9911796707
TMI Blog2024 (6) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... ved ' the demand on Trade Margin‟ confirmed against the Appellant is not sustainable and is required to be set aside. This decision has been followed by Hyderabad Bench of this Tribunal in case of BHAGYANAGAR GAS LTD VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, GUNTUR [ 2023 (11) TMI 1165 - CESTAT HYDERABAD] where it was held that 'The Court below has erred in drawing adverse inferences as the word commission has been used instead of the word profit-margin . Further, no adverse inferences can be drawn as the RSP is fixed by the Appellant, which is a PSU and CNG being a sensitive product touching the life of common man, in various aspects.' There are no merits in the impugned order and the same is set aside - appeal allowed. - HON BLE MR. P. K. CHOUDHARY , MEMBER ( JUDICIAL ) And HON BLE MR. SANJIV SRIVASTAVA , MEMBER ( TECHNICAL ) Shri Atul Gupta , Advocate for the Appellant Shri Manish Raj , Authorised Representative for the Respondent ORDER SANJIV SRIVASTAVA : This appeal is directed against Order-in-Appeal No.38/CE/ALLD/2015 dated 11/03/2015 passed by Commissioner (Appeals) Central Excise Service Tax, Allahabad. By the impugned order, the Order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end to evade payment of duty. 2.6 A show cause notice dated 10.07.2012 was issued to the appellant asking them to show cause as to why- (1) The demand of Central Excise duty amounting to Rs.30,74,603.00 [Cenvat Rs.29,85,051.00 + Education Cess Rs.59,705.00+ S H Education Cess Rs.29,847.00] should not be confirmed and recovered from them under Section 11A along with Interest under Section 11AA (Section 11AB) of Central Excise Act, 1944, and (2) penalty should not be imposed upon them under Section 11AC of Central Excise Act, 1944. 2.7 This show cause notice has been adjudicated as per Order- in-Original referred in para 1 above. 2.7 Appellant filed appeal before Commissioner (Appeals) which has been disposed of by the impugned order referred in para no.1 above. Hence this appeal. 3.1 We have heard Shri Atul Gupta, Advocate for the appellant and Shri Manish Raj Authorized Representative for the revenue. 3.2 Arguing for the appellant learned Counsel submits that- In absence of any evidence to support the allegation that there was any free supply, no notional amount may be added in term of Rule 6 of the Valuation Rules. No evidence for supply of manpower-demand is not sustainable. No f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e also referred to as tenancy or lease agreement. In rental agreements, there is a transfer of interest from a lessor to a lessee. If the premises are given on tenancy, there is an element of irrevocably by the owner except on the grounds for eviction mentioned under the Rent Act. From the above it is crystal clear that the License Fee is different from rent. Thus it can categorically be said that M/S HPCL/BPCL were not charging any rent for the commercial use of the property owned by M/S HPCL/BPCL or their dealers as case may be from M/S CUGL. The 72 agreed amount of Rs.0.06 per kg of CNG is inbuilt into the cost of the product, is known at the time of removal is a condition for the sale of CNG to HPCL etc. The agreement allowed CUGL to market their products effortlessly with mutuality of interest between the saler and the buyer. In fact, it benefitted both the parties directly and indirectly. The amount is extra consideration otherwise CUGL would have to setup the infrastructure with huge financial involvement. The appellant has contended that Section 4(1)(a) of Central Excise Act 1944 is applicable in their case. I find that Section 4(1) (a) reads as under: Where under this Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid Rules reads as under: Where the excisable goods are sold in the circumstances specified in clause (a) of sub section (1) of section 4 of the Act except the circumstance where the price is not the sole consideration for sale, the value of such goods shall be deemed to be the aggregate of such transaction value and the amount of money value of any additional consideration flowing directly or indirectly from the buyer to the assessee. In view of the above discussion I am of the opinion that the case of the appellant is rightly covered under the Rule 6 of the CENTRAL EXCISE VALUATION (DETERMINATION OF PRICE OF EXCISABLE GOODS) RULES, 2000 as held by the Ld Adjudicating Authority. The appellant has contended in the appeal that the case is hit by limitation as they have regularly