TMI Blog2013 (10) TMI 884X X X X Extracts X X X X X X X X Extracts X X X X ..... able as there was no machinery provisions available to determine MRP of the product. OR The demands for the period prior to 1.3.2008 are sustainable as MRP of the product can be determined by the assessing officer using reasonable/best judgement based upon material available and consistent with principles and provisions of Section 4A of the Central Excise Act, 1944. Whether demand for extended period is not sustainable in law? - E/949/2009-Mum., E/1115 to 1120/2010-Mum., E/546 to 549/2011-Mum., E/528 to 530/2012-Mum., E/545 to 548/2012-Mum., E/551 to 560/2012-Mum., E/569 to 578/2012-Mum., E/584 to E/588/2012-Mum., E/600 to 609/2012-Mum. - - - Dated:- 1-8-2013 - Ashok Jindal And P K Jain, JJ. For the Appellant : Shri V Sridharan, Sr. Adv. Ms Anjali Hirawat, Adv. For the Shri V S Nankani, Adv. Shri J H Motwani, Adv. Shri Prakash Shah Adv. Respondent : Shri Navneet, Addl. Commissioner (AR) PER : Ashok Jindal The appellants are in appeal against the impugned orders as the issue involved in all the appeals are common, therefore all are taken up together for disposal. 2. The brief facts of the case are: M/s. Schneider Electrical India (P) Ltd.: The appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule 2(1) of the P.C.Rules. As the products are sold by the dealers in retail and therefore, there is a statutory requirement to affix the MRP under the PC Rules. The case of the Revenue is that goods manufactured by the appellants are excisable to excise duty on the basis of MRP in terms of Section 4A of the Act, and not on the basis of transaction value under Section 4 of the Act. Therefore, the show cause notice proceeded to determine the MRP as equal to the List Price + VAT + Octroi as no MRP was affixed on the products. The assessable value was arrived at after granting abatement of 40% from such MRP arrived by the Revenue. The show cause notices were adjudicated demand for the extended period of limitation was dropped but demand for the normal period of limitation was confirmed against the appellant. Aggrieved from the said demands the appellant is before us. M/s. Larson Toubro Limited and its Job Workers (Vendors):- The appellants are engaged in the manufacture of Switchgears, Control gears and Power Gears, more particularly the products such as Moulded Case Circuit Breakers of rating from 16A to 1600A (MCCBs). Air Circuit Breakers of 400A to 6300A. Industrial Switches ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, 1977 are not applicable to them. Therefore duty under Section 4A is not required to be paid. It is further contended that in the case of Larson Toubro Ltd. and Siemens Ltd. both preferred writ petition before the Hon'ble High Court of Bombay. Although the Hon'ble High Court of Bombay held the goods meant for industrial use, the provisions of Section 4A of the Act are attracted. The said decision of Hon'ble High Court of Bombay came on 29.2.2008. Therefore, the demands, for the period prior to that, cannot be demanded from the appellants as they were under bona fide belief that provisions of Section 4A are not applicable to their case. In alternate, it is also contested that the Civil Appeal filed by Larson Toubro Ltd. has been admitted by the Hon'ble Apex Court and same is pending disposal. Therefore, the decision of the Hon'ble High Court in the case of Larson Toubro Ltd. is in Jeopardy. It is further contended that even if goods are notified under Section 4A of the Central Excise Act, 1944 there is no legal obligation on the appellants to print MRP on the package of the goods under Standard of Weights and Measures Act, 1976 or Standard of Weights and Measures (Packag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retail sale price which is not correct proposition of the Revenue. It was stressed that as per Central Excise (Determination of Retail Sales Price of Excisable Goods) Rules, 2008, Rule 4 of the said Rule is relevant for the purpose. The Rule provides that where a manufacturer removes the excisable goods without affixing the MRP, then the retail sale price is to be ascertained by conducting enquiries in the retail market where such goods have normally been sold and such enquiries are to be conducted on a sample basis. In other words, the Rule provides that the price at which the goods in question are actually sold in the retail market should form the basis for ascertaining the MRP, but in this matter MRP has been ascertained on the basis of the List Price. The list price does not form the basis for arriving at the MRP as it is basis of sale price between the appellants and the dealers. Therefore, list price cannot be the basis for arriving of the retail sale price. Therefore, demand is not sustainable. 7. It is also contended by the Counsels for the appellants that the decision in the case of Larsen Toubro holding that the goods are required to affixed MRP is based on the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Toubro Ltd. is not good law is not correct as held by the Hon'ble High Court of Gujarat in the case of Gujarat Heavy Chemicals Ltd. reported in 2011 (22) S.T.R. 610 (Guj.), the Hon'ble High Court held that the law as on date is applicable. Therefore the decision of the Hon'ble High Court of Bombay is having precedential value. 