TaxTMI 
TaxTMI 
2017 (2) TMI 835
X X X X Extracts X X X X
X X X X Extracts X X X X
....hin. 2. The assessee viz., Kochi Refineries Ltd. (hereinafter referred as KRL) is a manufacturer of petroleum products falling under Chapter 27, 29 and 39 of the 1st Schedule to the Central Excise Tariff Act, 1985. During the disputed period, KRL affected sale of Poly Iso Butane (PIB) to various Oil Marketing Companies (OMCs) pursuant to the competitive bidding procedure in which various suppliers including the KRL took part. KRL accordingly paid Central Excise duty on the transaction value (tender price) paid by the OMCs. The appellant is a subsidiary of BPCL and transaction value in the sale of PIB to BPCL is fixed by tender procedure just as the case with respect to other OMCs. The Department disputed the transaction value between KRL....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y, it cannot be said that the price at which PIB was sold to BPCL was influenced because of the relationship. (ii) Since the price for supply to BPCL was pursuant to competitive bidding done at the directions of Central Vigilance Commission, the transaction value needs to be accepted. The valuation adopted by the learned Commissioner in the impugned order for arriving at the differential duty demand is beyond the proposal made in the show-cause notice. The show-cause notice proposes to determine the value in accordance with the Rule 8 and 9 of the Valuation Rules, however, in the impugned order, Rule 11 has been adopted. Further, the Commissioner has adopted the highest of the prices at which KRL has sold the same product to other ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....period, penalty equal to the duty evaded should have been imposed under Section 11AC, as has been held by the apex court in the case of UOI vs. Dharamendra Textile Processors: 2008 (231) ELT 3 (SC). 7. M/s. KRL is a manufacturer of petroleum products. The dispute pertains to valuation of a product i.e., Poly Iso Butane (PIB). KRL is a subsidiary of BPCL and only on account of this fact, the Commissioner in the impugned order has disregarded the transaction value under Section 4 of the Central Excise Act. Thereafter, he has proceeded to the Central Excise Valuation Rules and arrived at the assessable value and demanded the differential duty. KRL has challenged the impugned order on the ground that the transaction value cannot be ignored o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he product is also volatile as in the case of most petroleum products whose prices are ultimately depending on the price of crude oil. In the above circumstances, it cannot be said that the price at which KRL has supplied to BPCL is a preferential price influenced because of the special relationship between KRL and BPCL. In any case, Revenue has not brought on record any evidence to indicate that price is not the sole consideration for sale of the product to the BPCL. Under the circumstance, we do not find justification in ignoring the transaction value of the transactions. We also note that clearance of the same product has been made during the disputed period to other independent buyers at prices which are equal to that at which it has be....