TaxTMI 
TaxTMI 
2014 (1) TMI 1642
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....switches, Moulded Case Circuit Breaker (MCCB), etc. which are commonly known as switchgear products. These goods are classified under Chapter Heading 8536 of the First Schedule to the Central Excise Tariff Act, 1985. The appellants are selling their products to their dealers/distributors from the factory or from their depots. The appellants have not affixed MRP on their products since inception as per the Standards of Weights (Packaged Commodities) Rules, 1977. Rule 6(1)(f) read with Rule 2(r) of the PC Rules required affixation of retail sale price. Prior to 1990, as the goods are classified under Chapter Heading 8536 of the First Schedule to the Central Excise Tariff Act, 1985 were notified for MRP based assessment w.e.f. 1-3-2002 vide Notification No. 13/2002-C.E. (N.T.), and thereafter, under Notification No. 2/2006-C.E. (N.T.) as per these Notifications the assessee is entitled an abatement of 40% from MRP to arrive the assessable value. The contention of the appellant is that their products were not covered by P.C. Rules relating to MRP Rules, the product did not classify as pre­packed commodity and were not sold by weight, measure or number. The appellants were also maki....
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....vices. The appellants are manufacturing of the above products at their factory and some products are manufactured at their vendor's factory in their brand name. In some products which are meant for retail sale, the appellants are affixing MRP and discharged duty liability of Central Excise Duty as per Section 4A of the Act. The dispute in the present case is that as goods are falling under Chapter Heading 8536 of the Central Excise Tariff Act, 1985 are notified goods. Therefore, the appellants are required to affix MRP on their products as per the Rule 2(1) of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 as amended as on the premise that the declaration of retail price was not necessary in respect of these products which were not intended to be sold in retail and were meant for industrial obligation and declaration was made to this effect as they were used manufacturer of control panel. The show cause notices were issued to the appellant and the vendors on the premise that as the appellant are not discharging their duty liability as per Section 4A of the Act. Therefore, demand for differential duty was confirmed against the appellant. M/s. Siemens Ltd....
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....ged Commodities) Rules, 1977 or under any other law for the time being in force. In the light of the Circular No. 625/16/2002-CX, dated February, 2002 relying on the decisions of Jayanti Food Processing Pvt. Ltd. v. CCE reported in 2007 (215) E.L.T. 327, and Titan Industries Ltd. v. Commissioner of Customs, Chennai, reported in 2007 (216) E.L.T. 327. 4. It is further contended that electric switchgears were meant for industrial use are not commodities in packed form and therefore impugned products are not covered by Rule 1(3) of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 for this reliance was placed on the following decisions. (i) Philips India Limited v. Union of India - 2002 WLR 140; (ii) Eureka Forbes Ltd. v. Union of India, AIR 2003 AP 275; (iii) Titan Industries Ltd. v. Union of India, AIR 2006 Bom. 336, (iv) Subhash Arjandas Kataria v. State of Maharashtra, AIR 2006 Bom. 393; (v) Pieco Electronics & Electricals Ltd. v. Union of India and Ors....
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....ned on the basis of the list price. The list price does not form the basis for arriving at the MRP as it is basis of sale price between the appellants and the dealers. Therefore, list price cannot be the basis for arriving of the retail sale price. Therefore, demand is not sustainable. 7. It is also contended by the Counsels for the appellants that the decision in the case of Larsen & Toubro holding that the goods are required to affix MRP is based on the decision of Hon'ble Apex Court in the case of Whirlpool of India Ltd. v. Union of India reported in 2007 (218) E.L.T. 167 (S.C.). The said decision is also jeopardy as the Hon'ble Apex Court in the case of Subhash Arjundas Kataria reported in 2012 - (275) E.L.T. 289 (S.C.) has doubted the said decision and referred the matter to Larger Bench of the Apex Court. Therefore the decision of Larsen & Toubro Ltd. of the Hon'ble High Court is not a good law. 8. All the Counsels for the appellants submit that on the following grounds the demand are not sustainable. Therefore impugned orders are to be set aside. 9. In alternate it is submitted that the demands for extended period of limitation, (in the case of Schnei....
