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CX – Assessee was, since 2005, disclosing methodology of valuation but Revenue never pointed out any irregularity – no malafide, hence extended period cannot be invoked: CESTAT

2019-TIOL-2113-CESTAT-AHM

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH, AHMEDABAD
REGIONAL BENCH
COURT NO. III

Excise Appeal No. 13900 of 2014
With
Cross Objection No. 10406 of 2015

Arising out of OIO-AHM-EXCUS-002-COMMR-06-14-15, Dated: 27.08.2014
Passed by Commissioner of Central Excise, Ahmedabad-II

Date of Hearing: 18.12.2018
Date of Decision: 16.04.2019

M/s ADANI GAS LTD
CNG STATION, NEAR AMTS DEPOT
HELMET CIRCLE, MEMNAGAR
AHMEDABAD-380052

Vs

COMMISSIONER OF CUSTOM 
THE CCE, CUSTOM HOUSE, NAVRANGPURA
AHMEDABAD-380009

Appellant Rep by: Shri Devan Parikh, Senior Adv., Shri Hardik Modh & Shri Amit Laddha, Advs.
Respondent Rep by: Shri Sameer Chitkara, AR

CORAM: Ramesh Nair, Member (J)
Raju, Member (T)

CX – The assessee is engaged in marketing, distribution and supply of natural gas/ Compressed Natural gas – They have installed CNG Outlets at the location of various Oil Marketing companies namely M/s IOC, M/s BPCL and M/s EOL known as OMCs and the gas is sold by assessee to such OMCs on payment for duty and VAT – In case of direct sale of CNG through their own outlet the assessee discharge central excise duty/ VAT on sale price to the retail customers – In case of sale to OMCs the duty is paid by assessee at the sale price to the OMCs who in turn sell it to retail customer and pays VAT on their sale price – Since the sale price has to be uniform regular at all the sale outlets the assessee grants a Trade Margin to the OMCs to cover their expenses, outgoings and profit margin – The value of the goods between the assessee and OMCs is fixed as per the agreement and hence the same cannot be disputed – The Revenue has relied upon the judgment ofMaruti Udyog Ltd – 2010-TIOL-1127-CESTAT-DEL-LB and Coromandal Fertilizers Ltd 2002-TIOL-343-SC-CX-LB, and Supreme Petrochem Ltd – 2009-TIOL-1133-CESTAT-MUM-LB – However, the said judgments are not applicable to the present set of facts – The demand on ‘Trade Margin’ confirmed against assessee is not sustainable and is required to be set aside – The demands raised in instant case are hit by limitation of time as assessee right from beginning made correspondences with the Department disclosing the price structure and the terms of agreement entered with the OMCs – The Revenue was in knowledge of valuation method adopted by assessee – The assessee since 2005 had made correspondence with department disclosing the price structure with bulk customers, retail customers and OMCs to Revenue – The correspondence clearly shows that assessee were disclosing the methodology of valuation and the Revenue never pointed out any irregularity – In such case, the bona fide of assessee cannot be doubted – Since there is no ingredient of any malafide intention on the part of assessee to evade the excise duty, the extended period cannot be invoked for raising demand – Views are also supported by Tribunal, Apex Court and High Court’s judgments in cases of Pragati Concrete Products (P) Ltd – 2015-TIOL-223-SC-CXSimplex Infrastructures Ltd – 2016-TIOL-779-HC-KOL-ST and Amway India Enterprises Pvt. Ltd – 2017-TIOL-423-CESTAT-DEL – The demand is not sustainable on merits and even on limitation of time – The impugned order is therefore not sustainable – The cross objection also stand disposed off: CESTAT

Appeal allowed

Case laws cited:

