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Case Law Details

Case Name : C.C.E. & S.T Vs Indian Oil Corporation Ltd (CESTAT Ahmedabad)
Appeal Number : Excise Appeal No.4088 of 2005
Date of Judgement/Order : 05/04/2023
Related Assessment Year :

C.C.E. & S.T Vs Indian Oil Corporation Ltd (CESTAT Ahmedabad)

CESTAT find that though this Tribunal ordered for sine die adjournment but on pointing out by the learned counsel for respondent, we find that firstly the appeal is of 2005, the issue is settled as of now by various decisions of the Tribunal. Though the revenue’s appeals are pending before the Hon’ble Supreme Court but in none of the appeal there is any stay. In this position, we are of the view that wheel of justice should not stop, acco wheel of justice should not stop accordingly we take up this appeal for disposal.

We find that as of now the issue is no longer res integra as in the majority of decisions cited by the respondent, it has been held that even though there is a difference of price between sale made through OMC on depot and in case of sale made to OMC even though at lower price, the same has been held under Section 4(1)(a) as transaction value and the demand of duty has been dropped. Though the revenue is in appeal before the Hon’ble Supreme Court but no stay has been obtained as per available records.

Accordingly, following the above decision cited by the learned counsel for the respondent, we are of the view that there is no infirmity in the impugned order hence, the same is upheld, revenue’s appeal is dismissed.

FULL TEXT OF THE CESTAT AHMEDABAD ORDER

The brief facts of the case are that earlier the petroleum product was based on Administered Pricing Mechanism (APM) however, Government of India, Ministry of Petroleum and Natural Gas (MOP & NG) passed a resolution for phase wise dismantling of Administered Pricing Mechanism of petroleum products and full deregulation was to be placed in 2002. As per resolution notified in the gazette vide No. 224 dated 21.11.1997. MOP & NG advises Oil Marketing Companies (OMCs) to enter into an MOU to ensure availability of petroleum products throughout the country on a uniform price so that consumer who are far away from refinery locations are not charged unreasonably higher price as compared to consumers in non-refinery locations. The Government of India resolved to decontrol pricing of petroleum products except SKO sold through PDS and LPG for domestic use vide notification no. 79/2002 dated 28.03.2002, Ministry of Petroleum and Natural Gas consequently, Oil Coordination Committee (OCC) is dismantled and new organization namely, Petroleum Planning and Analysis Cell (PPAC) was constituted. Oil Marketing Companies entered into MOU to ensure that consumer price of petroleum products is maintained on a uniform basis throughout the country and there is no disparity in price charged by OMC to the end costumers at any given location. IOCL entered into Memorandum of Understanding /agreement with Reliance Petroleum Limited for purchasing of petroleum products. Two show cause notices, first in December 2003 and other in May 2004 for the period June 2002 to March 2003 and April 2003 to December 2003 respectively were issued to the respondent. The adjudicating authority decided all the show cause notices holding in favour of the respondent. The learned commissioner adjudicated show cause notices by common order after detailed examination of MOU, relevant facts and provisions of law as applicable to those fact held as under:-

(a) Import parity price was not a notional price but based on international transaction.

(b) Transaction between OCMs were in the nature of sale and purchase of products.

(c) Place of sale or delivery was factory i.e. refinery gate and not depot of OCMs hence transaction was covered under Section 4(1)(a) of Central Excise Act, 1944.

(d) Duty paid by respondent sold to OOMCs refinery gate adopting IPP as transaction value under Section 4(1)(a) was correct and as per law.

The Chief Commissioner passed a review under Section 35E(1) of the Central Excise Act, 1944 accordingly, the present appeal was filed by the revenue.

02. Shri S K Mathur, learned Special Counsel appearing on behalf of the revenue appellant reiterates the grounds of appeal. He further submits that the respondent were clearing goods to their own unit as well as to HPCL, BPCL and IBP. As per the MOU, all oil exchange and oil companies are benefitted by doing this MOU of oil exchange and their excise duty is thus evaded/short paid were resorting to under valuation to the extent of amount of difference between assessable value for clearance to their own depot dealers and adopting lesser transaction value for other oil companies while clearing the goods under oil exchange MOU therefore, there is a under valuation of excisable goods hence, the adjudicating authority has failed to note that by signing MOU of the Oil Marketing Companies have mutually benefitted each other/themselves and strictly in terms of Section 4(1) for the petroleum product share with other oil companies are not sold at the time of clearance from factory of IOCL for the clearance of petroleum product under Oil Exchange agreement. There is no transaction value available in terms of Clause (a) of Section 4(1) of the Central Excise Act, 1944 as there is only exchange of product/goods and charging of agreed price from each other for such product. Exchange is only on notional basis, the price based on Import Parity Price cannot be expected as a transaction value for indigenously manufactured petroleum product where the value has to be determined in accordance to the provision of Section 4 of the Act.