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....scertained in the prescribed manner. Admittedly, no such procedure was prescribed by the Central Government before 1-3-2008, this does not mean that the provisions of Section 4A ibid are not enforceable. If that be so the provisions of Section 4A ibid shall become redundant and such a situation came before this Tribunal in the case of Sushil Agarwal v. CC, Mumbai-I reported in 2012 (283) E.L.T. 377 (Tri.-Mumbai) wherein this Tribunal has held that when no machinery provisions are expressly provided for in the law, there is no bar in adopting a reasonable provisions to make the law operational. Therefore irrespective of the fact that Rules in terms of Section 4(4) came to be issued on 1-3-2008, the provisions of this sub-section had to be given effect to by adopting any reasonable means that could help to ascertain the retail sale price of the impugned goods, and in case of any goods which are sold at different prices, the maximum of any of its retail sale price is liable to be adopted as the retail sale price in terms of Section 4A(4)(a) Explanation-1 to read with Explanation-2 sub-clause (a). Therefore, the spirit of the law can be cured out from such provisions that the maximum o....
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....n valuation determined under Section 4A, maximum retail sale price is available to the concerned market circles and establish by virtue of their price lists handed out to stockists and dealers, the information so ascertained from market circles makes the valid basis for determination of MRP for a period after the issuance of Rules, under the authority of and in terms of sub-section (4) to Section 4A of the Central Excise Act, 1944. It is further submitted that the market enquiries in retail market do not necessarily mean the actual retail sale price of the impugned goods, more so for the past transactions. It is submitted that the market enquiries as broad connotations, which may include ascertaining any market related data/information that can be legitimately obtained to determine the maximum retail price of inputs. That the price lists adopted by them in their marketing chain continues to guide the stockists as well as the retailers as to the maximum retail sale price, shall make a valid basis to ascertain and determine the MRP for the purpose of Section 4A, ibid. Thus, the MRP, excluding the local taxes & octroi, ascertained by the original authority, duly supported by the appel....
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....of Section 4A in that case. But the Hon'ble High Court of Bombay has held that appellants are required to affix MRP on the impugned goods. Further, the contention of the appellant is that the decision of Hon'ble High Court in the case of Larsen & Toubro Ltd. (supra) has been challenged before the Hon'ble Apex Court and appeal against the said order has been admitted and it is also contended that the decision of Larsen & Toubro Ltd. is based on the decision of Whirlpool India Ltd. v. Union of India (supra) and said decision of the Hon'ble Apex Court is in jeopardy as the Hon'ble Apex Court in the case of Subhash Arjundas Kataria (supra) has doubted the same. 17. We are not convinced with the argument advanced by the ld. Counsel for the appellant. In the light of decision of this Tribunal in the case of M/s. Access Textiles & Another vide Order No. A/569-572/13/CSTB/C-I, dated 23-4-2013 this Tribunal has observed as under :- "It is seen that the judgment in the case of West Coast (supra) is not a precedent for the ratio that a judgment losses its precedent value if stayed by a Superior Court, the said judgment was on the issue of commencement of the period of limitation fo....
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....vailable to determine MRP of the product if the same is not affixed on the product. It is an admitted fact that prior to 1-3-2008 there was no machinery provisions available to determine MRP. The said issue came up before this Tribunal in the case of Millennium Appliances India Ltd. (supra) wherein this Tribunal observed as under : 9. Another issue involved in this case is regarding the situation that arises where there are no clear cut statutory provisions to arrive at the value. We find that strong force in the contentions raised by the appellants on the provisions of Section 4A of the Central Excise Act (as is reproduced in Para 8 hereinabove). We find that the Department did not issue any guidelines or rules for determination of value as provided under sub-section (4) of Section 4A of the Central Excise Act. We find that Notification No. 13/2008-C.E. (N.T.), dated 1-3-2008 incorporates Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 which reads as under :- "Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008. [Notification No. 13/2008-C.E. (N.T.), dated 1-3-2008] In exercise of the powers conferred ....
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.... from the place of manufacture : Provided that if more than one retails sale price is ascertained under clause (i) or clause (ii), then, the highest of the retail sale price, so ascertained, shall be taken as the retail sale price of all such goods. Explanation - For the purposes of this rule, when retails sale price is required to be ascertained based on market inquiries, the said inquiries shall be carried out on sample basis. RULE 5. Where a manufacturer alters or tampers the retail sale price declared on the package of goods after their removal from the place of manufacture, resulting into increase in the retail sale price, then such increased retail sale price shall be taken as the retail sale price of all goods removed during a period of one month before and after the date of removal of such goods : Provided that where the manufacturer alters or tampers the declared retail sale price resulting into more than one retail sale price available on such goods, then, the highest of such retail sale price shall be taken as the retail sale price of all such goods. RULE 6. If the retail sale price of any excisable goods cannot be ascertained under these rules, ....