Mahanagar Gas – 2016-TIOL-2339-CESTAT-MUM…Para 2

BEHR India Ltd. – 2013-TIOL-2138-CESTAT-MUM…Para 2

BPCL – 2014-TIOL-1114-CESTAT-MUM…Para 2

IOC Manu/CE/1225/2017…Para 2

Maruti Udyog Ltd – 2010-TIOL-1127-CESTAT-DEL-LB…Para 3

Coromandal Fertilizers Ltd – 2002-TIOL-343-SC-CX-LB…Para 3

Supreme Petrochem Ltd – 2009-TIOL-1133-CESTAT-MUM-LB…Para 3

BEHR India Ltd – 2014-TIOL-494-CESTAT-MUM…Para 6

Mahindra & Mahindra Ltd – 2002-TIOL-62-SC-CUS-LB…Para 6

Hindustan Petroleum Corpn. Ltd – 2005 (187) ELT 479 (Tri)…Para 6

Indian Oil Corporation – 2014 (300) ELT 539 (Tri, Del)…Para 6

Maruti Udyog Ltd – 2010-TIOL-1127-CESTAT-DEL-LB…Para 6

Coromandal Fertilizers Ltd – 2002-TIOL-343-SC-CX-LB…Para 6

Supreme Petrochem Ltd – 2009-TIOL-1133-CESTAT-MUM-LB…Para 6

Pragati Concrete Products (P) Ltd – 2015-TIOL-223-SC-CX…Para 7

Metal Tubes -2000 (126) ELT 1260 (Tri.)…Para 7

Simplex Infrastructures Ltd – 2016-TIOL-779-HC-KOL-ST…Para 7

Blue Star Ltd – 2000 (120) ELT 415 (Tri.)…Para 7

Amway India Enterprises Pvt. Ltd – 2017-TIOL-423-CESTAT-DEL…Para 7

FINAL ORDER NO. A/10685/2019

Per: Ramesh Nair:

The present appeal has been filed against impugned Order-in-Original No. AHM-EXCUS-002-COMMR-06-14-15 dated 27.08.2014 passed by Commissioner, Central Excise, Ahmedabad. The brief facts of the case are that the Appellant are engaged in marketing, distribution and supply of natural gas/ Compressed Natural gas falling under chapter 27112900. They have installed CNG Outlets at the location of various Oil Marketing companies namely M/s Indian OIL Corporation (IOC), M/s Bharat Petroleum Corporation (BPCL) and M/s Essar Oil Limited (EOL) known as OMCs and the gas is sold by the Appellant to such OMCs on payment for duty and VAT. In case of direct sale of CNG through their own outlet the Appellant discharge central excise duty/ VAT on the sale price to the retail customers. In case of sale to OMCs the duty is paid by the Appellant at the sale price to the OMCs who in turn sell it to retail customer and pays VAT on their sale price. Since the sale price has to be uniform regular at all the sale outlets the Appellant grants a Trade Margin to the OMCs to cover their expenses, outgoings and profit margin. As per the agreement the OMCs has to provide the Appellant space for installation of machines, personnel, utilities, insurance and proportionate auxiliary expenses etc. for running the CNG stations. Vide the impugned order the adjudicating authority has confirmed demand of duty on such “Trade Margin” on the ground that the ‘Trade Margin’ is compensation given by the Appellant to OMCs in lieu of facilities received by the Appellant by means of Lease/Rent of the outlet/CNG station by OMCs, Personnel expenses for the CNG Station borne by OMCs, Other utilities provided at the outlet/ CNG Station by the OMCs and any other ancillary expenses related to CNG Station/ outlet by OMCs. The Trade Margin is part and parcel of the assessable value and the same is required to be included in the assessable value for payment of central excise duty. Hence the present appeal.

2. Sh. Deven Parikh Ld. Senior Advocate with Sh. Hardik Modh & Amit Laddha Ld. Advocate appearing for the Appellant submits that as per the agreement between the Appellant and the OMCs, such OMCs has to supply space for installation of machines, personnel, utilities, insurance and proportionate auxiliary expenses etc. for running the CNG Stations. It is such expenses, outgoings as well as profit margin which is passed on as ‘Trade Margin’ to OMCs. The agreement between the two are on principal to principal basis. That as per agreement the Trade Margin is a genuine pre-estimate of the costs & expenses and commission to dealers. In terms of Para 5 of the agreement the point of time is fixed at which the title to the goods is passed from Appellant to OMCs and thereafter from OMCs to their customers. The fact of passing of Title in goods is supported by payment of VAT by the Appellant at the inlet stage and payment of VAT by OMCs at outlet stage. The adjudicating authority has held that there is no ‘actual sale’ that have taken place and if there is no sale than service tax ought to have been paid which is incorrect. He relies upon the Tribunal’s order in case of Mahanagar Gas 2017 (348) ELT 175 (TRI) = 2016-TIOL-2339-CESTAT-MUM as affirmed by the Apex Court as reported in 2018 (360) ELT A187 (SC), BEHR India Ltd. 2014 (35) STR 637 (TRI) = 2013-TIOL-2138-CESTAT-MUMBPCL 2014 (36) STR 433 = 2014-TIOL-1114-CESTAT-MUM , IOC Manu/CE/1225/2017.

