TMI Blog2015 (11) TMI 1038X X X X Extracts X X X X X X X X Extracts X X X X ..... al consideration but administrative consideration. In my considered view, for future dispute, particularly when law itself was amended, in such a situation it is the duty of this Tribunal to examine the legal issues and give a verdict on the legal issue. If the circular was issued based upon legal analysis, this Tribunal will be justified to say that Revenue could not have argued against the circular. But that is not 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. Board has not anywhere stated that even when the manufacturer was selling the goods at a price higher than the APM price, then also the APM price is to be taken as the transaction value for purposes of assessment. Similarly, this circular no where states that even wherein manufacturer (like appellant) is selling the gas in bulk at import price parity to OMCs, duty is required to be collected at APM prices. - The OMCs sold, a part of it (which is subject matter of dispute) after bottling in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was lower than the value declared in the commercial invoice. Only the actual taxes paid from the overall transaction value are required to be deducted. In essence, whatever amount is recovered except the taxes actually paid will be the assessable value. In the present case, there is no dispute that the value recovered by the appellant is as per the commercial invoice and therefore the commercial invoices represent the transaction value, the duty will required to be paid by the appellant on the said transaction value. The APM price recovered by the appellant's customer from the general public or their customer is not relevant for determining the assessable value of the goods sold by appellant to OMCs under Section 4 of the Central Excise Act. Appellant was required to discharge its duty liability on the basis of 'transaction value' which it collected from the OMCs by issuing commercial invoices during the disputed period in terms of provisions of Section 4 of the Central Excise Act as amended w.e.f. 01/07/2000. In other words, post 01/07/2000, the provisions of new Section 4 cannot be ignored for determination of assessable value of LPG sold in bulk to OMCs for further sale i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 MRPL as passed by the Apex Court is sub silentio or otherwise is incorrect, as Apex Court considered the discussion held between the two Ministries of the Govt, of India on the self same issue for the period subsequent to the transaction value regime. He would submit that new Section 4 of Central Excise Act, 1944 came into picture from 01.07.2000 which requires the transaction value between purchaser and seller be considered for discharge of excise duty is the principle which cannot be faulted with, but in the case of ONGC, Liquefied Petroleum Gas (LPG) is sold to oil marketing company at a price which has been fixed by Govt, of India and excise duty is discharged on such prices, while in order to recover the cost which are more than the price fixed by the Govt, of India, ONGC issues the commercial invoices to Oil Marketing Company. He would submit that the commercial invoice of ONGC is definitely more than the value as mentioned for discharge of excise duty. He would read the decision of the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 out by the Referral Bench which we reproduce:- The dispute in the present case relates to the valuation, for assessment of duty of LPG (domestic) cleared in bulk from the appellant factory (refinery) to Oil Marketing Companies, namely Hindustan Petroleum Corporation Ltd. (HPCL), Bharat Petroleum Corporation Ltd. (BPCK) and Indian Oil Corporation Ltd. (IOCL) during the period June 2002 to December 2004. The appellant sold the goods to the OMCs at a price which was referred to as Import Parity Price and the OMCs sold the same after bottling in cylinders to their dealers at price fixed under a' scheme called Administered Price Mechanism (APM) by the Oil Co-ordination Committee under the Ministry of Petroleum, Govt, of India and the dealers in turn, supplied the goods in cylinders at the same APM price to the domestic consumers. 5.1 The Referral Bench has noted that the Tribunal in the case of the appellant's own case has decided an identical issue vide final order No. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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/1535-1541/WZB/AHD/08 Per B.S.V. Murthy: 1. Appellant M/s ONGC is manufacturing and selling Superior Kerosene Oil (SKO) and Liquefied Petroleum Gas (LPG). The dispute is about the valuation of these two products governed under Administered price Mechanism (APM) formulated by the Government of India. ONGC sells these products to oil marketing companies, namely, HPC, BPCL, IOCL, and IBP and who in turn, sell these products through public Distribution System (PDS) in the case of SKO and sell LPG through their own distributors. As per policy of the Government, these products are sold to the end consumers at the prices which are fixed but the Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is 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 to him, the actual amount received by the ONGC from the oil marketing companies irrespective of the fact whether the oil marketing companies pay this amount out of their own or not resources is not relevant. He also cites the decision taken by the Commissioner in his order in support of the argument. In addition, he also cites the judgment of the Hon'ble Supreme Court in the case of C.C.E. v. Mazagaon Dock Ltd. 2005 (189) ELT 3 (SC) wherein it was held that subsidy of 10% received by buyer is additional consideration and is includible in the assessable value and the fact that it is received under the policy under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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 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 and 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licable 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, the entire issue has been correctly put by the Secretary of the Petroleum and Natural Gas that it will be a transfer of money from one Govt, department to another. We were also informed that the appeals filed by the Revenue against the judgement of the Tribunal in the appellant's own case are still pending in the Apex Court. 