Central Excise Act, 1944 – Valuation of goods-price as sole consideration of goods:
Held: The Memorandum of Understanding (MOU) dated 31st March 2002 by and between the Oil Marketing Companies (OMCs) incorporates mutual arrangements made by MNCs for an uninterrupted supply of petroleum products so that MNCs can further sell the products to their dealers – By no stretch of the imagination, it can be said that the price fixed under the MOU was the sole consideration for the sale by one OMC to the other – Further, there is no specific finding recorded in the decision of the Tribunal in the case of Hindustan Petroleum Corporation Ltd. that the price was the sole consideration for the sale – The Tribunal has not adverted to the question of whether the third condition in s.4(1)(a) of the Central Excise Act was complied with – Thus, even assuming there is a merger of the said decision with the order of this court in the said case, the order of this Court does not constitute a binding decision on the issue of compliance with such condition – The finding of the fact recorded by the Tribunal in Civil Appeal No. 5642 of 2009 that price was not the sole consideration cannot be faulted with. [Paras 28-30]
Central Excise Act, 1944 – Applicability of extended period of limitation under the proviso to s.11-A(1) of the 1944 Act: Held: No detailed reasons have been recorded in support of invoking the extended period of limitation under the proviso to sub-section (1) of s.11-A by the Commissioner in his order – The department was aware of the MOU even before the date on which the show cause notice was issued – MOU was referred to in the decision of the Tribunal in the case of Hindustan Petroleum Corporation Ltd., thus, the ground of suppression of MOU taken to support the invocation of the extended period of limitation cannot be sustained – The second ground is that BPCL made the department believe that dual pricing was adopted as per the directions of the Government – It is not alleged in the show cause notice that any such misrepresentation was made by BPCL – The reply to the show cause notice submitted by the BPCL contains no such representation – Even in the order, no specific reference has been made to any such contention raised by BPCL or other OMCs – Hence, both the grounds in support of invoking an extended period of limitation cannot be sustained, and only on that ground, the demand cannot be sustained – Therefore, the said appeal preferred by the BPCL deserves to be allowed by setting aside the entire demand on the ground that the extended period of limitation could not be invoked – The other appeals to be remanded to the Tribunal for fresh adjudication. [Paras 32-34, 38, 39] Central Excise Act, 1944 – Applicability of s.11AC: Held: In this case, there is no allegation made by the Revenue of fraud, collusion or any wilful mis-statement on the part of the appellant – The stand taken is that the MOU was suppressed, and therefore, s.11AC will apply – In view of the findings recorded above on the issue of the invocation of the extended period of limitation, the penalty could not have been imposed. [Paras 36, 38]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Adeeba Mujahid, Hony. Associate Editor (Verified by: Ankit Gyan, Editor). Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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