2.1 The agreed price charged on the bartered basis does not represent the transaction value under Section 4 of the Central Excise Act, 1944. He submits that the learned Commissioner has failed to note that the oil companies with the envisaged mutual arrangement of exchange product have provided themselves with not only the smooth supply of various types of oil in the whole country but also have benefitted themselves by way of paying reduced amount of excise duty on quantity of exchange petroleum product upto the extent of 20% therefore, the impugned order is not legal and correct hence, the same needs to be set aside and revenue’s appeal be allowed.

03. Shri Willingdon Christian, learned counsel appearing on behalf of the respondent submits that this tribunal vide order dated 02.02.2022 adjourned the appeal sine die awaiting outcome of the Hon’ble Supreme Court in the department’s appeal. He further submits that the learned Commissioner has passed the impugned order after taking stock of all the facts and settled legal position on the identical issue therefore, there is no error in the impugned order hence the same may be upheld. He submits that this tribunal in the various judgments including the respondent’s own case decided the matter in favour of the respondent. He placed reliance on the following judgments:-

  • DEEK PRINTERS- 2013 (291) ELT 433 (Tri.-Ahmd.)
  • COMMISSIONER OF C.EX., LTU, CHENNAI Vs. AREVA T&D (I) LTD.-2011(267) E.L.T. 522 (Tri.-Chennai)
  • HINDUSTAN PETROLEUM CORPN. LTD. V/s. COMMR. OF C.EX., VISHAKHAPATNAM-I- 2005 (187) E.L.T. 479 (Tri.-Bang.)
  • INDIAN OIL CORPORATION LTD. V/s. COMMISSIONER OF C.EX., CUS., GOA- 2009 (235) E.L.T. 702 (Tri.-Mumbai)
  • BHARAT PETROLEUM CORPORATION LTD. V/s. COMMR. OF C.EX., NASIK- 2009 (242) E.L.T. 358 (Tri.-Mumbai)
  • COMMISSIONER OF CENTRAL EXCISE, COCHIN V/s. M/S. KOCHI REFINERIES LTD.- 2011-TIOL-276-CESTAT-BANG
  • INDIAN OIL CORPORATION LTD. V/s. COMMISSIONER OF C.EX., ALLAHABAD- 2014 (300) E.L.T. 539 (Tri.-Del.)
  • COMISSIONER OF C.EX., MUMBAI-IV V/s. INDIAN OIL CORPORATION LTD.- 2014 (308) E.L.T. 502 (Tri.-Mumbai)
  • BHARAT PETROLEUM CORPORATION LTD. V/s. COMMR. OF C.EX., COIMBATORE- 2016 (342) E.L.T. 602 (Tri.-Chennai)
  • KOCHI REFINERIES LTD.V/s. COMMISSIONER OF CENTRAL EXCISE, COCHIN- 2017 (349) E.L.T. 338 (Tri.-Bang.)

3.1 He pointed out that though against the above decision, the revenue filed appeal before the Hon’ble Supreme Court but no stay has been granted. Though this tribunal vide order dated 02.02.2022 ordered for adjournment sine die but it was realized that the appeal is of 2005 and on the same issue various coordinating benches of this tribunal has passed the decision in favour of the assesse. He strongly submits that even though revenue’s appeal are pending before the Hon’ble Supreme Court, this appeal being very old of 2005 cannot be kept pending therefore, and may be taken up for disposal.

04. We have carefully considered the submissions made by both the sides and perused the records. We find that though this Tribunal ordered for sine die adjournment but on pointing out by the learned counsel for respondent, we find that firstly the appeal is of 2005, the issue is settled as of now by various decisions of the Tribunal. Though the revenue’s appeals are pending before the Hon’ble Supreme Court but in none of the appeal there is any stay. In this position, we are of the view that wheel of justice should not stop, accordingly we take up this appeal for disposal.

4.1 We find that as of now the issue is no longer res integra as in the majority of decisions cited by the respondent, it has been held that even though there is a difference of price between sale made through OMC on depot and in case of sale made to OMC even though at lower price, the same has been held under Section 4(1)(a) as transaction value and the demand of duty has been dropped. Though the revenue is in appeal before the Hon’ble Supreme Court but no stay has been obtained as per available records.

05. Accordingly, following the above decision cited by the learned counsel for the respondent, we are of the view that there is no infirmity in the impugned order hence, the same is upheld, revenue’s appeal is dismissed.

(Pronounced in the open court on 05.04.2023)

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