TMI Blog2004 (3) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... 97 and 51/97, dated 10-9-1997 and subsequently under amended Notification Nos. 5/98 and 18/98, dated 2-6-1998. M/s. Videocon International Ltd. is the licenced user of the brand name 'Videocon'. Appeal No. E/2423/2001 is in respect of the T.V.s manufactured and sold by M/s. Videocon Communication Ltd. to M/s. Videocon International Ltd. Videocon International Ltd. is also engaged in the manufacture of Colour T.V. under its own brand name 'Videocon' and Appeal No. E/2422/2001 is in respect of the valuation of the T.V.s manufactured and sold by the said appellant. Revenue's appeal is against that portion of the order of the Commissioner (Appeals) vide which he has dropped the demand for the period prior to 2-6-1998 and has also set aside the entire penalty upon the appellants. 3.With effect from 12-3-1998 appellants floated a scheme under the name and style of the "Money Back Scheme". The said scheme was in respect of five models of the Colour T.V. According to the said scheme, the appellants was collecting a fix amount of Security Deposit along with the cost of T.V., which deposit was repayable by the company to the customers after expiry of period of six years or five years depen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d an opportunity to the appellants to produce evidence before the Assistant Commissioner in respect of all instances where customer has not availed of 'Money Back Scheme' and did not pay any security deposit. The Appellate Authority also set aside the entire penalty imposed upon the appellant. The said order of the Appellate Authority is impugned before us by the appellants as also by the Revenue. 6.We have heard Shri V. Sridharan, learned Advocate appearing for the appellants and Shri Uma Shankar, learned SDR appearing for the Revenue. 7.The short point required to be decided in the present set of appeals is as to whether the duty was rightly discharged by the appellant on the maximum retail price affixed on the T.V. packages or the same was required to be enhanced by including the security deposits made by the customers for the period up to 1-6-1998 and thereafter the appellants were required to pay duty at the specific rate by discarding the maximum retail price. The appellants strongly contended that such deposit cannot be considered to be a part of the price of the T.V., inasmuch as the same is refunded by the company to the customer after a fix period along with the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers have charged more than maximum retail price from their customers. He submits that out of the 53,000 T.V. sets sold during the period in question 13 instances is negligible evidence and in any case the excess amount collected is only marginal. The invoices in question do not show any circumstances under which the dealer has charged higher price from their customers. Even if in few cases dealers have charged higher, there is nothing on record to show that the amounts charged extra than the retail sale price have flown directly or indirectly to the appellants. Statement of the dealers recorded by the Revenue do not reflect upon the said fact. The appellants have relied upon the Tribunal decision in the case of I.T.C. Ltd. v. C.C.E., Bangalore reported in 1998 (104) E.L.T. 151 (Tribunal) as also on the Supreme Court decision in the case of State of Madras v. Radio and Electricals Ltd. - 1966 (18) STC 222 (S.C.). 10.Similarly learned Advocate submits that the allegation that some of the dealers have sold the T.V. as against exchange of old T.V. is irrelevant inasmuch as the same was a transaction between the dealer and the ultimate consumer. They have made it clear in their letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was compulsory in nature. As such, argues the learned SDR that the appellant was collecting such deposits in each and every sale of the colour T.V., in which case it has to be concluded that the same was a consideration towards value of the T.V. but was being collected under a different style. He also drew our attention to the statement of the dealers showing that the in some of the cases invoices have been raised at the price higher than the declared maximum retail price. The dealers in their statement recorded during investigation have also admitted that till that period no promissory note was issued by the Company to the customers. However, he submits that the promissory note now being shown were issued subsequently. Shri Uma Shankar, learned SDR has submitted that there is no guarantee that the appellants would return back amount so collected by their customer and they may retain the same after expiry of the period in question in which case the same would become consideration for sale of the T.V. 13.Shri Uma Shankar, learned SDR has further submitted that after amendment in the notification w.e.f. 2-6-1998 the retail sale price was defined as the maximum price at which the go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it Rs. Period of Secu-rity deposit 3607-R 6,390/- 300/- 6,690/- 3,100/- 5 years 5313-R 8,590/- 400/- 8,990/- 4,000/- 6 years 5410-R 12,590/- 400/- 12,990/- 4,000/- 6 years 5412-R 5430-R 13,990/- 400/- 12,990/- 5,000/- 6 years 15.Whereas the Revenue is of the view that the security deposit made by the customer at the time of purchase of the T.V. set is to form a part of their maximum retail price, the appellants have strongly contended that the maximum retail price is one which was affixed on the packages and the security deposit has got nothing to do with the same. Even if the security deposit is required to be made in 100% of the sold T.V.s, the same would still be a condition for the sale of the T.V. and not a consideration. We find from records that the deposit made by customers at the time of purchase of the T.V. is secured by the appellant-company by way of issuance of the promissory note to them. In terms of the said promissory note the appellants is under a legal obligation to return the amount after the expiry of the specified per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t taxable, it was not collected. By observing so, their Lordships held that, "We, therefore semanticise 'collected' not to cover amounts gathered tentatively to be given back if found non-exigible from the dealer" [Para 34]. In the instant case also the deposits made by the customers are not meant for retaining by the appellants as a consideration of the sale but the same are required to be returned to the customers after the expiry of the specified period for which the appellants is under a legal obligation having been created on account of issuance of promissory note. During the course of arguments, our attention has been drawn to the Tribunal decision in the case of Maruti Udyog Ltd. v. Commissioner of Delhi reported in 2003 (154) E.L.T. 635 (Tri. - Del.). The Tribunal in the said case was dealing with the situation where Maruti Udyog under a contract with their dealer allowed them special rebate from the sale price of the vehicles but the same was deposited in the security deposit of individual dealers, which was to be returned only on termination of the dealership agreement. The Tribunal observed that the fact that the rebate allowed through credit notes and