CESTAT Overturns Excise Duty on CNG Valuation, Upholds Factory Price over Retail Price at HPCL Outlets
Tribunal rejected the Department’s attempt to adopt retail price at HPCL outlets, allowing both appeals in favour of the company.
The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside excise duty demands on Compressed Natural Gas (CNG), ruling that the factory price must be the correct basis for valuation rather than the retail selling price at Hindustan Petroleum Corporation Ltd. (HPCL) outlets. The appellant, Bhagyanagar Gas Ltd., filed two appeals against...
The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside excise duty demands on Compressed Natural Gas (CNG), ruling that the factory price must be the correct basis for valuation rather than the retail selling price at Hindustan Petroleum Corporation Ltd. (HPCL) outlets.
The appellant, Bhagyanagar Gas Ltd., filed two appeals against excise duty demands and penalties for the periods January–December 2010 and January–October 2011, and the matter arose when the Department alleged that Bhagyanagar Gas Ltd. was undervaluing Compressed Natural Gas (CNG) cleared to Hindustan Petroleum Corporation Ltd. (HPCL) retail outlets, by paying excise duty on factory‑gate prices instead of the retail selling price at dispensing stations.
The appellant argued that the matter was identical to earlier disputes for 2005–2009, where the Tribunal had already ruled in its favour, a decision later upheld by the Supreme Court in similar cases involving Mahanagar Gas Ltd. and Adani Gas Ltd.
AMP Adjustment of ₹4.32 Cr Basedon Bright Line Test Unsustainable: ITAT Grants Partial Relief to Callaway GolfIndia [Read Order]The Department argued that excise duty should be discharged on the retail selling price at HPCL outlets, including the commission of ₹1.20 per kg paid to HPCL, since the place of removal was not the factory gate but the dispensing stations.
The revenue also pressed that appellant and HPCL were related parties and therefore valuation should fall under Section 4(1)(b) read with Rule 7.
After observing these matters, the tribunal noted that the show‑cause notices did not allege related‑party transactions, but only questioned the place of removal. It held that new grounds could not be introduced at the appellate stage.
Observing that the earlier order of 29.11.2023 squarely covered the same factual matrix, the Bench comprising A.K. Jyotishi (Technical Member) and Angad Prasad (Judicial Member)concluded: “we do not find any ground to uphold the orders of the Commissioner (Appeals), to the extent appealed against by the appellant.”
Accordingly, both appeals were allowed
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