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TMI Blog2005 (2) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be appreciated that the agreement among the oil companies has been entered into on a directive from the Government of India. This results in an optimal utilisation of the marketing facilities of the various companies in the country and reducing the cost of transportation. It is better for a refinery to market its products at a nearby marketing facility owned by another company than to send the same goods to its own marketing facility at a far off place. Alternatively, when the company having a refinery has a marketing outlet at some other place, nearer to a refinery of a different company, then it would be better for that marketing outlet to purchase the product from that refinery rather than receive from their own refinery. This arran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... products in their refinery located at Visakhapatnam. Till 1-4-2002, the price of petroleum products was fixed on the basis of Administered Price Mechanism (APM). In the wake of dismantling of APM, to maintain uninterrupted supplies to consumers the Government of India directed the various Oil Marketing Companies (OMCs) to enter into an agreement. The Oil Marketing Companies have their refineries and marketing network at various places in the Country. It so happens that in a particular place the refinery may be owned by one Company, and the marketing establishment by another. It was felt that in public interest to prevent any unhealthy development it would be in the fitness of things to have an agreement between all the oil companies, by whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered as commercial relationship, since all the parties stood to gain mutually by the arrangement. It was also observed that there is a huge difference between the price adopted to oil companies and that to dealers. Hence, the price to oil companies is not a representative price. Further it was held that the parties to the agreement including the appellant have wilfully and consciously dealt with the goods on which they knew that the duty was not discharged correctly. Further it was held that the price has been deliberately mis-declared by suppressing the agreement. 2. The Adjudicating Authority confirmed duty demands under Section 11A(1) along with interest under Section 11AB of the CE Act, 1944 and imposed separate penalties under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner's order as this fact has been referred to by Commissioner of Central Excise, Ahmedabad in Order-in-Original No. 02-06/Commissioner/2005 dated 2-2-2005 passed on similar grounds in case of M/s. IOC. 5. The learned JCDR urged the following points : The Agreement between the Oil Companies indicates that the price adopted by the Appellant to the Oil Companies is not a normal price and does not represent the transaction value. The price is not based on commercial considerations. Since each company will be supplying its products to the other company having marketing facility, there is mutual benefit. The import parity price, which is the basis for the price agreed upon by the parties to the agreement, is not representative of the actual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tank/truck/ wagon as nominated by the other oil companies for onward dispatch to their dealers. It should be appreciated that the agreement among the oil companies has been entered into on a directive from the Government of India. This results in an optimal utilisation of the marketing facilities of the various companies in the country and reducing the cost of transportation. It is better for a refinery to market its products at a nearby marketing facility owned by another company than to send the same goods to its own marketing facility at a far off place. Alternatively, when the company having a refinery has a marketing outlet at some other place, nearer to a refinery of a different company, then it would be better for that marketing out ..... X X X X Extracts X X X X X X X X Extracts X X X X
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