ORDER
S.L. Peeran, Member (J)
1. The appellant is a PSU Unit. They have obtained clearance from the Committee of Secretaries for contesting this appeal. The appellants are manufacturing Petroleum Products falling under Chapter 27 of the Central Excise Tariff Act, 1985. The allegation against them is that they had manufactured and cleared the excisable goods viz. Liquified Petroleum Gas (LPG in short) falling under Chapter Sub-heading 2711.19 of CET Act 1985 for domestic use and Superior Kerosene Oil (SKO in short) falling under Chapter Subheading 2710.91 of CET Act, 1985 for Public Distribution System on payment of duty on the value fixed by the Administered Price Mechanism (APM in short). The Revenue’s case is that as per provisions of Section 4 of CE Act, w.e.f. 01.07.2000, in cases 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 price is the sole consideration for the sale, then the value should be the Transaction Value and it includes the price actually paid or payable for goods, when it is sold and includes any other amount such as out ward handling, marketing and selling organization expenses, commission or any other matter, the buyer is liable to pay in addition to the amount charges as price, to or on behalf of the assessee in connection with the sale whether payable at the time of sale or at any other time. It was alleged by the Revenue that the appellant had cleared the above noted products by paying excise duty on the APM price instead of paying duty on the Transaction Value and hence, proceedings have been initiated to recover the short levy.
2. The learned Senior Counsel appearing for the appellants submit that this very issue was referred to the Larger Bench presided by the Hon’ble President in the case of Gas Authority of India Ltd. v. CCE, Vadodara, as . The Larger Bench has clearly held that for the purpose of levy of duty, the price fixed by the APM for the Petroleum Products should be the criteria for levy of duty. He submits that this Bench, in the case of Hindustan Petroleum Corporation Ltd. v. CCE, Guntur , applied the ratio of the above noted judgment independently. He also submits that all the facts were known to the department and the matter had been clarified by the Board also. Therefore, the demands are barred by time, as there was no suppression of facts.
3. The learned JDR fairly concedes the position that the issue is covered by the Larger Bench judgment. However, he reiterates the departmental view.
4. We have carefully considered the submissions and find that this issue was referred to the Larger Bench of this Tribunal in the case of Gas Authority of India Ltd. (cited supra). The Gas Authority of India Ltd. also took up the same contention as taken in the present case that the Administrative Price Mechanism covers the assessable value of the products for the purpose of levy of excise duty. The Larger Bench accepted their contention and set aside the demands raised as short levy. The findings recorded in paras 7 to 13 are reproduced herein below.
7. In deciding the issue, we are conscious of our limitation that we are not governed by the Policy of Govt. where the law is specific and calls for no different interpretation. If law on the point is not clear, then Policy of Govt. has vital impact. Tariff Act does not contemplate LPG in different forms – Packed or Bulk. Appellants have no discretion in fixing the price to their product. The OCC fixed the price depending on the end user as seen hereinbefore. That price can alone be the basis for assessing duty. It is the admitted case of parties that the appellants paid duty on LPG as per price fixed for domestic consumption. Whenever it was sold for non-domestic or industrial user, duty on the higher price was paid. Assessable value of goods manufactured will depend on the purchaser to whom it is meant to be sold and the price that is fetched at such sale. This is the law laid down by the Supreme Court in IDL Chemicals Ltd. v. Collector of Central Excise .
8. Learned Counsel Mr. Chandersekharan representing the Revenue advanced an argument that OCC fixed price for LPG depending on the nature or form in which it is removed and that price should decide the value for the purpose of imposing duty. LPG could be removed either in packed form or in bulk. In packed form it may be for domestic use or for non-domestic use. For both, different prices have been fixed. In the case of bulk movement another price is fixed and that should be the basis for assessment to duty. This argument is quite attractive; but on a closer scrutiny we find it difficult to accept the same. In packed form different prices are fixed by OCC depending on user. Therefore, it is evident that the packing is not the sole basis for the fixation of the price. The use to which it is put decides the price. Likewise, the removal in bulk can also be for different purposes. If it is earmarked for domestic consumption, the price that will be fetched on such sale should be fixed as assessable value. If a different interpretation is adopted, it will upset the entire price structure and the policy of the Central Govt. as discernable from the speech made by Finance Minister in Lok Sabha.
9. Mr. M. Chandersekharan further submitted that the principles laid down by Supreme Court in various decisions on Section 4(1)(a) of the Central Excise Act cannot be of any assistance to the appellants before us because these decisions were in relation to goods manufactured which were sold to different buyers at different prices. LPG is not capable of being sold to different classes of buyers at different prices. Price of LPG is fixed by OCC. It cannot be varied by the manufacturer. It must, therefore, according to learned Counsel, depend on the form in which it is removed. Even conceding for arguments’ sake that such an approach is possible, then LPG in packed form should have one price and bulk another price. This is not so. Accordingly, we are clear in our mind that LPG earmarked for domestic consumption must have the lower price for assessment even when it is removed to the buyers or on stock transfer in bulk for bottling. Thus, it is evident that the assessable value of LPG cleared in bulk by the appellants for bottling for domestic consumption should be assessed at the lower value fixed by OCC for that category. In this view, the decisions relied on by learned Counsel, namely, Dharamsi Morarji Chemical Co. Ltd. v. Collector of Central Excise, Bombay , Krislon Texturiser Pvt. Ltd. v. Union of India and Varelli Weavers Pvt. Ltd. v. Union of India are not of any assistance to him. They deal with entirely different set of circumstances. So, we are not discussing them in detail.