11. It is further submitted that the determination of retail sale price by the Revenue authorities in terms of Sub-section (4) to Section 4 ibid came into w.e.f. 14.05.2003. Therefore, appellants are required to affix MRP on the impugned goods and in the event of failure said goods shall be liable to confiscation. Further, the retail sale price is to be ascertained in the prescribed manner. Admittedly, no such procedure was prescribed by the Central Government before 1.3.2008, this does not mean that the provisions of Section 4A ibid are not enforceable. If that be so the provisions of Section 4A ibid shall become redundant and such a situation came before this Tribunal in the case of Sushil Agarwal Vs. CC, Mumbai-I reported in 2012 (283) E.L.T. 377 (Tri.- Mumbai) wherein this Tribunal has held that when no machinery provisions are expressly provided for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase goods from the authorized stockists, duly supported with tax invoices to establish the bona fide. The appellants, however, have failed to take advantage of their unique position and have failed to contest, in effective terms, to prove that the price lists declared by them periodically were other than MRP exclusive of taxes and local limits. It is in this context that Order-in-Original is on a sound footing and the appellants have not made out a contestable case, both on merits as well as against the reasonableness of the criterion for valuation adopted for determination of assessable value under Section 4A, ibid. It is further submitted that as the appellants had continued not to pay duty on valuation determined under Section 4A, maximum retail sale price is available to the concerned market circles and establish by virtue of their price lists handed out to stockists and dealers, the information so ascertained from market circles makes the valid basis for determination of MRP for a period after the issuance of Rules, under the authority of and in terms of subsection 4 to Section 4A of the Central Excise Act, 1944. It is further submitted that the market enquiries in retail mark ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame up before the Hon'ble High Court of Bombay in the case of Larson Toubro Ltd. (supra) as that whether the valuation of goods for the levy of excise duty, whether the provisions of Section 4 or 4A of the Central Excise Act, 1944 are applicable. 16. The contention of the appellant is that as per the explanation to Rule 2A of Standard of Weights and Measures (Packaged Commodities) Rules, 1977 that as the package commodities are meant for industrial or institutional consumers therefore they are not liable to affix MRP on their products accordingly they are out of the purview Section 4A in that case. But the Hon'ble High Court of Bombay has held that appellants are required to affix MRP on the impugned goods. Further, the contention of the appellant is that the decision of Hon'ble High Court in the case of Larson Toubro Ltd. (Supra) has been challenged before the Hon'ble Apex Court and appeal against the said order has been admitted and it is also contended that the decision of Larson Toubro Ltd. is based on the decision of Whirlpool India Ltd. Vs. Union of India (supra) and said decision of the Hon'ble Apex Court is in jeopardy as the Hon'ble Apex Court in the case of Subhas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... precedent . As the decision of the Hon'ble High Court of Bombay in the case of Larson Toubro Ltd. (Supra) has not been set aside by the Hon'ble Apex court. Therefore in the light of the judgment in the case of Shri Chamundi Mopeds Ltd. the judgment of the Hon'ble High Court of Bombay in the case of Larson Toubro Ltd. (Supra) is a Law of land as on today. Therefore, we hold that the appellants are required to affix MRP on the impugned goods. Issue No. B: Whether demand for the period prior to 1.3.2008 would sustainable or not as there was no machinery provision available to determine MRP of the product if the same is not affixed on the product. It is an admitted fact that prior to 1.3.2008 here was no machinery provisions available to determined MRP. The said issue came up before this Tribunal in the case of Millennium Appliances India Ltd. (Supra) wherein this Tribunal observed as under: 9. Another issue involved in this case is regarding the situation that arises where there are no clear cut statutory provisions to arrive at the value. We find that strong force in the contentions raised by the appellants on the provisions of Section 4A of the Central Excise Act (as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, then, the said declared retail sale price shall be taken as the retail sale price of such goods:. (ii) if the retail sale price cannot be ascertained in terms of clause (i), the retail sale price of such goods shall be ascertained by conducting the enquiries in the retail market