Bhagyanagar Gas Ltd. Vs Commissioner of Central Tax Guntur (CESTAT Hyderabad)
The case concerns appeals filed by a company against orders confirming demands of Central Excise duty and penalties for the periods January 2010 to December 2010 and January 2011 to October 2011. The Commissioner (Appeals) had upheld the demands confirmed by the adjudicating authority, including a penalty under Rule 25 of the Central Excise Rules. The dispute arose from the Department’s allegation that the appellant had not correctly discharged Central Excise duty on the clearance of Compressed Natural Gas (CNG) supplied to retail outlets.
The appellant had entered into an agreement with Hindustan Petroleum Corporation Ltd. (HPCL) on 13.09.2005 for the use of HPCL’s retail outlets at Vijayawada and Hyderabad. Under the agreement, the appellant paid a commission of Rs. 1200 per PMT to HPCL or its dealers for using the facilities. The Department analyzed the agreement and concluded that the goods were not sold at the factory gate but at the retail outlets where CNG was dispensed to customers. On this basis, the Department invoked Rule 7 of the Central Excise Valuation Rules, 2000, contending that the selling price at the CNG dispensing stations in HPCL retail outlets should be treated as the normal transaction value for calculating excise duty. The authorities also held that the commission or trade margin paid to HPCL should be included in the assessable value, on the ground that the transactions were not on a principal-to-principal basis but constituted stock transfers, with the ultimate selling price fixed by the appellant.