5.6 In view of the foregoing as recorded herein above, the Referral Bench ought to have followed the views expressed by the Tribunal in the appellant's own case. Accordingly, it has to be held that the views expressed by the Tribunal in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entences, 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 that the issue before the Larger Bench was not the valuation of LPG cleared by manufacturer to oil marketing company. The Larger Bench of this Tribunal in the case of Gas Authority of India Ltd. ( supra ) which was pertaining to period prior to 1.7.2000 took the view that excise duty on LPG cleared in bulk for domestic consumption as per the price fixed by the OCC is the correct duty to be paid. Revenue was not satisfied with the decision and had filed appeal before Hon'ble Supreme Court. However later on, the Board issued the circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter 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 whether as per Section 4 higher value (and resultant excise duty) in second category of cases is legally justified. Both the Departments agreed that even if Supreme Court agreed with revenue view point the Oil Companies will not be able to recover any duty. After discussions with representatives of Ministry of Petroleum and considering Hon'ble Apex Court direction to resolve the dispute essentially between Govt, and PSUs, it has been decided by the Govt, that in the special circumstances of production and marketing of LPG with Administere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 (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. The Larger Bench had no occasion to consider the concept of transaction value' under Section 4(3)(d) of the Central Excise Act, 1944 and therefore, this Tribunal should not have applied this case law without legal analysis. The crucial aspect that the concept of value and Section 4 has changed from 1.7.2000 was totally missed in the order of MRPL. The fact that before 1.7.2000, Section 4(i)(a) - proviso (ii) read as under:- Where such goods are sold by the assessee in the course of wholesale trade for d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 parity. In my considered view, any reliance on the circular dated 6.9.2004 in the context of the present issue will be totally misplaced. In any case, in the said order of the Tribunal the Board's circular dated 6.9.2004 was not the basis to arrive at the conclusion. 8.8 My learned brother in para 5.5 has referred to a letter written by the Chairman, CBEC, to the Secretary, Ministry of Petroleum and Natural Gas and the reply of the Secretary, Ministry of Petroleum and Natural Gas, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 are fixed by the Oil Coordination Committee (OCC) from time to time. The assessable value is the same irrespective of whether the administered petroleum products are sold at the refineries or through the marketing companies. It would be seen that but for the normal value being replaced by transaction value or normal transaction value (in case goods are sold at a point other than the place of removal), there is no essential difference in the scheme of valuation of petroleum pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sregard 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, however, equally true that it is vital to the administration of justice that those exercising judicial power must have the necessary freedom to doubt the correctness of an earlier decision if and when subsequent proceedings bring to light what is perceived by them as an erroneous decision in the earlier case. In such circumstances, it is but natural and reasonable and indeed efficacious that the case is referred to a larger Bench. This is what was done by the Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Court dismissed the appeal on 28.04.2014, on the ground that an alternative remedy of an appeal (to the Supreme Court) was available against the order in ABN Amro Bank Limited. Against this decision Royal Bank of Scotland N.V. filed SLP (C) 12901 of 2014. By the order dated 08.05.2014, Supreme Court directed issue of notice on the SLP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision 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 ruled that President had the jurisdiction to order the reference. The observation of the High Court regarding the propriety of awaiting the decision of the Supreme Court before constituting a Larger Bench was neither argued nor decided by the Apex Court. The consequence of allowing the appeal is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferral 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 Excise Rules, 2002. The OMCs received compensation/subsidy (i.e. difference between ex-refinery price paid to ONGC and the ex-storage price i.e. APM price collected from the dealers) from the 'Oil Pool Account/Subsidy' maintained by the Ministry of Petroleum. ONG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 to such price, any additional consideration which the buyer is liable to pay to, or on behalf of the assessee by reason of, or in connection with the sale. In the present case, the sale amount actually paid by the buyer (OMCs) to the appellant ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 retained by the assessee after 1-7-2000 shall be includible in arriving at the transaction value and sales tax shall be paid thereon. . The ratio of the above judgment is squarely applicable to the present case. After 1/7/2000, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 ₹ 22.44 crores retained by the assessee. 29. In our opinion, the Tribunal misdirected itself in law on several counts and erroneously decided the appeal in favour of the assessee and, therefore, the order of the Tribunal is set aside. From the above, it is clear that only the actual taxes paid from the overall transaction value are required to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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