2016 (11) TMI 857 - AT - Central Excise

Tribunal rules in favor of appellant on duty charges and assessable value.

The Tribunal ruled in favor of the appellant on both issues. It held that delivery charges collected from buyers should not attract duty post-clearance ... Levy of duty - delivery charges - delivery charges collected from the buyers whether shall be liable to duty? - Held that: - The retail distribution system of petroleum company has not been disputed by Revenue. It is the policy of the Government that the duty-paid goods are delivered at the place of buyers charging uniform freight. Once there was clearance of duty-paid goods, any further charges for delivery thereof under separate contract shall not form part of the assessable value. This being the basic principle for levy of excise duty, following the decision of Kolkata Bench of the Tribunal in IOCL Vs CCE Kolkata [2007 (5) TMI 476 - CESTAT, KOLKATA], there shall be no levy on this count. The second count of demand is that when duty-paid goods are cleared from terminal to the Company-Owned Company-Outlets (COCO), that was not the place of removal when no further levy of duty is made. Since 'place of removal' was terminal and duty prevalent at that point of time has been charged on the value at that place, there cannot be adoption of price at COCO for levy of duty on the duty-paid goods - Held that: - it is noticed that duty-paid goods had moved to the COCO and meaning of 'place of removal' before 14.5.2003 did not cover such transaction within its ambit. Therefore, appellant is correct to place reliance on the Bangalore Bench decision in the case of CCE Visakhapatnam Vs BPCL [2012 (12) TMI 471 - CESTAT, Bangalore]. Levy of duty not justified - appeal allowed - decided in favor of appellant. Issues:1. Liability of delivery charges collected from buyers to duty.2. Determination of assessable value when duty-paid goods are cleared to Company-Owned Company-Outlets (COCO).Analysis:Issue 1: Liability of delivery charges to dutyThe appellant contested that delivery charges collected from buyers should not be liable to duty as post-clearance expenses on duty-paid goods. Citing the policy of Petroleum Production Distribution, the appellant argued that such charges should not attract duty. The appellant relied on a previous decision by the Kolkata Bench of the Tribunal in the case of Indian Oil Corporation Ltd. Vs CCE Kolkata - 2007 (217) ELT 134 (Tri.-Kolkata) to support this contention. The Revenue, however, argued that the delivery charges should be subject to duty as they were not specific. The Tribunal, after considering both sides and perusing the records, upheld the appellant's argument. It noted that once duty-paid goods were cleared, any further delivery charges under a separate contract should not be included in the assessable value for excise duty purposes, following the principle established in the Kolkata Bench decision.Issue 2: Determination of assessable value for goods cleared to COCOThe second contention revolved around the determination of assessable value when duty-paid goods were cleared to Company-Owned Company-Outlets (COCO). The appellant argued that COCO was not the 'place of removal' and therefore, the price prevailing at that place should not be considered for assessing duty on the goods. The appellant pointed out the change in the definition of 'place of removal' before and after 14.5.2003. The Tribunal agreed with the appellant, noting that the 'place of removal' before 14.5.2003 did not cover transactions to COCO within its scope. The Tribunal referenced a decision by the Bangalore Bench in the case of CCE Visakhapatnam Vs BPCL - 2014 (299) ELT 237 (Tri.-Bang.) to support this interpretation. Consequently, the Tribunal found merit in the appellant's case on both counts and allowed the appeal.In conclusion, the Tribunal ruled in favor of the appellant on both issues, holding that delivery charges collected from buyers should not attract duty post-clearance, and the assessable value for goods cleared to COCO should not be based on the price prevailing at that location.