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2016 (3) TMI 475 - CESTAT MUMBAI

2016 (3) TMI 475 - CESTAT MUMBAI - 2016 (344) E.L.T. 488 (Tri. - Mumbai) - MRP based valuation - removal of goods without packing - Eligibility for abatement - short payment of excise duty while clearing 'spare parts' to their own unit in the Domestic Tariff Area - MRP-based assessment - assessee computed additional duty on maximum Retail Price adjusted for abatement and did not pay Special Additional Duty at 4% - refund of special additional duty exists for availment upon production of proof of .....

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Excisable Goods) Rules, 2008 is to penalize non-compliance and to determine the 'retail selling price' as per the Rules instead of opting for an opportunity to collect more duty through an inapplicable provision. Being parts of tractors, the goods cannot but find their way through commercial channels to an end-consumer who is an individual. The form of packing cannot alter this reality. By and large, manufacturers do not sell directly to retailers; they, too, with such an interpretation of appl .....

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option. This facilitation is a consequence of such institutions absorbing the product as an input for the service rendered by them to the final consumers or for manufacture of a final product. Tractor parts are not amenable to sale in such manner. It is the produce of the appellant that will alone satisfy the consumer need. The produce of the appellant cannot be cleared in any manner other than in accordance with the prescriptions in the Packaged Commodity Rules, 2007. No evidence has been put .....

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J Mathew, Member (T) For the Appellant : Shri S A Gundecha, Adv For the Respondent : Shri Ajay Kumar, Jt. Commissioner (AR) ORDER Per C J Mathew The dispute of the appellant, M/s John Deere Equipment Pvt Ltd. registered under the Exported oriented Unit Scheme, arises from confirmation of excise duty of ₹ 62,07,929 (including cess) held to have been short-paid while clearing 'spare parts' to their own unit in the Domestic Tariff Area. Allegedly, the appellant, while discharging its .....

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dditional duty of customs equal to excise duty computed on the assessed value and customs duty or the maximum retail price (MRP) adjusted for abatement, as the case may be, and the special additional duty at 4% to countervail VAT charged by the sate governments on domestic sales. The special additional duty, being levied to countervail the tax burden in a domestic sale transaction, is not leviable on imports that are sold as such and hence a system of refund the special additional duty exists fo .....

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multaneous disposal. 3. The original authority, Commissioner of Central Excise, Pune-III vide impugned order-in-original no. 05/CEX/2009-10 dated 29th June 2009 based the demand on the finding that the goods had been cleared in bulk with further packaging for retail market done at the unit in the Domestic Tariff Area; that the provisions of section4A of Central Excise Act, 1944 for MRP-based assessment would not apply to the appellant because the mandate of packing and affixing MRP under the Sta .....

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d by the Director General of Foreign Trade under the Foreign Trade (Development & Regulation) Act, 1992. Such units are issued with Letter of Permission by the Development Commissioner who administers the scheme. Units are required to be Net Foreign Exchange positive over five-year periods and are entitled to import or to procure capital goods, consumables and raw materials without payment of import or excise duty respectively. Parallel notifications under Central Excise Act, 1944 and Custom .....

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ing unit of the appellant packs the spare parts and affixes labels on the individual packs. In the grounds of appeal, it is submitted that these goods are then sold to dealers and VAT discharged in accordance with Entry 96 of Schedule C in the Maharashtra VAT Act, 2002. It is further contended that the sale to dealers is effected by the appellant itself and the goods are required to conform to Packaged Commodity Rules, 1977 issued under the Standards of Weights & Measures Act, 1976. The grou .....

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T 99 (Tri-Ahmd)] and M/s VVF Ltd v Commissioner of Central Excise, Belapur - 2014-TIOL-04-CESTAT-MUM were cited. It was also brought to our attention that in L'Oreal India Pvt Ltd v Commissioner of Central Excise, Raigad/ Thane [2014 (308) ELT 746 (Tri-Mumbai)] the Tribunal held that imported goods which underwent labeling prior to clearance for home consumption after landing in India being liable to additional duty did not amount to manufacture and excise duty thereon since additional duty .....

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nder what was then the Standards of Weights and Measures Act, 1976 and should be notified under section 4A(1). It was also contended that the immunity to invoking the extended period on the count of revenue neutrality was not tenable in view of the decision of the Hon'ble Supreme Court in Dharampal Satyapal v Commissioner of Central Excise, New Delhi [2005 (183) ELT 241 (SC)] was relied upon. 8. Having perused the records and considered the submissions made, we observe that though the transa .....

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ared locally. However, being eligible for exemption from duty on inputs, domestic clearances manufactured out of exempted inputs are treated at par with imports in computing the tax liability under the proviso to section 3 of Central Excise Act, 1944. 10. We take up the matter of Special Additional Duty of 4% which, according to impugned orders, are not eligible for exemption in relation to appellant because goods are cleared to another undertaking of the appellant and thus not sold. A specific .....

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re is no statutory requirement to furnish any evidence of discharge of VAT liability. The competent authority for implementation of VAT collection is the state government and it is not within the assigned responsibility of Central Excise authorities to ascertain compliance or to predicate the grant of exemption to such compliance. 11. The scheme of countervailing the VAT with the special additional duty under the Customs Tariff Act, 1975 also provides an exemption through the refund route for im .....

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er 2007 is administered by Customs authorities who collect the special additional duty on imported goods. Imported goods do not come within the ambit of VAT statutes of states and will not be leviable to VAT if used by the importer; countervailing being necessary in that specific type of transaction, ascertainment of non-use by the importer is a pre-requisite for refund of tax. Produce of EOUs are, by its transaction within the taxable territory of the states, directly under the control and asse .....

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it from the ambit of the countervailing tax entailed upon import of like goods. The demand for special additional duty is, therefore, in excess of jurisdiction and untenable. 12. Countervailing of central excise duty levied upon indigenous manufacture by charging additional duty of customs on imports extends mutatis mutandis to domestic clearances effected by Export Oriented Units. Produce of indigenous industry is subject to assessment of transaction value by default or by applying the tax rat .....

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e other hand, would be tenable if like goods manufactured and cleared from a domestic tariff area unit is subject to abated maximum retail price for computation of excise duty. Automobile parts are, without doubt, required to be assessed under section 4A for computation of Central Excise duty and. consequently, for computation of additional duty of customs payable by an Export Oriented Unit for clearance of parts of tractors to the local market. 14. The case of Revenue is that the parts are not .....

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ion of section 4A of Central Excise Act, 1944 which was given effect from 14th May 1997. The Central Excise Act, 1944 cannot, of its own, prescribe the mandate of maximum retail price with tax collection as the intent; such assessment can be notified only for such goods that are required to do so under the Packaged Commodity Rules, 1977. That these are, therefore, not options that may be exercised can be deduced from the confiscability of the goods for failure to declare 'retail sale price&# .....

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