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....following rules, namely :- 1.(1) These rules may be called the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008. .................. 3. The retail sale price of any excisable goods under, sub-section (4) of Section 4A of the Act, shall be determined in accordance with these rules. 4. Where a manufacturer removes the excisable goods specified, under sub-section (1) of Section 4A of the Act, - (a) without declaring the retail sale price on the packages of such goods; or (b) by declaring the retail sale price, which is not the retail sale price as required to be declared under the provisions of the Standards of Weights and Measures Act, 1976 (60 of 1976) or rules made thereunder or any other law for the time being in force; or (c) by declaring the retail sale price but obliterates the same after their removal from the place of manufacture, then, the retail sale price of such goods shall be ascertained in the following manner, namely :- (i) if the manufacturer has manufactured and removed identical goods, within a period of one month, before or after remova....
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.... declared on the package by a manufacturer can be determined in terms of these rules. We find that before issue of these rules, there was no machinery prescribed to determine the RSP of excisable goods for the purpose of assessment under Section 4A of the CEA where the RSP is not declared by the manufacturer. 15. As far as the CVD under Section 3 of the Customs Tariff Act is concerned, the Government is yet to similarly prescribe the manner to ascertain the RSP when the importer does not declare the RSP on the packages imported. The assessee had relied on the judgment of Hon'ble High Court of Madras in Eternit Everest Ltd. v. Union of India [1997 (89) E.L.T. 28] wherein their lordships had quashed the demand notices issued under 11D of the Act proposing to recover amounts collected as excise duty in excess of what was due and paid to the exchequer on the ground that there was no machinery provision in the statute to recover the same. We find that the situation obtaining in the case on hand is similar to the situation covered by the above judgment. The Section 11D of the Act had provided that "every person who has collected any amount from the buyer of any goods in any manne....
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....Narottamdas Hospital reported in 2010 (254) E.L.T. 286 (Bom.) wherein the Hon'ble High Court held that the prima facie view is not conclusive. Further, although the decision of ABB Ltd. (supra) has been challenged by Revenue before the Hon'ble Apex Court, but the decision of ABB Ltd. has not been set aside by the Hon'ble Apex Court therefore as observed by this Tribunal in the case of M/s. Access Textiles (supra) the decision of ABB Ltd. (supra) is having the field as on today. Therefore, we hold that demands for the period prior to 1-3-2008 are not sustainable as there is no machinery provisions to determine the MRP of the product in the absence of MRP is not affixed on the product. Issue No. C : Whether the list price can be adopted as MRP or not? The list price is the basis of MRP as held by the ld. Commissioner in the impugned order. 18. As per the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008. Rule 4 deals with the situation which is reproduced as under : Rule 4. Where a manufacturer removes the excisable goods specified under sub-section (1) of Section 4A of the Act, - (a) without declaring the....
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....e discounts were offered thereafter the sale value of goods were ascertained. On Discounted Price, VAT has been charged. On perusal of the invoice, the sale price of the impugned goods is Discounted Price + VAT. The contention of the Revenue is that the invoice is in name of retailer not in the name of ultimate consumer. Therefore, the discount given to the retailer as its margin, therefore retail sale price is the list price. On perusal of the invoices relied upon by the revenue, we find that the invoice issued by M/s. Popular Electricals, Andheri (E), Mumbai to M/s. Shanti Switchgear, Airoli, Navi Mumbai. The Revenue has not produced any invoice issued by M/s. Shanti Switchgear to establish that at which price M/s. Shanti Switchgear has sold the goods or otherwise. It is not ascertained by the Revenue that M/s. Shanti Switchgear has utilized these goods for their own consumption or otherwise. The similar invoice issued in the name of Power Flow Electricals, Goregaon (E), Mumbai, in that case also no efforts were made to ascertain M/s. Power Flow Electricals as sold the goods in retail if so, what is the retail price. The provisions of Rule 4(a)(ii) clearly cast the liability on t....
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.... 22. [Per : P.K. Jain, Member (T)]. - I have gone through the recorded judgment by my Learned Brother. However, I find that my views on issues (b), (c) & (d) listed in para 14 are at variance and are dealt with below. 23. Issue (b) listed in para 14 is "(b) Whether the demands for the period prior to 1-3-2008 are sustainable or not as there were no machinery provisions available to determine MRP of the product?" 23.1 The relevant Section for this issue is Section 4A in the Central Excise Act which was introduced in 1997 and read as under :- "Section 4A. Valuation of excisable goods with reference to retail sale price. - (1) 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 Standards of Weights and Measures Act, 1976 (60 of 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 apply. (2) Where the goods specified under sub-section (1) are excisable goods and are chargeable to duty of excise with ref....
