TMI Blog2003 (10) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 4A of Central Excise Act. They cleared push button Telephones to the DOT and MTNL on contract price and they are alleged to have claimed 40% abatement from the contract price to arrive at the assessable value. The contract price is much lower than the normal retail price. DOT and MTNL in turn provide these instruments to their subscribers on rental basis. The ownership of the instruments remained with DOT/MTNL, as no further sale took place. 3. These products falling under sub-heading 8517.00 are specified vide Notification No. 9/2000-C.E. (NT) dated 1-3-2000 for the year 2000-2001, subsequently for the year 2001-2002 by Notification No. 5/2001, dated 1-3-2001 and thus, with effect from 1-3-2000, Electronic Push Button Telephones manufactured by the appellants were made liable to be valued for assessment with reference to the Retail Price under Section 4A of the Central Excise Act, 1944. 4. The Department contested the assessments so made, vide the following show cause notices :- The Dy. Commissioner confirmed the demands along with appropriate interest under the Central Excise Act, 1944 and penalty was also imposed under Rule 173Q of the Central Excise Rules, 194 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely because the DOT/MTNL remain the owner of the instruments by itself will not be a cause to deny assessment under Section 4A and finding of the Commissioner (Appeals) on this account are contrary to the provisions of Standards of Weights Measures (Packaged Commodities) Rules, 1977 (hereinafter referred to as PC Rules) and in particular, Rule 2(q) of the said rules which defines retail sale. (e) In this case there is a sale to the DOT/MTNL for consumption by a group of individuals namely subscribers and others and therefore the sale effect by the appellants to DOT/MTNL cannot be outside the purview of the definition of retail sale under Rule 2(q) of PC Rules which do not exempt the appellants. (f) The only exception to Chapters 2 3 is provided by Rule 34(a) and the order of the Commissioner (Appeals) is contrary to ratio of the Allahabad High Court in AIR 1992 ALL. 41 (43). The findings of the Commissioner, the appellant was not required to declare the MRP on the clearance to DOT/MTNL is contrary to the provisions of PC Rules. The CBEC Board Circular No. 6/44/00-CXI, dated 28-2-2002 cannot create liability on the appellants in view of the Supreme Court decision in Cannanoo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat though the Board's circular is wrong, it has been accepted by the Tribunal. (c) In any case the Board's circular is perfectly in tune with the legal provisions of the Standard Weights Measures Act, 1976. Rule 2(q) of Standard Weights Measures (Packaged Commodities) Rules, 1977 defines retail sale as :- "retail sale in relation to a commodity, means the sale, distribution or delivery of such commodity through retail sales agencies or other instrumentalities for consumption by an individual or a group of individuals or any other consume." (emphasis supplied) As per the above definition there has to be sale to an individual or group of individual or any other consumer DOT/MTNL is neither an individual, group of individual or consumer. The rule necessary requires sale to the individual/consumer and not sale to bulk purchaser who does not sell further. That is to say there has to be retail sale though may be through distributor or retail sale agency. This argument is fortified by the definition of the wholesale package at Rule 2(x) which is as under :- "wholesale package" means a package containing - (i) a number of retail packages, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." In the present case there is no requirement under the Rules, 1977 ibid to mark the MRP on the bulk clearances. The telephone set is neither sold nor distributed/delivered to any consumer. It is only installed by DOT/MTNL at the subscribers place. The telephone remains the property of the DOT/MTNL. Hence question of affixing MRP does not arise in such a case. As such Section 4A itself not applicable. Question of reading 2nd proviso to Section 4A does not arise. (e) In this regard relevant extract of Board's Circular dated 28-2-2002 (Para 4) is reproduced for ease of reference. "The basic issue therefore, is to determine the circumstances in which Section 4A of the C.E. Act can be applied. The wordings of Sec. 4A(1) makes it very clear that it will apply only to such goods" .... In relation to which it is required, under the provisions of the 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 packa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regulated by any intended sale/use of the exigible goods. Arguments on Rule 3 of the Standard Measures (Packaged Commodity) Rules, 1977 would therefore not assist Revenue as is being pleaded before us by the ld. SDR. (b) From the perusal of case of CCE v. Trishul Research Lab (P) Ltd. (2002 (144) E.L.T. 204 (Tri. - Del.) relied by Revenue and Para 4 of that report, it is apparent that in that case it was the Revenue's case that soaps were not packed for retail sale and did not bear declaration of Retail Sale Price on the Retail Package. No such material or pleading are made in this case. Therefore this decision cannot help the Revenue's case in the appeal before us. (c) The plea of the appellants that they cannot be forced to be assessed under the circular, by resorting to Section 4 of the Central Excise Act, 1944 the provisions of Section 4 (2) cannot be ignored and has force, in view of the settled law on the subject as cited by the appellants' learned Advocate, Circular of Central Board cannot override provisions of Act [Kerala Financial Corporation - 210 ITR (129) (S.C.)]. Directions of Board not binding on Collector sitting as quasi judicial authority 1978 (2) E.L.