The Central Board of Excise and Customs, in the Department of Revenue of the Ministry of Finance, vide Circular No. 913/03/2010-CX dt 03/02/2010  have advised the field formations that in view of the developments that taken place after the decision of the CESTAT, Mumbai Bench vide Final order No. A/220/09/EB/C-II dt 17.6.2009 holding the view that the price as per MOU cannot be considered as “transaction value” under Section 4 and decided the case in favour of the Revenue dept., against which the aggrieved BPCL have reportedly filed an appeal against the said final order before the Supreme Court after obtaining COD [Committee on Disputed, under the Cabinet Secretariat], it has been decided to withdraw the Board’s instructions issued under 14F.NO.6/21/2003-CX-I (Pt) dt .14.2.2007. However, the CBEC has also advised the field formations that as the appeal of BPCL is pending before the Supreme Court, field formations are directed to consign all the pending show cause notices on the issue to the call book pending a final verdict from the Supreme Court. Further, for the cases within the review / appeal period necessary action to file appeal may be taken immediately.

By a careful reading of the over-abundantly cautiously worded circular now issued,  it is clear that the CBEC is keen to go back to the square one and wants to leave it to the Apex Court to decide finally.

In this context, it is worth to recapitulate the background under which the Cabinet Secretariat issued the guidelines for settlement of disputes between the Central Govt. departments and the Central Govt. controlled Pubic Sector units in tax related disputes. In fact the Supreme Court directed the Cabinet Secretariat to take steps to evolve a system by which such dispute matters between the Govt. and the PSUs are as far as possible resolved through inter-ministerial meetings / discussions so as to minimise all disputes being rushed to the High Courts and the Apex Court. For nearly two decades, the High Power Committee on Disputes have been doing the best to fulfill the expectations of the Apex Court. When such is the situation, it is a moot point to ponder over as to why the CBEC [Legal cell] have chosen to play safe in such a very vital dispute matter involving crores of revenue at stake. Why not the GROUP OF MINISTERS be approached by both the Finance and Petroleum Ministries to resolve this dispute matter and if need be take the approval of the Parliament through a legislative change on a prospective basis and take a lenient view on past cases ?

Everyone expects that the present day approach of the Ministries of the UPA-II Govt. to adopt a dynamic approach and not to adopt a play-safe technique especially in tax disputes matters of Petroleum sector.

VENKATRAMAN RAGGHUPATHY, Web admin.

CENTRAL EXCISE CIRCULARS sale amongst oil cos., Transaction value, Valuation

SUPREME COURT OF INDIA while deciding the Civil Appeal No. 7129 of 2002 on 23/4/08 in re: MOTOR INDUSTRIES CO. LTD vs COMMR. OF CUSTOMS, observed as follows: -

QUOTE: No special or extraordinary reasons have been recorded for rejecting the transaction value. It is settled law that unless transaction value is rejected for extraordinary or special reasons, the same has to be accepted. We agree with the submission made by Mr. Vellapally appearing for the assessee that the Tribunal has fallen in error in taking a decision contrary to the principle laid down by this Court in case of EICHER TRACTORS [2000-122-ELT-321(SC) and other decisions mentioned above. Under the circumstances, the impugned order of the Tribunal and the adjudicating authority are set aside and that of the first appellate authority is restored. The appeal is allowed accordingly. UNQUOTE

[for full text of the judgement please visit http://www.taxesinindia.com  and click on the citation taxind_2009_sc_ca_7179]

SUPREMR COURT ORDERS

VENKATRAMAN RAGGHUPATHY, Web admin.

SUPREME COURT JUDGEMENTS REJECTION, SPECIAL OR EXTRAORDINARY REASONS, Transaction value

SUPREME COURT OF INDIA referred the following to a Largers Bench, while deciding the Civil Appeal No. 3159 of 2004 in re: CCEX INDORE vs GRASIM INDUSTRIES LTD : -

QUOTE: Since the issues arising in these appeals are of seminal importance and are likely to have serious ramifications on the question of determination of assessable value of the excisable goods for the purpose of levy of duty of excise, we are of the view that the following issues require consideration by a larger Bench:-
1. whether Section 4 of the Central Excise Act, 1944 (as substituted with effect fom 1/7/2000) and the definition of ‘TRANSACTION VALUE” in Clause (d) of sub-Section (3) of Section 4 are subject to Section 3 of the Act?
2. Whether Sections 3 and 4 of the Central Excise Act, despite being interlinked, operate in different fields and what is their real scope and ambit?
3. Whether the concept of ‘TRANSACTION VALUE” makes any material departure from the deemed normal price concept of the erstwhile Section 4(1)(a) of the Act?
UNQUOTE

[for full text of the judgement please visit http://www.taxesinindia.com and click on the citation taxind_2009_sc_ca_3159]

SUPREME COURT ORDERS

VENKATRAMAN RAGGHUPATHY, Web admin.

SUPREME COURT JUDGEMENTS CENTRAL EXCISE ACT, Section 3, Section 4, Transaction value