Mahanagar Gas Ltd Vs Commissioner of Central Excise (CESTAT Mumbai)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai, heard an appeal against an Order-in-Appeal dated 11.07.2016 passed by the Commissioner (Appeals), Central Excise, Mumbai. The Commissioner (Appeals) had partly allowed the assessee’s appeal by setting aside the penalty but had upheld the demand of excise duty along with interest.
The appellant, engaged in the manufacture and supply of Compressed Natural Gas (CNG), had entered into an agreement with Navi Mumbai Municipal Transport (NMMT) for supply of CNG through dispensing units installed at NMMT depot premises. Under the arrangement, the appellant granted a trade discount of Rs. 0.17 per kg. to NMMT, resulting in a lower sale price compared to prices charged to other customers at different outlets.
The department alleged that the trade discount was not genuine and instead constituted “additional consideration” because NMMT had allegedly provided depot premises and civil infrastructure free of cost for establishing the CNG dispensing facility. On this basis, the department invoked Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 and issued a show cause notice dated 20.04.2015 seeking recovery of differential duty of Rs. 75,959 for the period from April 2014 to January 2015, along with interest and penalty. The adjudicating authority confirmed the demand, interest, and penalty. In appeal, the Commissioner (Appeals) removed the penalty but sustained the duty demand and interest.