10. Their Lordships of the Supreme Court in Oil and Natural Gas Commission v. Collector of Central Excise clarified in the Central Govt. to set up a High Power Committee to resolve controversies between a Ministry and another Ministry of the Govt. of India, a Ministry and a Public Sector Undertaking of the Govt. of India and between Public Sector Undertakings themselves. Such High Power Committee should, as per the decision, endeavour to resolve the matters in dispute. If that Committee is unable to resolve the matter for reasons to be recorded by it shall grant clearance for the litigation. Scant respect to this mandate of the Supreme Court has been shown by the High Power Committee. Committee did not take any measure to resolve the dispute or controversy between the Public Sector Undertaking and the Revenue Ministry. Minutes of the meeting of the High Power Committee which met on 10-6-1999 to consider the fate of appeals of ONGC were made available to us. Forty persons were present at the meeting of this High Power Committee which took up many cases. The decision arrived at by this crowded body as seen from the minutes is:
The Committee, having regard to the fact that the disputes in the above cases at serial Nos. 17 and 18 involved mixed questions of law and fact, permitted Oil and Natural Gas Corporation Ltd. to pursue the appeals in CEGAT.
Questions of law and facts will arise in disputes before Tribunals and Courts. Such disputes are to be resolved by the High Power Committee. No attempt in this direction was seen to have been made in the instant case.
11. To crown all these, we were informed of the view expressed by the Ministry of Petroleum and Natural Gas on the issue now permitted to be agitated before CEGAT. By letter No. P20029/18/98-PP, dated 6-4-1999, Ministry of Petroleum and Natural Gas issued clarification on the points raised in these appeals to the appellants before us and other similar manufacturers of LPG. It reads:
When LPG is removed by the gas extraction plants i.e., ONGC, OIL & GAIL as well as by the Petroleum refineries i.e., IOC, BPC, HPC, CRL, MRL and BRPL in bulk from either to their own bottling plants or to the bottling plants owned by any of the oil marketing companies, for the purpose of declaring the assessable value for Excise duty payment, the selling prices as applicable for the intended sale from such bottling shall only be applied and the excise duty liability shall be discharged by the gas extraction plants/petroleum refineries accordingly.
12. This clarification is in consonance with the view reached by us. When the Petroleum Ministry was having this view, the High Power Committee should have at least considered the same in a purported attempt to resolve the dispute and given reasons for deviating from that view. The High Power Committee in the case on hand dealt with the issue in a casual manner only to give an impression that the direction of the Supreme Court is complied with. Committee should not have approached the issue to say the least, in the casual manner adopted at its meeting held on 10-6-1996.
13. In view of what has been stated above, we allow all the appeals and hold that the appellants correctly paid excise duty on LPG removed in bulk for domestic consumption as per the price fixed by the OCC for the said quantities for the said user. No further amount by way of excise duty is payable by these appellants on those quantities. Contrary view taken by the adjudicating officers in the orders impugned in these appeals is illegal and unsustainable. Those orders are set aside with consequential relief, if any. Appeals are accordingly allowed.
4.1. This Bench also, in the case of HPCL, cited supra, upheld the assessees’ contention as noted in para 4, which is reproduced below:
4. On a careful consideration we are agreeing with the Board Circular. The Commissioner has also not applied the judgments which are clearly applicable to the facts of the case. He has also held that there is suppression of facts. On a careful consideration, we find that the order passed by the Commissioner is totally unacceptable and it is a clear case of judicial indiscipline. The Board Circular had been specifically issued for this case and it has been clarified that the PPA is hot includible in the assessable value. Further more, the issue is also covered by the Larger Bench judgment rendered in the case of CCE v. Coolade Beverages Ltd. and Brindavan Beverages (supra) and catena of other judgments which have clearly held that subsidy given to a manufacturer is not to be added to the sale price. All the facts were known to the department and clearance were made under invoices. In these circumstances to hold that there is suppression and also to impose fine and penalty is totally unjustified. The Order of the Commissioner to say the least is perverse and is not acceptable, particularly when he holds that there exists mens rea on the parts of PSU unit. The issue is they were to collect duty only on the value of price fixed by the Govt. and that additional consideration received as product price is not part of the price at all. In terms of the Board Circular and the citations, the impugned order is set aside and appeal allowed with consequential relief if any.
4.2. Respectfully following the ratio of the above noted judgments, we are of the considered opinion that the stay application and appeal are required to be allowed with consequential relief, if any. Ordered accordingly.
(Pronounced and dictated in open Court)