3. Sh. Sameer Chitkara Ld. Additional Commissioner (AR) appearing for the revenue reiterates the findings of the impugned order and supports the same. He also relies upon orders in case of Maruti Udyog Ltd – 2010 (257) ELT 226 (Tri, LB) = 2010-TIOL-1127-CESTAT-DEL-LB and Coromandal Fertilizers Ltd – 1984 (17) ELT 607 (SC) = 2002-TIOL-343-SC-CX-LB and Supreme Petrochem Ltd – 2009 (240) ELT 38 (Tri – LB) = 2009-TIOL-1133-CESTAT-MUM-LB.

4. Heard both the sides and perused the case records. We find that the Appellant has entered into agreement with the OMCs for supply on Natural gas/ CNG on principal to principal basis.

5. The terms of the supply were negotiated on principal to principal basis and it specifically provides the responsibility of the Appellant and OMCs to do certain acts and services. Hence clearly it is a negotiated deal between the two parties. Para 14.2 of the agreement makes it clear that the appellant does not act as agent of OMCs or vice-versa. Para 8.8 of the agreement states that the trade margin is a genuine pre-estimate of the costs and expenses and commission to dealers, which means the OMCs can recoup their expenses and profit margin. Para 5 of the agreement provides a point of time at which the title to the goods pass from the appellant to the OMCs and thereupon to the consumers. It is at this passing of title to the goods from the appellant to the OMCs that the VAT payment is made by the appellant and the OMCs also paid VAT at the time that they made further sale of gas to the customer. The appellant issued sales invoice to OMCs and paid VAT on such value and the same value was also shown in the sales tax return at which the goods are sold to the buyers. Clause 3.6 of the agreement entered between the Appellant and Indian Oil Corporation on 25.4.2011 provides that the ownership of CNG is transferred from the appellant to OMCs at the Inlets of the CNG stations and therefore the Appellant had taken the insurance cover in respect of risk and liability for CNG delivered and stored at the 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.) 2016-TIOL-2339-CESTAT-MUM, wherein in identical facts, the Tribunal held as under :

“5. We have considered the rival submissions and perused the records.

5.1 We find that the common issue involved in the above appeals is whether price charged for sale of CNG to OMCs can be considered as transaction value for the purpose of payment of duty under Section 4(1)(a) of CEA.

