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Commissioner of Central Excise, Nashik Versus M/s Bharat Petroleum Corporation Ltd.

2016 (6) TMI 768 - CESTAT MUMBAI

Valuation - petroleum products - At the time of clearance from the said terminal, the respondents were collecting ₹ 44/- per KL over and above the assessable value declared as Free Delivery Zone (FDZ) charges - Revenue argued that the said amount is not related to transportation but is an additional consideration - Held that:- There is a large number of decisions of the Tribunal had allowed deduction of such charges collected for delivery of goods within the FDZ - he appellant had submitte .....

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ajendra Jain, Advocate with Shri Rajesh Ostwal, Advocate, for Respondent ORDER PER: RAJU The respondents, M/s Bharat Petroleum Corporation Ltd., are engaged in the manufacture of petroleum products. The respondents were storing the excisable goods at Panewadi Terminal, Manmad District. At the time of clearance from the said terminal, the respondents were collecting ₹ 44/- per KL over and above the assessable value declared as Free Delivery Zone (FDZ) charges. The respondents were also coll .....

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how-cause notice demanding duty on this alleged additional consideration was issued to the respondents. The said show-cause notice was dropped by the Commissioner holding that basic prices of MS/HSD are inclusive of transportation charges. The Commissioner held that w.e.f. 1.7.2000, the valuation of excisable goods is the transaction value and transportation/freight charges are admissible for deduction provided that these charges are shown in the invoices separately. The Commissioner observed th .....

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al before the Tribunal seeking to set aside the order of Commissioner and to remand the matter for re-determination by Commissioner. 2. In the grounds of appeal, it was argued that the Circular of CBE&C F. No. 354/81/2000-TRU dated 30.6.2000 has not been interpreted properly. It was argued that equalized freight charges @ ₹ 44/- per KL within the area of distance upto 39 Km has to pay these charges irrespective of the distance involved. Therefore, deduction of freight charges so recove .....

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ion of cost of transportation is allowed only if the assessee has shown them separately in the invoice and the exclusion is permissible only for the actual cost so charged from his buyer. If the assessee has a system of pricing and sale at uniform prices inclusive of equated freight for delivery at factory gate or elsewhere, no deductions for freight element will be permissible. 2.1 The second ground raised by the Revenue is that deduction in respect of average freight i.e. the cost of transport .....

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on in Basic Selling Price of petroleum products from 29.9.2000 was communicated by the OCC. He specially pointed out to following two paras of the said Fax: - At present excise duty on freight in case of MS is being absorbed in the Pool Account effective midnight of 29th/30th September, 2000. Excise duty on freight element included in the price built up of MS should be passed on to consumers. In respect of products where currently 5% duty on assessable value is being absorbed in the Pool Account .....

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charges outside FDZ for MS, HSD and ATF are revised to ₹ 0.67/KL/Km. This increase will be passed on for all customers in the selling prices. However, in case of MS/HSD for the areas covered under the FTX scheme, the same will be borne by the Oil Pool Account. He argued that amount of ₹ 44/KL collected in respect of delivery within the FDZ is already included in the price fixed by OCC. He argued that amount of ₹ 44/KL collected by the appellant is an additional consideration. 3 .....

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gard to their reply dated 25.6.2004 to the Commissioner of Central Excise, Nashik. 4.1 Learned Counsel relied on the decision of the Tribunal in their own case as reported in 1999 (108) ELT 402 and affirmed by Hon'ble Supreme Court as reported in 2004 (174) ELT A78 (SC), wherein the Tribunal has observed as under: - 25. We now, therefore, come to the question of the deductions claimed (from the total invoice value) on various counts. The appellants have submitted that RPO charges constitute .....

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olved is recovered from these dealers as a part of the RPO charges. Revenue submits that these are not actual charges but fixed on an average basis and that since clearance operations being at M/s. Cochin Refineries Ltd. s gate and end at petrol pump only, therefore, freight charges may be includible. We find that it is not disputed that when these products are cleared from the factory gate of M/s. Cochin Refineries Ltd. to appellants designated depot (installation), a clear wholesale level sale .....

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second level wholesale. Now, we find that the law on exclusion of transport charges from beyond the factory gate of excisable goods is a clearly settled one, as can be seen from the following decisions :- 1979 (4) E.L.T. (J 490) (Ker.) 1980 (6) E.L.T. 193 (Bom.) 1980 (6) E.L.T. 220 (Bom.) Learned Additional Solicitor General of India also fairly conceded. Therefore, the freight element in this second level wholesale (from installation/depot to pump) is clearly deductible from the assessable valu .....

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throughout the country), then even such average freight is deductible. We, therefore, conclude that the freight element in RPO charges is deductible from the assessable value. He further pointed out that the Tribunal in the case of IOCL - 2007 (217) ELT 134 has allowed deduction of the amount collected for delivery within the FDZ. He argued that similar relief has also been allowed by the Tribunal in the case of IOCL as reported in 2007 (219) ELT 567. 4.2 Learned Counsel for the respondent argue .....

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observed as under: - 20. I find that in the case of Baroda Electric Meters Ltd. (supra) Hon ble Supreme Court has set aside the finding of Tribunal, that wherever freight actually paid was less than the amount collected by way of freight and transportation charges the difference was appropriated by the appellant and, therefore, the same would be a part of the assessable value. In other words, the Hon ble Apex Court has held that when the freight actually paid was less than the amount collected b .....

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Alloys Ltd. - 2007 (217) E.L.T. 373 (Tri.-Kolkata) (v) Rine Engineering Pvt. Ltd. v. CCE, Chandigarh - 2008 (86) RLT 933 (CESTAT-Del.) (vi) CCE, Mumbai v. Cable Corpn. Ltd. - 2008 (85) RLT 759 (CESTAT-Mum.) 21. I find that in the case of Gujarat Guardian Ltd., the amount collected was in respect of freight, in the case of Britco Food Co., the amount collected was in respect of Insurance charges, in the case of Hindustan Petroleum Corpn. Ltd, the amount collected by the appellant was in respect o .....

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ter was referred to 3rd Member. The 3rd Member, following the judgment of Honble Apex Court in the case of Baroda Electric Meters Ltd., agreed with the view taken by ld. Member (Judicial). It is also seen that in the recent judgment of co-ordinate Bench in the case of Mercedes Benz India Pvt. Ltd. 2010 (260) E.L.T. 149 (Tri.-Mumbai), the co-ordinate Bench has taken a view that post 1-4-2000, when the provision of transaction value was brought into, the law position remains the same. I may respe .....

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excess freight collected from the dealers was only a profit on transportation and not an additional consideration within the meaning of this expression used in Rule 6, nor an additional amount within the meaning of the definition of transaction value under Section 4(3)(d) of the Act. In this view of the matter, we further hold that the distinction drawn by the learned Consultant for the Revenue between normal value and transaction value is not relevant in this case. It can be seen from t .....

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