supplied the copies of the Balance sheet to the department. The Appellant have not adduced any evidence to prove their pleading. Even otherwise submission of balance sheet does not prove that the agreement its contents were disclosed to the department. In absence any such evidences available before me, I am not inclined to accept it. 4.3 We find that the issue involved in the present case is vis- - vis deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces. Hence clearly it is a negotiated deal between the two parties. Para 14.2 of the agreement makes it clear that the appellant does not act as agent of OMCs or vice-versa. Para 8.8 of the agreement states that the trade margin is a genuine pre-estimate of the costs and expenses and commission to dealers, which means the OMCs can recoup their expenses and profit margin. Para 5 of the agreement provides a point of time at which the title to the goods pass from the appellant to the OMCs and thereupon to the consumers. It is at this passing of title to the goods from the appellant to the OMCs that the VAT payment is made by the appellant and the OMCs also paid VAT at the time that they made further sale of gas to the customer. The appellant issued sales invoice to OMCs and paid VAT on such value and the same value was also shown in the sales tax return at which the goods are sold to the buyers. Clause 3.6 of the agreement entered between the Appellant and Indian Oil Corporation on 25.4.2011 provides that the ownership of CNG is transferred from the appellant to OMCs at the Inlets of the CNG stations and therefore the Appellant had taken the insurance cover in respect of risk and liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lets of PPs and the sales price of MGL to OMCs, treating the difference as the charges for the services rendered by OMCs to MGL and the Department also claims that sale is not taking place between the appellants and OMCs. We have perused the copies of Central Excise invoices issued by MGL to OMCs on daily basis for dispensing CNG from 6.00 am to 6.00 am showing the quantity supplied, assessable value, duty paid/payable, etc. We also find that there are joint tickets prepared outlet-cum-party-wise showing the sale period starting at 0600 hrs. on preceding day and ending at 0600 hrs. on the succeeding day and also show the quantity of CNG dispensed with opening reading, closing reading, total reading and total quantity supplied. Such joint-tickets are also signed by both parties, i.e. appellants and OMCs. Thereafter, the appellants are raising tax invoices upon OMCs on monthly basis with specific business days within which payment has to be made by OMCs and for any delay in payment, interest is also payable by OMCs. The appellants have paid VAT/sales tax on their sale of CNG to OMCs, as evidenced from the invoices. Further, sales invoices of OMCs for resale of CNG to ultimate buyers, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service providers and not buyers of CNG from MGL. Their obligation under the contracts is merely to provide assistance for supply/sale of CNG to the vehicles by MGL. For acting as an agent of MGL, PPs get specified service charges on per kg basis of the CNG sold by them on behalf of MGL. Since the PPs are acting as agents of MGL for supply of CNG, PPs consider their activity as Business Auxiliary Service and pay service tax on the commission received from MGL. We find that sale of CNG by the appellants to OMCs is on principal-to-principal basis, which is clear from various terms/covenants of the agreements between MGL and OMCs, i.e. retail sales price is the price at which CNG is to be sold to vehicles by the OMC as communicated by MGL to OMCs, from time- to-time; OMC shall sell CNG at the outlets situated at the site; Retail Price of CNG shall be fixed by MGL and the OMCs shall sell the CNG only at the retail price communicated by MGL to OMCs, from time-to- time; OMCs shall pay to MGL the retail price as reduced by profit margin/commission/discount; MGL shall, before 5th of every month, send to OMCs an invoice for the quantity of CNG sold by OMCs during the preceding month. Such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents when read with invoices raised by the appellants upon OMCs, it is clear that it was the sale transaction on principal-to-principal basis and, hence, as held by Hon‟ble Supreme Court in Perfect Circle Victor - 1992 (60) E.L.T. 676 (S.C.) and D.C.M. Textiles - 2006 (195) E.L.T. 129 (S.C.), etc. trade discount allowed by whatever name called is an admissible deduction and the