TMI Blog2016 (10) TMI 1159X X X X Extracts X X X X X X X X Extracts X X X X ..... the subsidized price, when it is on record and it is the fact that the assessee received additional consideration (differential price) from the Oil Pool Account for the ‘same goods’, the goods in questions and they paid the same to the manufacturer, who is M/s. Kochi Refineries Ltd. (KRL) - It is again made clear that the additional consideration/differential price being received from Oil Pool Account is to be treated as price-cum-duty paid on behalf of the buyer and it is being received by the assessee, who is M/s. IOCL, who in turn reimburse the manufacturer, KRL by its payment to KRL - the duty of Central Excise is chargeable for the additional consideration (reimbursement) received and paid to the manufacturer, KRL by the assessee IOCL. Extended period of limitation - Held that: - From the facts on record, it cannot be proved that the respondents wilfully suppressed the facts from the Department with intention to evade payment of duty of Central Excise though the Department in the show cause notice has invoked the extended period clause citing the proviso to Section 11A of the Central Excise Act, 1944. When there is no sufficient evidence on record to prove wilful suppressio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as follows : (i) The respondents (IOCL) are paying duty at a price which is much less than the price paid to the manufacturer, KRL. (ii) The duty is payable on the full price paid by the respondent to KRL. (iii) The subsidized value on which duty has been paid by the respondents cannot be taken as assessable value for the purpose of payment of Central Excise duty. (iv) The period involved is after 1-7-2000, which is the date when the new Central Excise Valuation Rules, 2000 came into force. It brought the new concept of transaction value . (v) Under the concept of transaction value , the actual value which has been paid to KRL becomes the transaction value and the duty is payable on the entire amount paid to KRL by IOCL, the respondents. 3.1 The learned AR in support relies on the following case laws : (i) Oil Natural Gas Corporation Ltd. v. Commissioner [2015-TIOL-1960-CESTAT-MUM-LB = 2015 (325) E.L.T. A147 (Tribunal)] (ii) Oil Natural Gas Corporation Ltd. v. Commissioner [2010-TIOL-1419-CESTAT-MUM = 2010 (262) E.L.T. 1078 (Tribunal)] (iii) Commissioner of Central Excise, Jaipur-II v. Super Synotex (India) Ltd. [2014 (301) E.L.T. 273 (S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transaction value adopted should not be rejected unless there is any flow back of additional consideration from the buyer to the assessee. (ii) Product Price Adjustment (PPA) is not additional consideration either directly or indirectly from buyer to respondents : (a) In terms of Rule 6 of the Central Excise (Valuation) Rules, 2000 any additional consideration received directly or indirectly from the buyer to the seller is required to be added to the assessable value. (b) In the case of SKO sold through the retail dealers, it is the admitted position that no amounts over and above the price fixed under the APM are charged/received by the respondents from the buyers. (c) The show cause notice has only alleged that the price paid to KRL should be considered as the transaction value - which proposition is not governed by any of the valuation provisions. (d) The PPA (Product Price Adjustment) received by the respondents from the Oil Pool Account cannot be considered as an additional consideration flowing either directly or indirectly from the buyers to the respondent as claimed in this appeal. (e) Reliance is also placed on the following decisions wherein the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction value. (b) in any other case, including the case where the goods are not sold, be the value determined in such manner as may be prescribed. Explanation. - For the removal of doubts, it is hereby declared that the price-cum-duty of the excisable goods sold by the assessee shall be the price actually paid to him for the goods sold and the money value of the additional consideration, if any, flowing directly or indirectly from the buyer to the assessee in connection with the sale of such goods, and such price-cum-duty, excluding sales tax and other taxes, if any, actually paid, shall be deemed to include the duty payable on such goods. 6.2 The respondents argue that they rightly paid the duty on the price fixed by the Government under Administrative Price Mechanism (APM) and it is the price adopted for clearance to the buyers and there cannot be any question of demand of duty on the amount paid to the refinery. The respondents namely M/s. IOC Ltd. pleads that in their case, transaction value is subsidized price fixed under APM and it is the price paid by the buyer for the subject goods. 