5.2 We find that entire period covered in all the appeals is post July, 2000, governed by amended Section 4. The new Section 4 essentially seeks to accept different transaction value, which may be charged by the assessee to different customers, for assessment purposes, so long as those are based purely on commercial consideration, where buyer and the seller are not related and price is the sole consideration for sale at the time and place of delivery. Thus, it enables valuation of goods for excise purpose on the value charged as per normal commercial practices, rather than looking for a notionally determined value which existed prior to amendment of Section 4 in 2000. The Adjudicating Authority has confirmed the demand on the differential value between MGL’s sales price from their own outlets and/or the outlets of PPs and the sales price of MGL to OMCs, treating the difference as the charges for the services rendered by OMCs to MGL and the Department also claims that sale is not taking place between the appellants and OMCs. We have perused the copies of Central Excise invoices issued by MGL to OMCs on daily basis for dispensing CNG from 6.00 am to 6.00 am showing the quantity supplied, assessable value, duty paid/payable, etc. We also find that there are joint tickets prepared outlet-cum-party-wise showing the sale period starting at 0600 hrs. on preceding day and ending at 0600 hrs. on the succeeding day and also show the quantity of CNG dispensed with opening reading, closing reading, total reading and total quantity supplied. Such joint-tickets are also signed by both parties, i.e. appellants and OMCs. Thereafter, the appellants are raising tax invoices upon OMCs on monthly basis with specific business days within which payment has to be made by OMCs and for any delay in payment, interest is also payable by OMCs. The appellants have paid VAT/sales tax on their sale of CNG to OMCs, as evidenced from the invoices. Further, sales invoices of OMCs for resale of CNG to ultimate buyers, VAT/sales 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, have been given higher discount also needs to be accepted in the absence of any allegation/substantiation of mutuality of interest between appellants and OMCs, as both are independent entities. We also find that there is a distinct difference in the transactions of the appellants with PPs, wherein MGL supply CNG through the outlets owned and operated by PPs and CNG is directly supplied by PPs to the ultimate consumers/vehicles users from their outlets for and on behalf of MGL, under the invoices/bills/cash memos of MGL and the price charged in those bills/invoices/cash memos are the retail sales price or maximum recommended price determined by MGL, from time to time. In a true sense, the customers/vehicle users at the outlets of PPs are buying CNG from MGL, through the PPs. The privity of contract is between MGL and those buyers and those sales are directly recorded in the Books of Account of MGL and not in the Books of PPs, as there is no sale and purchase of CNG by PPs and PPs act only as an agent of MGL on commission basis. The entire sales proceeds are remitted by PPs to MGL on daily basis. The contracts between MGL and PPs are that of “principal” and “agent” as the PPs are merely service providers and not buyers of CNG from MGL. Their obligation under the contracts is merely to provide assistance for supply/sale of CNG to the vehicles by MGL. For acting as an agent of MGL, PPs get specified service charges on “per kg” basis of the CNG sold by them on behalf of MGL. Since the PPs are acting as agents of MGL for supply of CNG, PPs consider their activity as Business Auxiliary Service and pay service tax on the commission received from MGL. We find that sale of CNG by the appellants to OMCs is on principal-to-principal basis, which is clear from various terms/covenants of the agreements between MGL and OMCs, i.e. retail sales price is the price at which CNG is to be sold to vehicles by the OMC as communicated by MGL to OMCs, from time-to-time; OMC shall sell CNG at the outlets situated at the site; Retail Price of CNG shall be fixed by MGL and the OMCs shall sell the CNG only at the retail price communicated by MGL to OMCs, from time-to-time; OMCs shall pay to MGL the retail price as reduced by profit margin/commission/discount; MGL shall, before 5th of every month, send to OMCs an invoice for the quantity of CNG sold by OMCs during the preceding month. Such 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 MGL do not have any role to play in such transactions; that commission paid to PPs was Rs. 1.20/kg, Rs. 1.74/kg, Rs. 1.90/kg and Rs. 2.45/kg during different periods, whereas discount given to OMCs was Rs. 1.20/kg, Rs. 1.40/kg, Rs. 2.42/kg, Rs. 2.62/kg and Rs. 2.74/kg during different periods. From the above discussions, we are of the view that the appellants’ case is squarely covered under new Section 4(1)(a) of CEA which essentially permit different transaction values, unlike normal sales price existed prior to 1-7-2000, which has also been explained by C.B.E. & C., vide its Circular No. 354/81/2000-TRU, dated 30-6-2000 in Para 5.

5.4 We also find that the agreements between the appellants and OMCs were entered into in 1998 or 1999, when there was no levy on CNG, which came into effect only from 1-3-2001 and, hence, the appellants could not have thought that using certain expressions like commission/trade margin, etc. would create hassle at a future date from Central Excise point of view and also there would not have been any inducement to use any expression in the agreement with an intent to evade payment duty. The nomenclature like commission/profit margin used in the agreements when read with invoices raised by the appellants upon OMCs, it is clear that it was the sale transaction on principal-to-principal basis and, hence, as held by Hon’ble Supreme Court in Perfect Circle Victor – 1992 (60) E.L.T. 676 (S.C.) and D.C.M. Textiles – 2006 (195) E.L.T. 129 (S.C.) = 2006-TIOL-22-SC-CX, etc. trade discount allowed by whatever name called is an admissible deduction and the appellants are not liable to include the same for the purpose of payment of duty. In the present case, the appellants have charged mutually agreed price, which is transaction value between the appellants and OMCs in the normal course of their business for sale of CNG and no additional consideration, whatsoever, flows from OMCs to MGL. Further, by virtue of its technical necessity, the supply of CNG could have been done in the manner in which the appellants have done, as natural gas by the process of compression amounts to manufacture for the purpose of marketing as CNG for use as fuel which has been done at the time of dispensing. Inasmuch as NG is compressed at 210 bars pressure in Mother Stations and Online Stations and got stored in stationary cascades and dispensed by bringing the pressure 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 that the appellants have a strong case on merits itself and are allowing the appeals on merits, we are not discussing the alternate propositions like non-applicability of extended period, etc. The penalties imposed on the appellants are also not sustainable. With the above discussions, we set aside the impugned orders and allow the appeals with consequential relief, if any, in accordance with law.”

