Custom, Excise & Service Tax Tribunal
Hindustan Petroleum Corporation Ltd vs Commissioner Of Customs & Central ... on 24 January, 2018
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH REGIONAL BENCH AT HYDERABAD BENCH - DB COURT - I Appeal(s) Involved: E/495/2008-DB (Arising out of Order-in-Appeal No. 21-2008 (G) CE dated 29/02/2008 passed by Commissioner of Central Excise & Customs (Appeals) Guntur) Hindustan Petroleum Corporation Ltd Vijayawada Terminal Appellant(s) Versus Commissioner of Customs & Central Excise, GUNTUR Respondent(s) Appearance: Mr. G. Prahlad, Adv for the Appellant. Mr A.V. Narasimhan A.R. for the Respondent. CORAM: HON'BLE Mr. M.V.RAVINDRAN, MEMBER (JUDICIAL) HON'BLE Mr. MADHU MOHAN DAMODHAR, MEMBER (TECHNICAL) Date of Hearing: 24/01/2018 Date of Decision: 24/01/2018 Final Order No. A/ 30016 / 2018 [Order per: M.V.RAVINDRAN ] .
This appeal is directed against Order-in-Appeal No. 21/2008 (G) CE dated 29.02.2008.
2. The issue in brief that falls for consideration is whether the appellant needs to be saddled with the additional duty liability in respect of the petroleum products cleared to company owned and company operated (COCO) outlets during the period April 2002 to September 2004. It is the case of the Revenue that during the period in question, the appellant operated COCO outlets wherein the price of petroleum products remained the same to a retail customer as was in the case of petrol bunks operated by dealers. It is the case of the Revenue that appellant having self-operated COCO outlets, retains the benefit of discount/commission offered to the dealers and hence on that account they are required to discharge the differential central excise duty. Show-cause notice was defended stating that the value adopted for discharge of central excise duty in the case of COCO outlets is correct and the assessable value has been correctly arrived and is more than the assessable value of goods cleared to dealer operated outlets. The adjudicating authority would not agree with the contentions raised and confirmed the demand along with interest and imposed equivalent amount of penalty. Aggrieved by such an order, an appeal was preferred to the 1st Appellate Authority who concurred with the views of the adjudicating authority and rejected the appeal.
3. Learned counsel submits that appellant is not contesting the demand of the differential duty liability for the period April and May 2002 and have discharged the same along with interest. As regards the differential duty demanded for the period June 2002 to September 2004, he draws our attention to a classic case of valuation done in respect of petroleum products cleared for the month of August 2002 and certified by the Chartered Accountant and submits that the value adopted for clearances made to COCO outlets is higher than the assessable value for the goods cleared to dealer operated outlets. It is his submission that there is no case for the department in respect of adding the dealers margin into the assessable value of the goods cleared to COCO outlets.
4. Learned A.R. on the other hand while reiterating the orders of the lower authorities, stated as under:-
4. The appellants vide their appeal claimed that for the clearances effected to their COCOs from June 2002, they adopted assessable value including the dealers margin and paid duty correctly and hence the issue is only non-payment for the period April 2002 to June 2002, for which duty involved was Rs.45,125/- [ para 22 of the appellants grounds of appeal].
5. The Appellant's plea of payment of duty on dealer's margin from June 2002 to September 2004 was rejected by the adjudication authority at para 16 of the OIO No.5/2007 dated 17.02.2007. The assesses have produced the same sample invoice No.103262 dated 30.08.2002 and RT-12 return details for the month of Aug 2002. The adjudication authority on examination of the details produced arrived at the conclusion that the documents produced in support of their claim are not sufficient to prove their point. The same plea of the Appellant was rejected by the Commr(Appeals) at para- 8 of his Order-in-Appeal No.21/2008(G)CE dated 29.02.2008. Now the same Inv NO.103262 dated 30.08.2002 is explained with other dealer invoice. No new facts or grounds have been produced by the Appellants in support of their claim. From June 2002 to September 2004, they can produce as many invoices as possible to prove their claim, but did not do so even after their claim was rejected on facts at two stages.
Hence, it is prayed that the appeal filed by the Appellant may be rejected on merits.
5. On a careful consideration of the submissions made, we find that the issue that falls for consideration is whether there is under-valuation of the goods cleared to and from COCO outlets or otherwise.
6. It is undisputed that when the goods are cleared to outlets operated by the dealers, the assessable value is worked out by deducting the discounts/commission offered to the dealers. The excise duty is discharged after reducing the commission amount from the assessable value. We find that the learned Counsel was correct in brining before us the reconciliation done by them in respect of clearances between COCO outlets and dealer operated outlets which we reproduce:
Reconciliation between COCO & Dealer Assessable Values Rs per KL MS COCO AV 13057.04 Dealer AV 12662.00 BED+SED 3917.11 BED+SED 3798.60 AED 7000.00 AED 7000.00 Billing rate to COCO 23974.15 FDZ charges 44.00 Sales Tax 7324.10 Billing rate to Dealer 23504.60 RSP 31298.26 Sales Tax 7180.66 Invoice total 30685.26 Dealer Commn 613.00 RSP 31298.26 Reconciliation between COCO & Dealer Assessable Values Rs per KL MS COCO AV 13207.87 Dealer AV 12926.35 BED+SED 1849.10 BED+SED 1809.69 AED 1000.00 AED 1000.00 Billing rate to COCO 16056.97 FDZ charges 15.06 Sales Tax 3103.81 Billing rate to Dealer 15751.10 RSP 19160.78 Sales Tax 3044.69 Invoice total 187955.79 Dealer Commn 365.00 RSP 19160.79
7. It can be seen from the above reproduced statements that the appellant had discharged more excise duty on the clearances to and from COCO outlets, wherein the assessable value is more than the assessable value of the petroleum products cleared to dealers (certified by Chartered Accountants), which implies that the commission which has been extended to dealers has been included in the value. Hence it can be assumed that the retention of dealers commission as alleged by the Revenue is already taken care of while discharging the duty liability on the higher assessable value on petroleum goods cleared to and from COCO outlets and cannot have effect of loss to the exchequer, as it can be seen that net excise duty paid on the petroleum products cleared to COCO outlets is more than the duty paid on the clearances to dealers outlets. In view of the foregoing, the confirmation of demand of duty liability for the month of April and May 2002 is upheld along with interest while the demand for the duty liability for the period June 2002 to September 2004 is set aside. Since we have set aside the major part of the demand, we hold that there is no warrant for visiting the appellant with any penalty.
8. Appeal stands disposed of as indicated hereinabove, (Order pronounced and dictated in open court) MADHU MOHAN DAMODHAR MEMBER (TECHNICAL) M.V.RAVINDRAN MEMBER (JUDICIAL) neela reddy 5