The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata has held that the Ultimate Selling Price from the depot is irrelevant in determining the Assessable Value whereas the Import Parity Price published by Platts shall be accepted for the valuation of Petroleum Products under the Central Excise Regime.
The appeal was filed by M/s. Haldia Petrochemicals Limited against the Commissioner of Central Excise, Haldia with respect to the valuation of goods cleared from the factory to the depot on a stock transfer basis and eventually sold from there.
The assessee argued that since there was no prevailing depot price or ex-factory selling price available at the time of clearance, they had adopted the import parity price published by Platts, an international organization that notifies petrochemical product prices worldwide, for the purpose of Central Excise Duty payment.
A Show Cause Notice (SCN) was issued to the assessee alleging a violation of the Valuation Rules and demanding differential duty based on the ultimate selling price of the goods from the depot.
The revenue, Commissioner of Central Excise, Haldia represented by Shri A. Roy contended that the Central Excise Duty shall be fixed on the assessable value that is determined based on Ultimate Selling Price from the depot.
The assessee, represented by CA. Arvind Baheti contended that the ultimate selling price from the depot is irrelevant in determining the assessable value of the goods.
The assessee also argued that the demand for the month of February 2002 is time-barred since the time limit for issuance of SCN under Section 11A of the Central Excise Act, 1944 is one year from the date of clearance of goods to the depot and that there was no wilful suppression or misstatement of facts to warrant the imposition of penalty.
The bench noted that in cases of clearance of goods from the factory to the depot, the duty is payable as per Rule 7 of the Valuation Rules. The ultimate selling price of the goods from the depot is not relevant in determining the assessable value as per Section 4(1)(b) of the Central Excise Act, 1944.
The two-member bench consisting of Mr. Ashok Jindal (Judicial Member) and Mr. K. Anpazhakan (Technical Member) upheld the contentions of the assessee and held that the demand based on the ultimate selling price was not sustainable.
The bench also acknowledged the acceptability of import parity prices based on Platts for the valuation of petroleum products under the Central Excise Regime.
The bench ruled in favour of the assessee, setting aside the demand based on the ultimate selling price holding that the duty should be assessed based on the import parity price adopted by the assessee.
In result, the appeal filed by the assessee was allowed.
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