where such goods have normally been sold at or about the same time of the removal of such goods from the place of manufacture: Provided that if more than one retails sale price is ascertained under clause (i) or clause (ii), then, the highest of the retail sale price, so ascertained, shall be taken as the retail sale price of all such goods. Explanation - For the purposes of this rule, when retails sale price is required to be ascertained based on market inquiries, the said inquiries shall be carried out on sample basis. RULE 5. Where a manufacturer alters or tampers the retail sale price declared on the package of goods after their removal from the place of manufacture, resulting into increase in the retail sale price, then such increased retail sale price shall be taken as the retail sale price of all goods removed during a period of one month before and after the date of removal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E (NT) under which Central Excise (Determination of Retail Sales Price of Excisable Goods) Rules 2008 were issued are reproduced below: "In exercise of the powers conferred by section 37 read with sub-section (4) of section 4A of the Central Excise Act, 1944 (1 of 1944), the Central Government hereby makes the following rules, namely:- These rules may be called the Central Excise1. (1) (Determination of Retail Sale Price of Excisable Goods) Rules, 2008. The retail sale price of any excisable goods under subsection (4) of section 4A of the Act, shall be determined in accordance with these rules. Where a manufacturer removes the excisable goods specified 4. under sub-section (1) of section 4A of the Act, - (a) without declaring the retail sale price on the packages of such goods; or by declaring the retail sale price, which is not the retail (b) sale price as required to be declared under the provisions of the Standards of Weights and Measures Act, 1976 (60 of 1976) or rules made thereunder or any other law for the time being in force; or by declaring the retail sale price but obliterates the same (c)after their removal from the place of manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribing the manner to ascertain RSP of such goods in the CEA. With the issuance of Notification No. 13/2008 dated 1.3.2008, RSP of the goods indigenously manufactured and not declared on the package by a manufacturer can be determined in terms of these rules. We find that before issue of these rules, there was no machinery prescribed to determine the RSP of excisable goods for the purpose of assessment under Section 4 (A) of the CEA where the RSP is not declared by the manufacturer. 15. As far as the CVD under Section 3 of the Customs Tariff Act is concerned, the Government is yet to similarly prescribe the manner to ascertain the RSP when the importer does not declare the RSP on the packages imported. The assessee had relied on the judgment of Hon'ble High Court of Madras in Eternit Everest Ltd. Vs. Union of India [1997 (89) ELT 28] wherein their lordships had quashed the demand notices issued under 11D of the Act proposing to recover amounts collected as excise duty in excess of what was due and paid to the exchequer on the ground that there was no machinery provision in the statute to recover the same. We find that the situation obtaining in the case on hand is similar to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal and that was not the final view, therefore the said decision cannot be relied as held by the Hon'ble High Court of Bombay in the case of Sir Harkisandasan Narottamdas Hospital reported in 2011 (254) ELT 286 (Bom.) wherein the Hon'ble High Court held that the prima facie view is not conclusive. Further, although the decision of ABB Ltd. (supra) has been challenged by Revenue before the Hon'ble Apex Court, but the decision of ABB Ltd. has not been set aside by the Hon'ble Apex Court therefore as observed by this Tribunal in the case of M/s. Access Textiles (supra) the decision of ABB Ltd. (supra) is having the field as on today. Therefore, we hold that demands for the period prior to 1.3.2008 are not sustainable as there is no machinery provisions to determine the MRP of the product in the absence of MRP is not affixed on the product. Issue No. C: Whether the list price can be adopted as MRP or not? The list price is the basis of MRP as held by the Ld. Commissioner in the impugned order. 