TMI Blog2019 (4) TMI 999X X X X Extracts X X X X X X X X Extracts X X X X ..... VERSUS CCE, MUMBAI - V [2016 (9) TMI 782 - CESTAT MUMBAI], where it was held that 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 also the value of the goods between the Appellant and OMCs is fixed as per the agreement and hence the same cannot be disputed - It is also a fact that the OMCs are Public Undertakings and therefore, there is no iota of doubt that the transaction between the parties is the sole consideration and at arm s length - there is no commission being paid by the appellant to the OMCs and what has been provided by the appellant is only a trade discount, which is a normal business practice - the demand on Trade Margin confirmed against the Appellant is not sustainable and is required to be set aside. Time limitation - HELD THAT:- 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 - Since there is no ingredient of any malafide intention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessable value and the same is required to be included in the assessable value for payment of central excise duty. Hence the present appeal. 2. Sh. Deven Parikh Ld. Senior Advocate with Sh. Hardik Modh Amit Laddha Ld. Advocate appearing for the Appellant submits that as per the agreement between the Appellant and the OMCs, such OMCs has to supply space for installation of machines, personnel, utilities, insurance and proportionate auxiliary expenses etc. for running the CNG Stations. It is such expenses, outgoings as well as profit margin which is passed on as Trade Margin to OMCs. The agreement between the two are on principal to principal basis. That as per agreement the Trade Margin is a genuine pre-estimate of the costs expenses and commission to dealers. In terms of Para 5 of the agreement the point of time is fixed at which the title to the goods is passed from Appellant to OMCs and thereafter from OMCs to their customers. The fact of passing of Title in goods is supported by payment of VAT by the Appellant at the inlet stage and payment of VAT by OMCs at outlet stage. The adjudicating authority has held that there is no actual sale that have taken place and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de margin which are decided on assumptions basis and, therefore, they are not only the ultimate and final factors for such determination of trade margin and such expenses are actually not paid to OMCs. The agreement between the appellant and OMCs clearly shows that the trade margin were being decided at fixed level by the parties to such agreement. In terms of Clause 6.1 of the agreement, OMCs are not entitled to any remuneration or compensation of any nature whatsoever for installing equipment and other facilities at the site of the OMC. The Trade Margin is decided after considering the costs and expenses incurred by OMCs including their profits. The above terms of the agreement clearly show that the transaction between the appellant and the OMCs is at arms length and cannot be doubted. Hence the Trade Margin cannot be included in the assessable value at the Appellant s end and hence the demand raised against the Appellant on Trade margin is not sustainable. Our views are also based upon the Tribunal judgment in case of Mahanagar Gas Ltd 2017 (348) ELT 175 (Tri.) , wherein in identical facts, the Tribunal held as under : 5. We have considered the rival submissions and perus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso paying VAT on their sales price to their customers. This clearly evidences that the AR s arguments that sale is not taking place between appellants and OMCs and also it is a paper transaction is incorrect and not supported by any evidence on record. It is noteworthy that this Tribunal in the case of BPCL/HPCL (supra), wherein the service tax demanded on the very same amount received by OMCs from MGL, claiming such amount as commission paid for rendering of services under Business Auxiliary Service for marketing of CNG manufactured by the appellants, has been set aside holding that the OMCs themselves are buying the goods from MGL and MGL is charging VAT/sales tax while selling the CNG to BPCL/HPCL and BPCL/HPCL are also paying VAT/sales tax on the entire value, including the so-called commission and, hence, the transaction between them is sale/purchase transaction and VAT/sales tax has been paid at both ends the same cannot be considered as service contracts. 5.3 We find that the appellants contention that OMCs, being bulk buyers, have been given higher discount also needs to be accepted in the absence of any allegation/substantiation of mutuality of interest between app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NG sold as stated in the invoice within ten days from the date of invoices; it is specifically stated in the agreements between OMCs and MGL that during the term of the agreements OMCs shall not hold out to be as agents of MGL and it is clearly understood that this agreement is on principal-to-principal basis and MGL shall not be liable for any of the acts of omission/commission of OMCs. We also find from record that when CNG is supplied by MGL through PPs, there is no sale between MGL and PPs, as the sale takes place between MGL and the ultimate customers/vehicle users and the PPs act as agents of MGL; that the PPs were/are issuing cash memos/invoices/bills of MGL, when they supply CNG to customers/vehicle owners; that the PPs are acting as agents of MGL, for which they get specified service charges and the PPs are paying service tax on such amount; that, in contrast, as far as OMCs are concerned, sale of CNG takes place between MGL and OMCs at OMCs outlets and OMCs issue their cash memos/bills/invoices to their customers/vehicle owners and MGL do not have any role to play in such transactions; that commission paid to PPs was ₹ 1.20/kg, ₹ 1.74/kg, ₹ 1.90/kg and & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on light motor vehicles and transported to Daughter Booster Stations, wherein the same is dispensed by recompressing to the pressure at 200 bars pressure. Therefore, considering the technical necessity of the product, this was the only methodology which anybody could have adopted. Since the activity of manufacture takes place at each of the compression station the appellants are having centralized registration for each of the locations, which are the factories of MGL. 5.5 The ld. AR s arguments that manufacture and sale is taking place simultaneously would not be correct, as CNG is drawn from stationary cascades and dispensed through dispenser. Further, even if the transaction of purchase and sale between the buyer and seller takes place simultaneously on account of peculiar nature of the product, such transaction has to be treated as sale on principal-to-principal basis based on the Hon ble Supreme Court judgment in the case of BayyanaBhimayya, Always Agencies, etc. cited supra by the appellants. 5.6 Since we are of the view that the appellants have a strong case on merits itself and are allowing the appeals on merits, we are not discussing the alternate propositions l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es the sales of wire harness by Tyco Electronics Corporation India (P) Ltd. to the appellants. The appellant has also issued an export invoice to the foreign buyer and has realised the export proceeds. These documents on records clearly evidence that the transaction involved is one of purchase and sale of goods by the appellant on a principal-to-principal basis and not as an agent of anybody else. Following the decision of this Tribunal in the case of Pratap Singh Sons cited supra, we set aside the impugned order and allow the appeal. The Tribunal in following cases has held that the agreement between the parties reflects the real state of affairs and hence the same is a guiding factor for determining the passing of title to the goods from one party to another: (i) Mahindra Mahindra Ltd - 1995 (76) ELT 481 (SC) (ii) Hindustan Petroleum Corpn. Ltd 2005 (187) ELT 479 (Tri) (iii) Indian Oil Corporation 2014 (300) ELT 539 (Tri, Del) 6. In the present case also the value of the goods between the Appellant and OMCs is fixed as per the agreement and hence the same cannot be disputed. The Revenue has relied upon the judgment of Maruti Udyog Ltd 2010 (257) ELT 226 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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