The above Tribunal’s judgment was affirmed by the Hon’ble Apex Court, as reported in 2018 (260) ELT A187 (SC). Further same views were given by the Tribunal in case of BEHR India Ltd – 2014 (35) STR 367 = 2014-TIOL-494-CESTAT-MUM. The relevant paras of said judgment are as under:-

“Para 2. The appellant, M/s. Behr India Ltd. purchased Wire Harness from M/s. Tyco Electronics Corporation India (P) Ltd. and sold the same to their principal M/s. Behr Czech Republic. While selling the product to their principal, they marked up the price by 3% of the purchase price. Since the material has to be supplied to Czech Company, the appellant directed the Indian seller i.e. M/s. Tyco Electronics Corporation India (P) Ltd. to ship the goods to the Czech entity. However, the invoices for the same were made on the Indian entity and VAT liability was also discharged on the transaction. The appellant raised export invoice on the foreign entity and received the export proceeds from their foreign principal as evidenced from the bank realization certificate dated 6-9-2007 and the proceeds have been credited to the appellant’s accounts and the commission paid or payable is shown as nil. However, in the books of accounts they had shown the mark up made in the transaction as ‘commission income’. Therefore, the department came to the conclusion that the appellant was acting as a Commission agent for M/s. Tyco Electronics Corporation India (P) Ltd., and hence on the mark up made by them, they are liable to pay Service Tax under the category of “Business Auxiliary Service”. Accordingly, a notice was issued and the demands were confirmed vide order dated 16-12-2008 solely on the ground that the mark up made by them in the transaction was shown as commission income in their books of account. The appellant preferred an appeal against the said decision before the lower appellate authority, who rejected the appeal. Hence, the appellant is before us.

Para 6.1 We have also perused 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) = 2002-TIOL-62-SC-CUS-LB

(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 value of the goods between the Appellant and OMCs is fixed as per the agreement and hence the same cannot be disputed. The Revenue has relied upon the judgment of Maruti Udyog Ltd – 2010 (257) ELT 226 (Tri, LB) = 2010-TIOL-1127-CESTAT-DEL-LB and Coromandal Fertilizers Ltd – 1984 (17) ELT 607 (SC) = 2002-TIOL-343-SC-CX-LB , and Supreme Petrochem Ltd – 2009 (240) ELT 38 (Tri, LB) = 2009-TIOL-1133-CESTAT-MUM-LB. However, we find that the said judgments are not applicable to the present set of facts. The ratio of Maruti case supra is not applicable as the Revenue has not produced any evidence to show that there is any kind of direct or indirect consideration paid by the OMCs to the Appellant. It is also a fact that the OMCs are Public Undertakings and therefore, there is no iota of doubt that the transaction between the parties is the sole consideration and at arm’s length. The order in case of Coromandel Fertilizers is also not applicable as in the said case, the issue involved was “whether the commission paid by way of remuneration for service rendered by the selling agent can be considered as discount” whereas in the present case, there is no commission being paid by the appellant to the OMCs and what has been provided by the appellant is only a trade discount, which is a normal business practice. Similarly the Tribunal Larger Bench order in case of Supreme Petrochem is also not applicable as the issue involved in the said case was as to whether the expenses of loading of excisable goods within the factory for clearance to buyer are to be included in the assessable value or not, which is not the issue in the present case. We are of the view that the demand on ‘Trade Margin’ confirmed against the Appellant is not sustainable and is required to be set aside.

7. We also find that the demands raised in the instant case are hit by limitation of time as the Appellant right from beginning made correspondences with the Department disclosing the price structure and the terms of agreement entered with the OMCs. The Revenue was in knowledge of the valuation method adopted by the appellant. The Appellant since 2005 had made correspondence with the department disclosing the price structure with bulk customers, retail customers and OMCs to the Revenue on 6.12.06, 1.2.2007, 27.7.08, 15.1.10, 19.2.10, 12.4.10, 17.9.10. The above correspondence clearly shows that the Appellant were disclosing the methodology of valuation and the Revenue never 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) =2015-TIOL-223-SC-CXMetal Tubes -2000 (126) ELT 1260 (Tri.), Simplex Infrastructures Ltd – 2016-TIOL-779-HC-KOL-STBlue Star Ltd – 2000 (120) ELT 415 (Tri.) and Amway India Enterprises Pvt. Ltd – 2017 (3) GSTL 69 (Tri.-Del) = 2017-TIOL-423-CESTAT-DEL.

8. In view of our above observation we hold that the demand is not sustainable on merits and even on limitation of time. The impugned order is therefore not sustainable. We thus set aside the impugned order and allow the appeal with consequential reliefs to the Appellant. The cross objection also stand disposed off.

(Pronounced in the open court on 16.04.2019)

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