6.2.1 In this regard the Explanation appearing in S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an assessee in place of the manufacturer, it is not an acceptable argument on behalf of the assessee that transaction value in their case is only the subsidized price, when it is on record and it is the fact that the assessee received additional consideration (differential price) from the Oil Pool Account for the same goods , the goods in questions and they paid the same to the manufacturer, who is M/s. Kochi Refineries Ltd. (KRL). It is again made clear that the additional consideration/differential price being received from Oil Pool Account is to be treated as price-cum-duty paid on behalf of the buyer and it is being received by the assessee, who is M/s. IOCL, who in turn reimburse the manufacturer, KRL by its payment to KRL. 6.2.4 It is to be noted that the provisions of Section 4(1)(a) of the Central Excise Act, 1944, require the following three conditions to be satisfied : (i) The sale of the goods by the assessee for delivery at the time and place of removal; (ii) The assessee and the buyer are not related; and (iii) Price is the sole consideration for sale. Here, if we consider the transaction of sale by the respondents to their buyers under PDS, we find th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for issuing the demand on the differential money/price paid by them to M/s. Kochi Refineries Ltd. (KRL). The said Rule 6 of the Valuation Rules, 2000 (supra) is reproduced below : Rule 6. 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. 6.3.1 This Rule 6 makes the position further clear that the value of the goods shall be deemed to be the aggregate of the subsidized price and the reimbursement money (differential price/compensation being received from Oil Pool Account by the respondents). This aggregate is the actual value on which Central Excise duty is chargeable as this is the consideration which is flowing directly or indirectly to the assessee namely IOCL. The Explanation to Section 4(1) of Central Excise Act, 1944 reproduced earlier makes it clear that in case of reimbursement money or the differential pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation to Section 4(1) of the Central Excise Act, 1944 and Rule 6 of the Central Excise Valuation Rules (supra) are very clear this submission of the respondents does not have sufficient force and cannot be accepted. 6.5 The respondents submit that the Tribunal s Larger Bench decision in the case of Oil and Natural Gas Corporation Ltd. (ONGC) v. Commissioner of Central Excise, Raigad [2015-TIOL-1960-CESTAT-MUM-LB = 2015 (325) E.L.T. A147 (Tri.-Mum.)] is not applicable in their case as the transaction in that case is between ONGC Refinery and the Oil Marketing Company (OMC); and in that case, Refinery has to discharge duty on transaction value collected from the Oil Marketing Company by raising commercial invoices. The respondents further argue that in the present case, transaction is between the respondents (who are not a refinery and also are not the manufacturer of the goods) and the retail buyers and the respondents paid the duty (not the Refinery) on the transaction value of the goods sold. 6.5.1 The impugned liability for payment of duty cannot be successfully contested on the grounds that the respondents have not manufactured the goods and that they are paying th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uyer under Public Distribution System (PDS) and for this sale the additional consideration received from Oil Pool Account has been further reimbursed to the manufacturer who is M/s. Kochi Refineries Ltd. (KRL) in this case. The Tribunal cannot accede to the logic of the respondents that transaction is complete just by delivery of the goods (SKO) to the buyers when part payment of goods still remains to be paid. In fact because of unique circumstances the payment of transaction value has been split into two parts - one part paid directly by buyers, other part paid by the Oil Pool Account, which is deemed indirect payment by the buyers. We may be permitted to say that ultimate buyers here are people of India who are receiving SKO on subsidized value/price. The people of India pay their direct/indirect taxes/levies/duties to National Exchequer. Therefore, money received from Oil Pool Account ultimately can be said to be sourced from people of India, who are the buyers of the subject goods, SKO. 6.8 It is also important to note that basic premise of law of Central Excise is that this duty/tax is levied on manufacturing of an excisable commodity. This duty/tax is an indirect tax wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Super Synotex (India) Ltd. [2014 (301) E.L.T. 273 (S.C.)] and in the case of Commissioner of C. Ex., Jaipur v. Shree Rajasthan Syntex Ltd. [2015 (318) E.L.T. 626 (S.C.)] and from the Tribunal s Larger Bench decision in the case of Oil and Natural Gas Corporation Ltd. v. CCE [2015-TIOL-1960-CESTAT-MUM-L.B.]. In all these decisions, the ratio is that the price or cost paid/received to/by an assessee or manufacturer constitutes the assessable value/transaction value for the purpose of levy of Central Excise duty. The Hon ble Supreme Court in the case of C.C.E., Jaipur-II v. Super Synotex (India) Ltd. (supra) in Paragraph 22 observes that the price or cost paid to the manufacturer constitutes the assessable value on which Central Excise duty is payable. Hon ble Supreme Court further says that the words that gain signification are actually paid . In the present case, the actual amount paid is the subsidized price plus the additional consideration (reimbursement money received from Oil Pool Account), which was in turn paid by the assessee respondents to the manufacturer, which in aggregation has to be treated as the value on which duty liability has to be discharged as per Rule 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
