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TMI Blog2019 (3) TMI 1093X X X X Extracts X X X X X X X X Extracts X X X X ..... ification No. 10/2003-CE dated 01.03.2003 as the contract price, according to them, was less than Rs. 500/- per watch. 2.2 The Department was of the view that the concessional rate of duty under Notification No. 10/2003 is not eligible to the assessee. After due process of law, an amount of Rs. 23,00,470/- being the differential duty at the rate of 16% was demanded along with appropriate interest and penalties were also imposed. Aggrieved by such Order, the assessee filed appeal before the Commissioner (Appeals). The Department's contention in such appeal was that the contract price at which the assessee has paid duty cannot be considered as M.R.P. and hence, Notification No. 10/2003 is not applicable to the assessee. The Commissioner (Appeals) held that the goods are liable to be assessed under Section 4A and concessional rate of duty under Notification No. 10/2003 is eligible for the clearances effected by the assessee to the industrial consumers. 3.1 However, after scrutinizing the different clearances, it was observed by the Commissioner (Appeals) that apart from the four instances, there was no evidence adduced by the assessee to show that the watches were sold at a price le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 500/- and below and not for the watches having 'ex-factory price', 'wholesale price', 'dealers price', etc., of Rs. 500/- and below. Thus the allegation in the Show Cause Notice is that for the watches cleared to institutions based on ex-factory price, the rate of duty would be 16% and not 8% as the assessee do not fall into the criteria prescribed in the said Notification. 4.2 She submitted that the goods covered in the Show Cause Notice are not sold in retail to the ultimate individual consumers. They are sold to industries/organizations who intend to distribute them to their employees as complimentary gifts. The names of the institutional/industrial consumers are engraved on the watches. The Department does not have a case that there is further sale from such institutions to other customers. The institutions to which the watches have been supplied are the ultimate consumers. 4.3 In the Show Cause Notice itself it is stated that watches are cleared at a price below Rs. 500/-. The price includes all taxes, freight, transport charges, commission and all charges towards advertisement, delivery, packing, forwarding and the like and the said price is the sole consideration f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of four clearances made by the assessee and has confirmed the demand with respect to the sales made to others, thus partly allowing the appeal filed by the assessee. The Commissioner (Appeals) has erroneously set aside the penalty stating that the issue involved is in the nature of interpretation and also involves applicability of the Notification. 5.2 As per Sl. No. 7 of Notification No. 10/2003-CE dated 01.03.2003, only watches and clocks of retail sale price not exceeding Rs. 500/- per piece are eligible for exemption. In the instant case, though the goods (watches) are covered under Notification issued under Section 4A of the Act, the sales were not in retail since they were sold to institutional organizations. There was no retail sale price in this case and no M.R.P. was exhibited on the packages to comply with the Standards of Weights and Measures (Packaged Commodities) Rules, 1977. 5.3 The watches cleared to institutions based on ex-factory price as per the purchase order should have suffered duty at the rate of 16% ADV and not 8% ADV due to non-availability of retail sale price, which is the criteria prescribed in the Notification. In the absence of retail sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp;. . 7. . . . 91 . . . Watches and clocks of retail sale price not exceeding Rs. 500 per piece . . . 8% 8. As seen above, the definition of 'retail sale price' though has been adopted as it stands in the Central Excise Act, 1944, it can be seen that the said definition of retail sale price in the Notification is only for the purpose of the Notification. The definition in Explanation II starts with the words "for the purpose of this Notification", whereas the definition of 'retail sale price' in Explanation I in the Central Excise Act, 1944 starts with the words "for the purposes of this Section". 9.1 Section 4A deals with 'Valuation of excisable goods with reference to retail sale price'. Sub-Rule (1) of Section 4A provides that 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 Legal Metrology Act, 2009 (Standards of Weights and Measures Act, 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 app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve cleared it below Rs. 500/-. On this score, the finding of the Commissioner (Appeals) that the goods are to be assessed under Section 4A since the assessee has not established that they have cleared their goods to institutional consumers in the cases excepting the four instances, is factually incorrect. 9.4 At the cost of repetition, we have to say that the Notification in question has no reference to the SWM Act and Rules. We have to emphasize that even if the valuation is under Section 4 or under Section 4A, the benefit of the Notification under Sl. No. 7 would be eligible if the price at which the goods are sold (contract price) is less than Rs. 500/- per piece. 10. At this juncture, it is also noteworthy that the name of the industry/organization was engraved on the watches and the assessee has put forward a specific plea that these were sold to the industrial organizations for being distributed to their employees as complimentary gifts. The Department has not put forward any evidence to show that there has been a further sale by the industry/ organization to another person. Therefore, in the present case, the ultimate consumer is the industry/organization to which the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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