TaxTMI 
TaxTMI 
2024 (6) TMI 242
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....eriod with interest under Section 11AA (Section 11AB) of Central Excise Act, 1944. (ii) I also impose a penalty of Rs.30,74,603/- [ Rs. Thirty lacs Seventy Four thousand Six Hundred Three only] upon the party under Section IMC of Central Excise Act 1944." 2.1 Appellant is engaged in compression of natural gas received from GAIL (India) Ltd., such compression amounts to manufacture, resulting in a new product Compressed Natural Gas (CNG). Appellant was registered with Central Excise Department and was paying Central Excise duty under sub- heading No.27112100 of Central Excise Tariff Act, 1985. They were also availing Cenvat credit on inputs/capital goods and input services. 2.2 During the course of audit of the account of the appellant, it was observed that appellant was selling CNG through its own pumping stations [known as company operated CNG filled station (COCO)] and also through bulk buyers like BPCL and HPCL for sell to their petrol pumps. 2.3 The clearance of the gases out to the bulk buyers and the appellant on the basis of transaction value determined after deducting bulk discount determined as per the agreements entered with the said bulk buyers from the....
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....tands settled by following decisions:- * Mahanagar Gas Ltd. Vs CCE 2017 (348) ELT 175. The appeal filed against the above judgment by the department was dismissed by Hon'ble Supreme Court as Mahanagar Gas Ltd. Vs CCE 2018 360 ELT A133 (SC). * Bhagyanagar Gas Ltd. Vs CCE Final Order No.A/30404/2023 dated 29.11.2023. * Extended period of limitation not invokable and the substantial demand is time barred. Reliance is placed by the following cases:- * Accurate Chemicals Industries Vs CCE, Noida 2014 (300) ELT 451 (Tribunal); * CCE, Noida Vs Accurate Chemical Industries 2014 (310) ELT 441 (Alld); 3.3 Learned Authorized Representative reiterates the findings recorded in the orders of the lower authorities. 4.1 We have considered the impugned orders along with the submissions made in appeal and during the course of argument. 4.2 Impugned order records following findings:- "I find that the appellants are selling the goods to M/S HPCL/BPCL (a public Limited Co) under an agreement dated 06.11.2009 and 23.03.2009 respectively. The terms and conditions are identical in both the agreements. I find that in para 4 of the said....
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.... (a) in a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration for the sale, be the transaction value; C Explanation- For the removal of doubts, it is hereby declared that the price-cum-duty of the excisable goods sold by the assessee shall be the price actually paid to him for the goods sold and the money value of the additional consideration, if any, flowing directly or indirectly from the buyer to the assessee in connection with the sale of such goods, and such price-cum-duty, excluding sales tax and other taxes, if any, actually paid, shall be deemed to include the duty payable on such goods. In this context, I find that the appellant's case is not covered under the said section in as much as additional consideration is flowing back by way of rent of the installation of the dispenser of the CNG. It is mentioned in the para 4 of the agreement that the appellant will pay the Licence fee @ Rs.0.06 per kg but there is no mention of the rent in the agreement, which is the additional consideration flowing back, and t....
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....Excise Act read with Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. Undisputedly, in the present case, appellants have cleared the goods to the bulk buyers on payment of duty on the transaction value determined after deducting the bulk discount from the retail sale price of the CNG from the pumping stations or the petrol pump/pumping stations of BPCL and HPCL. 4.4 Compressed CNG is sold by the appellant through their own pumping stations referred as COCO and through the petrol pumps of the bulk buyers. The Retail Sale Price of the case is fixed for sale from both the outlets and is uniforms throughout the state irrespective of the fact whether the CNG is sold from COCO outlet or the petrol pump of the bulk buyer. Whatsoever is method for determination of assessable value the expenses incurred by the bulk buyers at their petrol pumps for selling CNG from their retail outlets (petrol pumps) cannot be added to the assessable value. Undisputedly the sale transaction in terms of the Central Excise Act, 1944 in case of the sale to the bulk buyers was completed at the point of clearance of the CNG by the appellant to the bulk buyer, whic....
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.... retail outlets. Clause 8.8 of the agreement dated 25.4.2011 only provides the factors for considering the trade margin which are decided on assumptions basis and, therefore, they are not only the ultimate and final factors for such determination of trade margin and such expenses are actually not paid to OMCs. The agreement between the appellant and OMCs clearly shows that the trade margin were being decided at fixed level by the parties to such agreement. In terms of Clause 6.1 of the agreement, OMCs are not entitled to any remuneration or compensation of any nature whatsoever for installing equipment and other facilities at the site of the OMC. The Trade Margin is decided after considering the costs and expenses incurred by OMCs including their profits. The above terms of the agreement clearly show that the transaction between the appellant and the OMCs is at arms length and cannot be doubted. Hence the Trade Margin cannot be included in the assessable value at the Appellant's end and hence the demand raised against the Appellant on Trade margin is not sustainable. Our views are also based upon the Tribunal judgment in case of Mahanagar Gas Ltd - 2017 (348) ELT 175 (Tri.), wherei....
