2013 (10) TMI 1145 - AT - Central Excise

Tribunal orders pre-deposit due to discrepancies in declared and actual prices of drinking water

AQUA ZING PVT LTD Versus COMMISSIONER OF CENTRAL EXCISE

The tribunal found discrepancies between the declared Maximum Retail Prices (MRPs) and actual sales prices of packaged drinking water by the appellant. It ... Valuation as per MRP under Rule 4A of CE Rules – packaged drinking water - domestic and industrial supply - Waiver of Pre-deposit – Held that:- There is no ascertainment at the retail market as prescribed under the Rule, if one examines the purchase orders placed by the institutional customers it is seen that the goods have been sold at prices ranging from Rs.43/- and Rs. 48/- during July 2008 to July 2010. Such prices also envisage rendering of additional services such as providing free water dispensers and supply of goods free of delivery charges - There is no nexus between the declaration of retail sale price and the prices at which the goods are sold to institutional customers - some of the institutional customers have also admitted that in the water jars received by them, the MRP was printed as Rs.50 - the declaration of retail sale price by the appellant is not borne out from the evidences available on records - the appellant directed to make a pre-deposit of 25% of duty – upon such submission rest of the duty to be waived till the disposal – Partial stay granted. Issues:- Determination of Maximum Retail Price (MRP) for excise duty calculation.- Evidence supporting the declared MRP by the appellant.- Compliance with the procedure for ascertainment of MRP.- Nexus between declared MRP and actual sales prices to institutional customers.- Confiscation and determination of retail sale price under Section 4A (4) of the Central Excise Act.Analysis:1. Determination of Maximum Retail Price (MRP): The appellant, a manufacturer of packaged drinking water, was levied excise duty based on the MRP affixed on the packages. The case against the appellant was that they adopted different MRPs to fall within the exemption limit for small scale manufacturers. The department alleged that the appellant sold goods at an MRP of Rs. 50/-, leading to a duty demand for excess clearances. The tribunal noted discrepancies in the declared MRPs and actual sales prices, directing the appellant to make a pre-deposit of 25% of the duty adjudged.2. Evidence supporting declared MRP: The appellant argued that the revenue failed to provide evidence supporting the charge that goods were sold at the declared MRPs. They contended that sales to institutional customers at higher prices were due to additional services provided, not indicative of the declared MRPs. The tribunal observed inconsistencies between the declared MRPs and actual sales prices, emphasizing the lack of evidence to substantiate the declared MRPs.3. Compliance with ascertainment procedure: The appellant's counsel highlighted the prescribed procedure for determining MRP, requiring market inquiries by the department. They argued that the department did not follow this procedure, rendering the MRP determination in the order unsustainable. The tribunal acknowledged the procedural lapses in determining MRP and emphasized the importance of following prescribed procedures for accurate assessments.4. Nexus between declared MRP and sales prices: The revenue contended that evidence, including purchase orders, indicated that the declared MRP was incorrect and that the actual MRP was Rs. 50/-. They cited instances where goods were sold above the declared MRPs, suggesting that Rs. 50/- was the correct MRP. However, the tribunal found discrepancies in the evidence presented, noting that sales to institutional customers did not conclusively prove the declared MRPs.5. Confiscation and determination of retail sale price: Section 4A (4) of the Central Excise Act addresses confiscation and determination of retail sale price for excisable goods. The tribunal referenced the rules for ascertaining MRP, emphasizing the need for accurate price determination. Despite discrepancies in declared MRPs and actual sales prices, the tribunal directed the appellant to make a pre-deposit, pending further proceedings.In conclusion, the tribunal's judgment focused on the discrepancies between declared MRPs and actual sales prices, the procedural shortcomings in MRP determination, and the necessity for evidence-backed assessments in excise duty cases.