appellants are not liable to include the same for the purpose of payment of duty. In the present case, the appellants have charged mutually agreed price, which is transaction value between the appellants and OMCs in the normal course of their business for sale of CNG and no additional consideration, whatsoever, flows from OMCs to MGL. Further, by virtue of its technical necessity, the supply of CNG could have been done in the manner in which the appellants have done, as natural gas by the process of compression amounts to manufacture for the purpose of marketing as CNG for use as fuel which has been done at the time of dispensing. Inasmuch as NG is compressed at 210 bars pressure in Mother Stations and Online Stations and got stored in stationary cascades and dispensed by bringing the pressure to 200 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charged on the transaction. The appellant raised export invoice on the foreign entity and received the export proceeds from their foreign principal as evidenced from the bank realization certificate dated 6-9- 2007 and the proceeds have been credited to the appellant‟s accounts and the commission paid or payable is shown as nil. However, in the books of accounts they had shown the mark up made in the transaction as commission income‟. Therefore, the department came to the conclusion that the appellant was acting as a Commission agent for M/s. Tyco Electronics Corporation India (P) Ltd., and hence on the mark up made by them, they are liable to pay Service Tax under the category of Business Auxiliary Service . Accordingly, a notice was issued and the demands were confirmed vide order dated 16-12-2008 solely on the ground that the mark up made by them in the transaction was shown as commission income in their books of account. The appellant preferred an appeal against the said decision before the lower appellate authority, who rejected the appeal. Hence, the appellant is before us. Para 6.1 We have also perused the purchase order and sale invoices issued by M/s. Tyco Elec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicable as the issue involved in the said case was as to whether the expenses of loading of excisable goods within the factory for clearance to buyer are to be included in the assessable value or not, which is not the issue in the present case. We are of the view that the demand on Trade Margin‟ confirmed against the Appellant is not sustainable and is required to be set aside. 7. We also find that the demands raised in the instant case are hit by limitation of time as the Appellant right from beginning made correspondences with the Department disclosing the price structure and the terms of agreement entered with the OMCs. The Revenue was in knowledge of the valuation method adopted by the appellant. The Appellant since 2005 had made correspondence with the department disclosing the price structure with bulk customers, retail customers and OMCs to the Revenue on 6.12.06, 1.2.2007, 27.7.08, 15.1.10, 19.2.10, 12.4.10, 17.9.10. The above correspondence clearly shows that the Appellant were disclosing the methodology of valuation and the Revenue never pointed out any irregularity. In such case, the bona fide of the appellant cannot be doubted. Since there is no ingredient of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .L.T. 175 (Tri. Mumbai) which was approved by the Hon'ble Supreme Court in the case of Commissioner vs. Mahanagar Gas Ltd. 2018 (360) E.L.T.A133 (S.C.). Thus, he held that the difference in the retail sale price of CNG sold by the appellant from their own outlet that sold through the retail outlets of M/s BPCL/ M/s HPCL, is nothing but trade discount/ commission given to M/s BPCL/ M/s HPCL. 4.2 Thus, I find that in this case, the Adjudicating Authority has failed to determine the money value of space man power supplied by M/s BPCL/ M/s HPCL and the amount which he has considered as money value, is nothing but trade discount/commission given to M / s BPCL/ M/s HPCL (as held, vide the Orders-in-Appeal No. 35-36-CE/APPL KNP/ADG-NACIN/2017-18 dated 21.02.2018, in respect of demands for the subsequent periods) which is permissible deduction from assessable value. Thus, when there is nothing on record, to show any money value, I find that Rule 6 of the Valuation Rules cannot be applied in this case and as such, the impugned Order is not sustainable. 4.7 As the issue is squarely covered by the above referred decisions, we do not find any merits in the impugned order and the same is se ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
