2019 (3) TMI 607 - AT - Central Excise

Tribunal sets aside duty demand due to faulty redetermination before prescribed rules

M/s. Multiplex Electronics Versus Commissioner of Central Excise, Mumbai Zone I

The Tribunal allowed the appeal against the order confirming a demand under section 11A of the Central Excise Act, 1944, concerning the liability to ... Method of valuation - supplies to institutional buyers - section 4 and 4A of CEA - time limitation - Held that:- Identical issue decided in the case of M/S ACME CERAMICS AND OTHERS VERSUS CCE RAJKOT [2014 (3) TMI 164 - CESTAT AHMEDABAD], where it was held that prior to 01.03.2008, in the absence of any provisions for re-determining the RSP, in the form of prescribed rules, the Revenue authorities cannot re-determine the RSP under any of the provisions available to them. It has to be noted that there is no contrary view which has been taken by the Tribunal. In consequence of the absence of machinery provision during the period of dispute the assessable value for the purpose of computation of duty, even though not found to be affixed on the product, would have to be accepted as the ‘retail selling price.’ - appeal allowed. Issues:1. Appeal against order confirming demand under section 11A of Central Excise Act, 1944.2. Liability to discharge duty under section 4A of Central Excise Act, 1944.3. Applicability of Standard of Weights & Measures (Packaged Commodities) Rules, 1977 on supplies to institutional buyers.4. Bar of limitation of time for the demand.Analysis:1. The appeal was filed against the order confirming a demand of Rs. 16,36,968 under section 11A of the Central Excise Act, 1944, along with interest and penalty. The Tribunal noted that the matter could be resolved within the scope of enhancing the assessable value under section 4A of the Act during the relevant period. The goods in question were 'coin box telephones' installed in 'public call offices.'2. The Tribunal referred to a previous case, Acme Ceramics v. Commissioner of Central Excise, where it was established that the provisions of sub-section (4) of Section 4A were enacted to determine the correct retail price, but the rules for redetermination were not prescribed until 1-3-2008. It was emphasized that in the absence of rules for redetermination of retail selling price (RSP), the authorities could not redetermine the RSP based on best judgment prior to 1-3-2008. The Tribunal found that the redetermination by the Revenue before 1-3-2008 was faulty and not in accordance with the law.3. The Tribunal analyzed Section 4A of the Central Excise Act, 1944, which provides for determining duty on excisable goods based on the Retail Selling Price (RSP) as per the Standards of Weights and Measures Act, 1976. It was noted that prior to 1-3-2008, there was no legal procedure to revise the Maximum Retail Price (MRP) and demand duty, as the rules for redetermination were introduced only from that date. The absence of legal machinery during the relevant period meant that redetermination of RSP/MRP by the Department was unauthorized.4. Relying on previous decisions, the Tribunal concluded that the rules effective from 1-3-2008 could not be applied retroactively to determine the value for clearances made before that date. Therefore, in the absence of machinery provision during the disputed period, the assessable value for duty computation had to be accepted as the 'retail selling price.' Consequently, the Tribunal set aside the demand and allowed the appeal.This detailed analysis of the judgment highlights the key legal issues involved and the Tribunal's reasoning in reaching its decision.