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvoke the penal liabilities, as we find that the Commissioner has held "It is essentially, a question of interpretation of law as to whether Section 4 or Section 4A would be applicable...." and not sustained the penalty under Section 11AC. We concur with the same. Therefore we cannot uphold the Revenue's appeal on the need to restore the penalty under Section 11AC as arrived at by the Original Authority. As regards the penalty under Rules 173Q 210, we find the Commissioner (Appeals) has not given any finding why he considered the same as correct and legal in Para 8 of the impugned order. Imposition of penalty under Rules 173Q 210 on matters of interpretation, without specific and valid reasons, is not called for. (g) In view of our findings, we find no reason to refer the matter to a Larger Bench. 8. In view of our findings, the orders are set aside and the appeal of Revenue is dismissed while that of the assessee is remitted back before the Original Authority to re-determine the duty if any as above. Sd/- (S. S. Sekhon) Member (T) 9. [Contra per : G.A. Brahma Deva, Member (J)]. - I have carefully gone through the proposed order written by my ld. Brother Shri S.S. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Standards of Weights and Measures Act, 1976 and the rules made thereunder mainly Weights and Measures (Packaged Commodity) Rules, 1977, if the retail sale price on the package has to be declared under Standards of Weights and Measures Act or Packaged Commodity Rules, the Central Government can notify such goods on the MRP. Telephone sets have been notified in the official gazette under Section 4A(1) of the Act. It was contended that once the goods have been notified in the official gazette under Section 4A(1), the assessable value will be based on the retail sale price such abatement as may be allowed by the Central Government in the said Notification. It was also argued that once the goods have been concluded under Section 4A(1), then the assessable value will be based only on the MRP irrespective whether the goods are sold in wholesale retail or distributed as free gifts or even if they are captively consumed. 14. It was submitted on behalf of the Revenue that the issue involved herein has been covered by the decision of the Tribunal in the case Bharti Systel Ltd. - 2002 (145) E.L.T. 626. It was also submitted that in both the cases, telephone instruments are cleared in bulk t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be heard to contend that the Circular dtd. 28-2-2002 is not binding on it. It is not the case of the assessee that a benefit has been granted to it for the first time under the Circular. It is relying on the circular in support of its stand that the law that is applicable to the facts of the case is Sec. 4 and not Sec. 4A. Therefore, there is no merit in the contention that assessee cannot rely on a recent circular." While deciding the issue in favour of the assessee, it was specifically observed therein that it is not the case of the assessee that a benefit has been granted to it for the first time under the Circular, it is relying on the Circular in support of its stand that the law that is applicable to the facts of this case is Section 4 and not Section 4A. Although there is some force in the arguments advanced on behalf of the assessee in the instant case, that the Circular is in conflict with the provisions of Section 4A, since the very Circular has been considered by the Tribunal in the aforesaid case and validity of the same was upheld, though in different context, I am of the view that as per judicial discipline, the point at issue has to be resolved by the Larger Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has pointed out that supplies in the present case were not under Rule 34 since the telephone instruments in question had their MRP indicated on them. Learned Counsel has further pointed out that, whether the goods in fact were sold in retail, is also irrelevant for valuation under Section 4A inasmuch as the definition of "retail sale" under Rule 2 of Packaged Commodities Rules included " distribution or delivery through the retail sales agencies or other instrumentalities for consumption by an individual." Thus, retail sale was not a requirement to attract the Rules. He further submitted that introduction of such criteria would only unnecessarily complicate the valuation process inasmuch as, often, the specified goods are sold to institutions who purchase them for free distribution among shareholders, staff members etc. He has also pointed out that the simplication of valuation process sought to be achieved by the introduction of Section 4A would be eroded if more and more categories of disposals are kept outside the purview of assessment under that Section. 19. With regard to the decision of this Tribunal in the case of M/s. Bharati Systel Ltd. the learned Counsel has pointed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bulk for consumption or distribution. He pointed out that the decision in Jayanti Food Processing Pvt. Ltd. case is of no application to cases where there was no resale of the goods. 21. The difference of opinion in the present case has arisen in view of Tribunal's decision in Bharati Systel Ltd. What came up for decision in that case was whether the demand raised contrary to Circular No. 625/16-CX., dated 28th Feb. 2002 was required to be set aside and the Tribunal held that Circulars are binding on the Revenue. In doing so, the Tribunal was following a well settled legal principle (Hiren Chemical Industries - 2002 (139) E.L.T. 3). The opposite is the issue raised in the present appeals. It is being contended that since the demand is in conformity with a Circular of the C.B.E. C., the same is to be confirmed by the Tribunal. This proposition cannot be accepted. It is well settled that an assessee can challenge a decision rendered in accordance with a Circular of the Board and that the Tribunal would not be bound by the Circular in deciding such an appeal. An additional material which has come up during the hearing before me is the decision of this Tribunal in the case of Jayan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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