TMI Blog2014 (3) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... expressed by the 3 decisions of the co-ordinate benches of the Tribunal on this issue, even assuming that there was mis-declaration of RSP, period prior to 01.03.2008 the RSP cannot be re-determined by the Revenue in any manner. Yet another angle to the entire case is absence of evidence as to there being alteration of RSP; in as much as when the investigations were conducted by the authorities, we find that the investigating authorities have not seized a single carton of the offending goods in the Pan India operation at different dealers premises, wherein different RSP was declared. It would be beyond imagination that the dealers could not have had any stocks of glazed/vitrified tiles received from the appellants, in their hands when the investigation took place. In the absence of such a crucial evidence, we are unable to hold that the appellant herein can be saddled with a liability of Central Excise duty based upon re-determined RSP, for the period prior to 01.03.2008. Further, the manufacturers may be unaware that the RSP on the box was obliterated or altered after the removal from their place of manufacturer, as none of the dealers have stated that the RSPs were changed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demanded, demand interest thereof and also seeking to impose penalty on the main assessee as well as their employees/partners. All the appellants herein contested the show cause notice on merits and also on various other grounds and filed reply stating that there is no evasion of Central Excise duty on their part. The adjudicating authority in all these appeals, after following the due process of law, came to a conclusion that all the appellants herein have under-valued the product i.e. ceramic glazed tiles and vitrified tiles during the material period (relevant period against each appeal is indicated in Paragraph 1) and confirmed the demand, demanded interest and also imposed penalties. To come to such conclusion, the adjudicating authority relied upon the evidences in the form of statements of dealers, shroff/angadias that there was additional consideration flowing back to the manufacturer from the dealer/buyers and also relied upon the subsequent development of increase in the MRP by the manufacturers; as also relied upon the evidence in the form of printed price lists which were recovered from the premises of the dealers of the tile manufacturers; and has also worked out the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of manufacturer as it would apply to the product in question as enumerated in Section 2(f) of the Act. After taking us through said provision, it was submitted that the change of MRP would tantamount to manufacture and such changing of MRP on the boxes took place subsequent to the clearance of the goods hence if any duty is liable to be demanded, it would not be on the manufacturer but on the persons who have changed the MRP. It is further submitted that they had specifically stated before the adjudicating authority that the provisions of Section 4A underwent a change for collection of the duty in the case where MRP which has been declared is considered as incorrect by the lower authorities. After taking us through the changed provision of sub-section 4 of Section 4A of the Act, ld. Counsel would state that the said sub-section provides for enactment of rule to determine revised MRP/RSP. He would submit that such rules were brought into statute by Notification No.13/2008-CE(NT) and was made applicable from 01.03.2008. It is the submission that when there was no provision of re-determining the MRP/RSP, even if it is considered that there was under-valuation, determination of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inuation of such submission, it was stated that in the current scenario, it cannot be expected of any buyer/consumer purchasing a box of tiles wherein MRP is declared is Rs.100 but the dealer/seller sells the goods for Rs.150; it would indicate that the boxes when sold to the customers, there was a change in MRP. It is also further submitted that in continuation of this proposition that the despite making Pan India investigation, the DGCEI authorities were unable to seize even one carton of tiles which was cleared from the factory premises of the appellant wherein the declared MRP was changed and nor is there any evidence brought on record as to who changed the MRP. It is the submission that impugned order be set aside and the appeals be allowed. It is also further submitted that as regards the demand of the duty liability post 01.03.2008, the demand is also not correct in as much as the adjudicating authority has not followed the provisions of valuation rules as envisaged by Notification No.13/2008-CE (NT). It is the submission that the said rules which came into statute from 01.03.2008 requires the authorities to follow the said rules before coming to a conclusion of demand of di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his submission that the statements recorded of the representatives/ partners/owners of the tile manufacturers does indicate that there was one MRP declared on all sizes of tiles, across the board, while there was a difference in each and every tile manufactured and cleared by the manufacturer. It is further submission that the after-effect of the massive investigation, has resulted that the manufacturers have increased the retail sale prices of various brands substantially, which would indicate that the prices were earlier suppressed in order to evade Central Excise duty. It is his submission that the manufacturers have destroyed all the data, information regarding actual MRP of different grades/colours/design of ceramic tiles cleared by them for the period prior to 01.03.2008 and this can be evidenced from the fact that the ceramic/vitrified tiles manufactured by organized sector manufacturers like M/s Somani Pilington Ltd and M/s H R Johnson Ltd has very high MRP/RSP on like goods. He would submit that essentially the issue is regarding the under-valuation of the ceramic/vitrified tiles for