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....tax is paid by them on their sales price. In nutshell, the appellants are paying VAT on its sales price to OMCs and OMCs are also paying VAT on their sales price to their customers. This clearly evidences that the AR‟s arguments that sale is not taking place between appellants and OMCs and also it is a paper transaction is incorrect and not supported by any evidence on record. It is noteworthy that this Tribunal in the case of BPCL/HPCL (supra), wherein the service tax demanded on the very same amount received by OMCs from MGL, claiming such amount as commission paid for rendering of services under Business Auxiliary Service for marketing of CNG manufactured by the appellants, has been set aside holding that the OMCs themselves are buying the goods from MGL and MGL is charging VAT/sales tax while selling the CNG to BPCL/HPCL and BPCL/HPCL are also paying VAT/sales tax on the entire value, including the so-called commission and, hence, the transaction between them is sale/purchase transaction and VAT/sales tax has been paid at both ends the same cannot be considered as service contracts. 5.3 We find that the appellants‟ contention that OMCs, being bulk buyers, h....
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....uch invoices shall be based on the meter reading on CNG dispensers jointly taken by MGL and OMCs; OMCs shall pay to MGL the invoice value for CNG sold as stated in the invoice within ten days from the date of invoices; it is specifically stated in the agreements between OMCs and MGL that during the term of the agreements OMCs shall not hold out to be as agents of MGL and it is clearly understood that this agreement is on principal-to-principal basis and MGL shall not be liable for any of the acts of omission/commission of OMCs. We also find from record that when CNG is supplied by MGL through PPs, there is no sale between MGL and PPs, as the sale takes place between MGL and the ultimate customers/vehicle users and the PPs act as agents of MGL; that the PPs were/are issuing cash memos/invoices/bills of MGL, when they supply CNG to customers/vehicle owners; that the PPs are acting as agents of MGL, for which they get specified service charges and the PPs are paying service tax on such amount; that, in contrast, as far as OMCs are concerned, sale of CNG takes place between MGL and OMCs at OMCs outlets and OMCs issue their cash memos/bills/invoices to their customers/vehicle owners and....
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....essure to 200 bars to vehicles. Likewise, NG is compressed and filled at 230 bars pressure in cascades of cylinders mounted on light motor vehicles and transported to Daughter Booster Stations, wherein the same is dispensed by recompressing to the pressure at 200 bars pressure. Therefore, considering the technical necessity of the product, this was the only methodology which anybody could have adopted. Since the activity of manufacture takes place at each of the compression station the appellants are having centralized registration for each of the locations, which are the factories of MGL. 5.5 The ld. AR‟s arguments that manufacture and sale is taking place simultaneously would not be correct, as CNG is drawn from stationary cascades and dispensed through dispenser. Further, even if the transaction of purchase and sale between the buyer and seller takes place simultaneously on account of peculiar nature of the product, such transaction has to be treated as sale on principal-to- principal basis based on the Hon‟ble Supreme Court judgment in the case of BayyanaBhimayya, Always Agencies, etc. cited supra by the appellants. 5.6 Since we are of the view tha....
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....ed the purchase order and sale invoices issued by M/s. Tyco Electronics Corporation India (P) Ltd. The invoice clearly shows that VAT liability has been discharged which indicates the sales of wire harness by Tyco Electronics Corporation India (P) Ltd. to the appellants. The appellant has also issued an export invoice to the foreign buyer and has realised the export proceeds. These documents on records clearly evidence that the transaction involved is one of purchase and sale of goods by the appellant on a principal-to-principal basis and not as an agent of anybody else. Following the decision of this Tribunal in the case of Pratap Singh & Sons cited supra, we set aside the impugned order and allow the appeal. The Tribunal in following cases has held that the agreement between the parties reflects the real state of affairs and hence the same is a guiding factor for determining the passing of title to the goods from one party to another: (i) Mahindra & Mahindra Ltd - 1995 (76) ELT 481 (SC) (ii) Hindustan Petroleum Corpn. Ltd - 2005 (187) ELT 479 (Tri) (iii) Indian Oil Corporation - 2014 (300) ELT 539 (Tri, Del) 6. In the present case also the valu....
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....ver pointed out any irregularity. In such case, the bona fide of the appellant cannot be doubted. Since there is no ingredient of any malafide intention on the part of the Appellant to evade the excise duty, the extended period cannot be invoked for raising demand. Our views are also supported by the Tribunal, Hon‟ble Apex Court and High Court‟s judgments in cases of Pragati Concrete Products (P) Ltd - 2015 (322) ELT 819 (SC), Metal Tubes -2000 (126) ELT 1260 (Tri.), Simplex Infrastructures Ltd - 2016-TIOL-779-HC-KOL-ST, Blue Star Ltd - 2000 (120) ELT 415 (Tri.) and Amway India Enterprises Pvt. Ltd - 2017 (3) GSTL 69 (Tri.-Del)." 4.6 This decision has been followed by Hyderabad Bench of this Tribunal in case of M/s Bhagyanagar Gas Ltd. Vs CC, Guntur Final Order No.A/30404/2023 dated 29.11.2023. 4.6 We also note that following decision of M/s Mahanagar Gas Ltd., Commissioner (Appeals) himself has given relief to the appellant, in similar circumstances by holding as follows:- "4.1 I have gone through the facts of the case, the averments made at the time of the personal hearing and all other documents/material available on record. It is observed that: ....