential benefits. 14. Opposing the Appeal, learned AR for Revenue relies on the Impugned Order. He further refers to the facts that Appellant sells CNG to HPCL and thereafter, HPCL sells the same to retail customers at the administered price. HPCL agreed with the Appellant to set up CNG dispensing facility in their retail outlets. Such RSP is fixed by the Appellant at which HPCL is to sell to the retail customers. Thus, it is Appellant which is selling CNG to the retail customers through HPCL, as the sale price is being determined by the Appellant and not HPCL. It is furt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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