the period prior to 01.03.2008 and post 01.03.2008. He would assail the defences taken b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ept of RSP i.e. maximum price at which the specified goods may be sold to the dealer. After giving a overall view of the reasons for introducing such a provision i.e. Section 4A, he would submit that in the year 1999, new sub-section (4) was added to Section 4A to provide confiscation of goods in respect of clearances which were effected without declaring the RSP, tampering or altering the RSP or mis-declaring RSP. He would further submit that in the year 2003, sub-section (4) was substituted by an elaborate provision to cover cases of default including the cases where the manufacturer declared incorrect RSP and decide the liability of confiscation of such goods, it also provided for ascertainment of RSP in the specified cases of default was to be done in a prescribed manner. He would submit that subsequently, rules were framed by Notification No.13/2008-CE(NT), dt.01.03.2008 describing the manner of ascertainment of RSP in the aforesaid cases of defaults. It is his submission that the arguments of the ld.Counsel that from 01.03.2008, only the value of mis-declared MRP can be re-calculated is incorrect as provisions of Section 3 of Central Excise Act, 1944 is a charging section for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he re-determination of RSP was upheld and re-determination of RSP on best judgment basis was also upheld by laying down a ratio just because there is no provision in Section 4A for enhancing the declared MRP, if the same was not found to be correct, it does not mean that during the period, an assessee coming within the purview of Section 4A was free to declare any false MRP and evade the duty as it is well settled law that nobody can be allowed to benefit from his wrong doing. It is his submission that the appellants in these cases should also be not allowed to take undue advantage of wrong doing merely on the ground that the manner of ascertainment was not prescribed during the period from 14.05.2003 to 01.03.2008. He would submit that Revenue places reliance on the judgment of Apex Court in the case of M/s Mahim Patram Pvt.Ltd. - 2007 (7) STR 110 wherein their Lordships have held that measure or value to which rate would be applied but how the turnover would be determined is another; Computation provision may bear a relationship with the nature of charge and charging section and computation provision together constitute an integrated course. He would submit that this ratio would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n submissions filed by both sides after the conclusion of hearing. 9. Essentially, the dispute in these cases relates to the demand of Central Excise duty due to under-valuation of final product cleared by the appellant in two periods i.e. prior to 01.03.2008 and post 01.03.2008. 10. The undisputed facts are that the appellants are manufacturer of ceramic/vitrified tiles and the said tiles are covered under the provisions of Section 4A of Central Excise Act, 1944 (hereinafter referred to as the Act ) and are discharging MRP declared on the boxes cleared from their factory premises. It is also undisputed that the appellant assessees are selling their final product ex-factory and the transportation arrangements are made by the purchasers themselves. 10.1 The entire case of the Revenue as adjudicated by the lower authorities has confirmed the demand based upon the evidences such as the statements of various dealers who had stated that the tiles which are manufactured and cleared by the appellant are sold at a price more than the MRP/RSP declared on such tiles; statements of various shroffs / angadiyas who had stated that the appellants were handed over an amount in cash which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tail sale price for the purposes of this section. Explanation 1. -For the purposes of this section, retail sale price means the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer and includes all taxes, local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like and the price is the sole consideration for such sale: Provided that in case the provisions of the Act, rules or other law as referred to in sub-section (1) require to declare on the package, the retail sale price excluding any taxes, local or otherwise, the retail sale price shall be construed accordingly. Explanation 2. -For the purposes of this section, - (a) where on the package of any excisable goods more than one retail sale price is declared, the maximum of such retail sale prices shall be deemed to be the retail sale price; (b) where the retail sale price, declared on the package of any excisable goods at the time of its clearance from the place of manufacture, is altered to increase the retail sale price, such altered retail sale price shall be deemed to be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not prescribed the rules how the re-determination has to be done till 01.03.2008. It can be seen from the definition of the word prescribed as enshrined in Section 2(g) of the Act (as reproduced hereinabove) that it is very clearly stated that it can be done only by the rules made under this Act. Closer perusal of Notification No. 13/2008-CE (NT), dt. 01.03.2008 indicated that the said notification was issued in exercise of 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. It can be seen from the above preamble to the Notification No.13/2008-CE(NT), Central Government made the rules as applicable for sub-section (4) of Section 4A w.e.f. 01.03.2008. In the cases in hand, for the period prior to 01.03.2008, the entire exercise of the Revenue in re-determining the RSP, even if RSP is not in accordance with the law, is faulty and not in accordance with the law, as prescribed manner of re-determination of RSP was brought into statute only from 01.03.2008. We find that once the Central Government has not framed the rules for re-determining the RSP in a case where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andards 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 