18. As per the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008. Rule 4 deals with the situation which is reproduced as under: Rule 4. Where a man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... troi. On those rates, the some discounts were offered thereafter the sale value of goods were ascertained. On Discounted Price, VAT has been charged. On perusal of the invoice, the sale price of the impugned goods is Discounted Price + Vat. The contention of the Revenue is that the invoice is in name of retailer not in the name of ultimate consumer. Therefore, the discount given to the retailer as its margin, therefore retail sale price is the list price. On perusal of the invoices relied upon by the revenue, we find that the invoice issued by M/s. Popular Electricals Andheri (E) Mumbai to M/s. Shanti Switchgear, Airoli, Navi Mumbai. The Revenue has not produced any invoice issued by M/s. Shanti Switchgear to establish that at which price M/s. Shanti Switchgear has sold the goods or otherwise. It is not ascertained by the Revenue that M/s. Shanti Switchgear has utilized these goods for their own consumption or otherwise. The similar invoice issued in the name of Power Flow Electricals Goregaon (E), Mumbai, in that case also no efforts were made to ascertain M/s. Power Flow Electricals as sold the goods in retail if so, what is the retail price. The provisions of Rule 4(a)(ii) clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by my Learned Brother. However, I find that my views on issues (b), (c) (d) listed in para 14 are at variance and are dealt below. 23. Issue (b) listed in para 14 is (b) whether the demands for the period prior to 1.3.2008 are sustainable or not as there were no machinery provisions available to determined MRP of the product . 23.1 The relevant section for this issue is Section 4A in the Central Excise Act which was introduced in 1997 and read as under:- Section 4A. Valuation of excisable goods with reference to retail sale price. (1) The Central Government may, by notification in the Official Gazette, specify any goods, in relation to which it is required, under the provisions of the Standards of Weights and Measures Act, 1976 (60 of 1976) or the rules made thereunder or under any other law for the time being in force, to declare on the package thereof the retail sale price of such goods, to which the provisions of sub-section (2) shall apply. (2) Where the goods specified under sub-section (1) are excisable goods and are chargeable to duty of excise with reference to value, then, notwithstanding anything contained in section 4, such value shall be deemed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be liable to confiscation. Earlier such goods were not liable to confiscation. Here again no new machinery provisions were required as the Central Excise Act and Rules already defines power of adjudication/confiscation etc. 23.4 During the period 1997 onwards there would be cases where goods covered by Section 4A(1) would be cleared without declaring MRP or declaring MRP which does not constitute the sole consideration for such sale or other situations elaborated in sub-section (4), in such cases assessing officer would assess duty liability after arriving at M.R.P. based upon various materials available to him as also provisions of Section 4A. In brief, assessing officer would use best judgment to arrive at MRP based upon the material available and thereafter assess the duty liability. The assessing officer is not allowed to assess the goods covered by Section 4A in terms of Section 4, as such an action would be against specific prohibition imposed under Section 4A (2). 23.5 In 2003, sub-section (4) was again amended and new sub-section (4) read as under;- (4) Where any goods specified under sub-section (1) are excisable goods and the manufacturer - (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined in the prescribed manner and such price shall be deemed to be retail sale price for the purpose of this section. Thus the new provision stipulated among other things that in case goods are cleared without declaring retail sale price or in other situation as elaborated, the retail sale price shall be ascertained in the prescribed manner. The amendment in 2003, stipulated that Government will prescribe the method for ascertainment of MRP in specified situation which was hitherto being done based upon best judgement method by assessing officer. Even though the said amendment was made in May 2003, the manner for ascertainment was prescribed only on 1st March, 2008 vide Notification No. 13/2008-CE(N.T.), dated 1.3.2008. Here again the administering machinery to ascertain retail price in the prescribed manner was neither defined nor required to be defined, as the function was already assigned to assessing officer. All that was done by the Notification was to provide guidance to the assessing officer in certain situations in which so far assessing officer was assessing the duty using his best judgement consistent with provisions of Section 4A. 23.6 The issue that arises is that du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of law the case might otherwise appear to be. In other words, if there be admissible in any statute, what is called an equitable construction, certainly, such a construction is not admissible in a taxing statute where you can simply adhere to the words of the statute. Viscount Simon quoted with approval a passage from Rowlatt, J. expressing the principle in the following words: In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. (at p. 635)" 24. The 1956 Act contains the charging provision. Upon amendment of the definition of 'sale' in the year 2002, the transfer of property in goods involved in the execution of works contract would be treated to be a sale. It may be true that further amendments had been made in the