the amount being d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the goods cannot go on changing depending upon whether the money has been refunded or not. It is sufficient to observe that the appellants are under a legal obligation to return money and as such irrespective of the facts whether the same are actually returned or not, it is always like a deposit in the hand of the manufacture and would never take the colour of sale price. In fact during the course of argument, a statement was placed on record by learned Advocate showing that wherever their customers have approached them for the return of the money in question, the same has been returned along with the interest accrued up to that date. Learned Advocate has argued that if the intention of the company was to charge more from their customers towards the value of the T.V., they would not have made returns of huge amount of money to the customers even before the expiry of the time. 19.Our attention has also been drawn to the United Breweries case 1997 (3) SCC 530 whereas in Paras 25 and 33 their lordship observed as under :- "It, however, cannot be said that the moneys lying with the company for a long time as security deposit from its customers would automatically become sale p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omary obligation upon the assessee to spend the amounts only on charitable purposes. Similarly, the appellant in the present case is under an obligation to pay back the deposit plus interest amount at the end of the fixed period and maintains a separate account of such deposits and show their resultant liability in their balance sheets, the complexion of such deposits cannot be changed to consideration of the goods sold. 21.Even for the period subsequent to 2-8-1989, we find that the Colour T.V. sets were to be charged at ad valorem duty of 18% as per Sr. No. 229(i) of Notification No. 5/98-C.E., where retail sale price was declared on the packages at the time of clearance from the factory of production. The retail sale price was defined in the explanation to the said Sr. No. According to explanation, retail sale price means the maximum retail price at which the excisable goods in packaged form may be sold to the ultimate consumer and include all taxes local or otherwise, freight, transport charges, commission payable to the dealers and all charges towards advertisement, delivery, packing, forwarding and the like as the case may be and the price is the sole consideration for su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d E/2978/2001-Mum. : 23.The dispute in the present three appeals relate to the Colour Television sets manufactured by M/s. Videocon International Ltd. under the brand name of "Sansui" and sold to M/s. Kitchen Appliances India Ltd., licence trademark user of the said brand name. The manufacturer is affixing the Television sets with the maximum retail price, as informed to them by M/s. Kitchen Appliances and the duty was being paid by them accordingly in terms of the provisions of Section 4A, at the rate of 18% ad valorem under Notification No. 5/98-C.E. 24.There is no dispute that the colour televisions are being sold by M/s. Kitchen Appliances in the market at the maximum retail price affixed on the same. However, during the period relevant for the purpose of the present appeals M/s. Kitchen Appliances floated a scheme called "Basket Scheme" according to which if more than one items were purchased along with the colour televisions, the prices were reduced. There is no dispute that the appellant has paid duty on the maximum retail price affixed on the T.V. sets, even where they were sold at a consolidated prices of two or more items, which was less than the some total individual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said scheme was optional and the T.V. sets were also being sold individually at a price declared on the packages. However, wherever they have sold the T.V. sets along with the other two items, the price collected from the customers was on the lower side whereas they have paid the duty on higher value declared by them. As such, it cannot be said that the maximum retail price declared by them is not correct or genuine. 29.We find that explanation attached to Sr. No. 229 of Notification No. 5/98-C.E. reads as under :- "Explanation. - '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, as the case may be, and the price is the sole consideration for such sale." 30.As per the definition of the retail sale price given above it is seen that the same refers to Maximum price at which the excisable goods in packaged form may be sold. In the instant case the price at which individual T.V. set have been sold is the same price which has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacturer. Even the statement of the dealers have not indicated anything to that effect. At this stage, we may take note of the Tribunal's decision in the case of I.T.C. Ltd. v. C.C.E. - 1998 (104) E.L.T. 151 wherein dealing with the identical situation, it was observed that where there were million dealers, M/s. I.T.C. cannot be held responsible for the tendency of the retailer to charge higher than the approved prices so as to secure larger margin. It is only in case where the declaration has been made by the manufacturer which can be proved to be fake by production of sufficient evidence, the sale price has to be discarded. However, the said price which has been adhered to by the maximum No. of dealers, has to be taken as correctly declared maximum retail price and the fact that a very small percentage of dealers has charged marginally higher than maximum retail price, in a negligible No. of cases cannot turn the situation. The definition of the retail sale price suggest that the packages are capable of being sold at that price. 33.To the similar effect, we find another decision of the Tribunal in the case of Maruti Udyog v. C.C.E. - 2000 (124) E.L.T. 1175 (T). In the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss, discharge duty at higher specific rate, Commissioner (Appeals) has observed that the said circular is binding on the Department. The appellant's contention is that a quasi judicial authority is not bound by the circular which is adverse to the assessee and the correctness of the same can be challenged by showing it to be contrary to law. It is only those circular which are in favour of the assessee which have been held to be of binding nature upon the Revenue's own officers. Reference has also been made to the various decisions holding that such circular are binding on the departmental officers but not binding on the quasi judicial authority and assessee. This has been so held by the Hon'ble Calcutta High Court in the case of Birla Jute and Industries v. Assistant Commissioner - 1992 (57) E.L.T. 674 (Cal). There can be not in dispute about the above legal position. Circulars which are contrary to the correct legal interpretation are not binding on the judicial authorities. As we have already observed that sale of the T.V.s along with other electrical items being manufactured by the appellants under the basket scheme at a price lower than the declared retail sale price, would no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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