to be the retail sale price declared on such goods less such amount of abatement, if any, from such retail sale price as the Central Government may allow by notification in the Official Gazette. (3) The Central Government may, for the purpose of allowing any abatement under sub-section (2), take into account the amount of duty of excise, sales tax and other taxes, if any, payable on such goods. (4) Where any goods specified under sub-section (1) are excisable goods and the manufacturer - (a) removes such goods from the place of manufacture, without declaring the retail sale price of such goods on the packages or declares a retail sale price which is not the retail sale price as required to be declared un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue after availing the abatement in accordance to the notification issued under the said section i.e. 65% of the MRP. There is also no dispute that the MRP which was declared on the goods cleared during the relevant period was either obliterated or scored out. It can be seen from the above reproduced Section 4A that sub-section (4) was introduced by the legislature w.e.f. 1-3-2008. It is also to be noted that the recalculation or re-quantification of an amount received in excess of the MRP declared and collected from the customers has to be done in a prescribed manner. The provisions of MRP Valuation rules under sub-section (4) of Section 4A was introduced w.e.f. 1-3-2008 wherein the Central Government prescribed a procedure to be followed for re-determination of RSP and MRP in case where assessee has collected an amount in excess of the RSP/MRP declared. This re-determination has to be done, failing which the RSP/MRP cannot be revised by the authorities. We find that the CBEC vide Circular No. 334/1/2008-TRU, dated 29-2-2008 made it clear that the MRP Valuation rules are effective from 1-3-2008. This would indicate that prior to 1-3-2008, there was no procedure to revise the MRP an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch (a) 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, then, the retail sale price of such goods shall be ascertained in the following manner, namely :- if the manufacturer has manufactured and removed identical (i) 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 : if the retail sale price cannot be ascertained in terms of (ii) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having no office, to pay Service tax, as receiver. By issuing the said Notification, Central Government intended to tax the service receiver from non-resident, with effect from 1-1-2005, which, in corollary would be that no service tax is payable by this category prior to 1-1-2005. If that by so, then the amount paid by the appellant is not a tax, which the revenue cannot kept with it. 13. It is seen from the findings of the adjudicating authority in para 55, 56 and 57 that the adjudicating authority has confirmed the demand based only on the ground of undervaluation and extrapolating the amount for the period December, 2001 and January, 2002 as being 65% of the MRP declared and confirmed the demand. As we have already held that this could not be done by adjudicating authority in the absence of any rules or authority under the section, the demand is not sustainable. We find that in para 55 and 57, the adjudicating authority has recorded a finding which is as under :- 55. Thus, in this case, the suppression of turnover is admitted and can be either on account of undervaluation or on account of volume. 57. As the suppressed turnover is in value te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B Ltd have held a view that prior to 01.03.2008, in the absence of any provisions for re-determining the RSP, in the form of prescribed rules, the Revenue authorities cannot re-determine the RSP under any of the provisions available to them. It has to be noted that there is no contrary view which has been taken by the Tribunal. 14. At this juncture, we would like to refer to the submissions made by the ld. Special Counsel for the Revenue that in the case of M/s Schneider Electrical India Pvt. Ltd.(supra), Hon ble Member (Technical) has diferred with the views of Hon ble Member (Judicial) who has relied upon all these three case laws. In our considered view, the differing Member has incorrectly applied the law in the case of M/s Mahim Patram Pvt. Ltd. to take a different view from the views already existing. On perusal of the said decision of Apex Court in the case of M/s Mahim Patram Pvt. Ltd, we find that the Apex Court was dealing with a dispute wherein in the absence of rules having been prescribed under the Central Sales Tax for determining the manner in which the sale price of transfer of goods under Works Contract was to be calculated, would the levy of Works Contract be su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Tribunal on this issue, even assuming that there was mis-declaration of RSP, period prior to 01.03.2008 the RSP cannot be re-determined by the Revenue in any manner. 15. We also find that in the cases in hand, on factual matrix also, there is a strong case in favour of the assessee i.e. manufacturer of tiles. The statements recorded of the individuals of manufacturer of the tiles, specifically state that they were declaring a RSP of Rs.100/- on each box which were cleared by them from the factory premises, it is also stated that the said clearances are effected on ex-factory basis and transportation of such boxes are in the hands of the buyers. If it is the case of the Revenue that RSP was later on changed and sold to the ultimate consumer at higher price, it was for the Department to first ascertain who has changed the said MRP. In our view, the person who has altered the RSP on the goods is the person who can be held as a manufacturer on alteration of RSP; as the definition of manufacturer Section 2(f) of the Act (herein before reproduced) specifically talks about the process of declaration or alteration of RSP on the product which are covered under the provisions of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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