year 2005 and for certain purposes, the subsequent legislations may also be considered for the construction of a statute, but in our opi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bangalore Bench of this Tribunal. In the case of Millennium Appliances India Ltd. reported in 2009 (248) ELT 713 (Tri. - Bangalore), Appellant was manufacturing and selling certain consumer electronic items in combination under a scheme called Combination Scheme . The price under Combine MRP when examined was found to be lesser than the aggregate of MRPs of individual consumer goods when cleared separately. Revenue wanted to charge duty on the basis of the aggregate of MRPs of individual; which was not accepted by the Tribunal. While arguing the said case, Appellant also contended that during the period Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 were not in existence and Tribunal commented on that. Similarly, in case Ravi Foods Pvt. Ltd. reported in 2011 (266) E.L.T. 399 (Tri-Bang.), demand was raised based upon disclosure of undisclosed income made before the Income Tax authorities. Ravi Food happens to be manufacturing MRP based commodity. In that context, Revenue on hypothetical basis computed MRP of goods cleared without any evidence of clandestine clearance or wrong MRP. Case of ABB Ltd. reported in 2011 (272) ELT (706) (Tri.-Bangalo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e followed and whether or not list price can be considered as reasonable method. The second part would be on and after 1.3.2008, when the Rules came into existence/force, whether or not list price can be adopted in the facts of the present cases. 24.1 At the outset, it is interesting to note that even after the present issue cropped up, appellants continue to clear the goods without declaring MRP but assessing the goods under Section 4A i.e. MRP basis and MRP is arrived at based upon List Price, VAT and Local Taxes. Appellants are disputing the List Price method for the period covered in these cases while adopting themselves the List Price for the subsequent period. Be that it maybe, we proceed to analyse the issue. 24.2 We note that appellants themselves are issuing Price Lists of all their products. These Price Lists are available to all Distributors, Stockist, Retailers. A retail consumer, when buys such goods is retail market, is shown Price List. Such Price List forms basis of transaction at all levels of supply chain viz. Appellants to Distributors, Distributors to Stockist, Stockist to Retailers and Retailer to ultimate consumer. For certain products, Revenue during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacture, then, the retail sale price of such goods shall be ascertained in the following manner, namely:- (i) if the manufacturer has manufactured and removed identical goods, within a period of one month, before or after removal of such goods, by declaring the retail sale price, then, the said declared retail sale price shall be taken as the retail sale price of such goods: (ii) if the retail sale price cannot be ascertained in terms of clause (i), the retail sale price of such goods shall be ascertained by conducting the enquiries in the retail market where such goods have normally been sold at or about the same time of the removal of such goods from the place of manufacture: Provided that if more than one retail sale price is ascertained under clause (i) or clause (ii), then, the highest of the retail sale price, so ascertained, shall be taken as the retail sale price of all such goods. Explanation.- For the purposes of this rule, when retail sale price is required to be ascertained based on market inquiries, the said inquiries shall be carried out on sample basis. 24.5 In the present case, enquiries were made in the market (though not r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry accurate and reasonable substitute for MRP and accordingly hold so. 25. Issue No.D. Whether demands for the extended period of limitation are sustainable or not . Learned Brother has observed in para 19 above 19. As the appellants are having good case on limitation also as the appellants were having the understanding that the goods are meant for industrial/institutional use, they are not required to affix MRP. The issue was settled by the Hon'ble High Court of Bombay on Writ Petition filed by the appellants. Therefore, the extended period of limitation is not invokable. In case of appellant Siemens Ltd., in one notice extended period is invoked. It is seen that they had approached Director, Legal Metrology to exempt goods under Rule 34(a) on 20.3.2002 which was rejected on 30.4.2002. However, they took the matter the Hon'ble Bombay High Court after 6 years i.e. in 2008, which upheld the orders of Director, Legal Metrology. Similarly Larsen Toubro Writ Petition was also filed in 2007, when they were clarified by Director, Legal Metrology in 2002 itself. The delay of five years speaks about their willful intentions. These products were notified under Section 4A(1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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