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....such sales, or tamper with, obliterates or alter any such declaration made on the packages after removal, such goods shall be liable to confiscation. Earlier such goods were not liable to confiscation. Here again no new machinery provisions were required as the Central Excise Act and Rules already define power of adjudication/confiscation, etc. 23.4 During the period 1997 onwards there would be cases where goods covered by Section 4A(1) would be cleared without declaring MRP or declaring MRP which does not constitute the sole consideration for such sale or other situations elaborated in sub-section (4), in such cases assessing officer would assess duty liability after arriving at MRP based upon various materials available to him as also provisions of Section 4A. In brief, assessing officer would use best judgment to arrive at MRP based upon the material available and thereafter assess the duty liability. The assessing officer is not allowed to assess the goods covered by Section 4A in terms of Section 4, as such an action would be against specific prohibition imposed under Section 4A(2). 23.5 In 2003, sub-section (4) was again amended and new sub-section (4) read....
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....e area to which the retail sale price relates". It would be seen that new sub-section among other changes provided that the "retail sale price of such goods [as stipulated in clauses (a) and (b)] shall be ascertained in the prescribed manner and such price shall be deemed to be retail sale price for the purpose of this section." Thus the new provision stipulated among other things that in case goods are cleared without declaring retail sale price or in other situation as elaborated, the retail sale price shall be ascertained in the prescribed manner. The amendment in 2003, stipulated that Government will prescribe the method for ascertainment of MRP in specified situation which was hitherto being done based upon best judgment method by assessing officer. Even though the said amendment was made in May 2003, the manner for ascertainment was prescribed only on March, 2008 vide Notification No. 13/2008-C.E. (N.T.), dated 1-3-2008. Here again the administering machinery to ascertain retail price in the prescribed manner was neither defined nor required to be defined, as the function was already assigned to assessing officer. All that was done by the Notification was to provide guidan....
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....words. In a classic passage Lord Caims stated the principle thus : If the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind, to be. On the other hand, if the Crown seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of law the case might otherwise appear to be. In other words, if there be admissible in any statute, what is called an equitable construction, certainly, such a construction is not admissible in a taxing statute where you can simply adhere to the words of the statute. Viscount Simon quoted with approval a passage from Rowlatt. J. expressing the principle in the following words: In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. (at p. 635)" 24. The 1955 Act contains the charging provision. Upon amendment of the definition of 'sale' in the year 2002, the transfer of property in....
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....termine the MRP and whole object of Section 4A of the Central Excise Act, 1944 would be rendered redundant and ineffective. This would be against the Hon'ble Supreme Court's direction/observation (supra). 23.9 My Learned Brother as also appellant has relied upon three case laws, all rendered by Bangalore Bench of this Tribunal. In the case of Millennium Appliances India Ltd. reported in 2009 (248) E.L.T. 713 (Tri.-Bangalore), appellant was manufacturing and selling certain consumer electronic items in combination under a scheme called "Combination Scheme". The price under "Combined MRP" when examined was found to be lesser than the aggregate of MRPs of individual consumer goods when cleared separately. Revenue wanted to charge duty on the basis of the aggregate of MRPs of individual; which was not accepted by the Tribunal. While arguing the said case, appellant also contended that during the period Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 were not in existence and Tribunal commented on that. Similarly, in case Ravi Foods Pvt. Ltd. reported in 2011 (266) E.L.T. 399 (Tri.-Bang.), demand was raised based upon disclosure of undisclosed ....
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.... for the period prior to 1-3-2008 and for the period on or after 1-3-2008. For the period prior to 1-3-2008, Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 were not in existence or force and hence a reasonable/best judgment basis consistent with the provisions of Section 4A is to be followed and whether or not list price can be considered as reasonable method. The second part would be on and after 1-3-2008, when the Rules came into existence/force, whether or not list price can be adopted in the facts of the present cases. 24.1 At the outset, it is interesting to note that even after the present issue cropped up, appellants continue to clear the goods without declaring MRP but assessing the goods under Section 4A i.e. MRP basis and MRP is arrived at based upon list price, VAT and Local Taxes. Appellants are disputing the list price method for the period covered in these cases while adopting themselves the list price for the subsequent period. Be that it may be, we proceed to analyse the issue. 24.2 We note that appellants themselves are issuing price lists of all their products. These price lists are available to all Distributors,....
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....p; by declaring the retail sale price, which is not the retail sale price as required to be declared under the provisions of the Standards of Weights and Measures Act, 1976 (60 of 1976) or rules made thereunder or any other law for the time being in force; or (c) by declaring the retail sale price but obliterates the same after their removal from the place of manufacture, then, the retail sale price of such goods shall be ascertained in the following manner, namely (i) if the manufacturer has manufactured and removed identical goods, within a period of one month, before or after removal of such goods, by declaring the retail sale price, then, the said declared retail sale price shall be taken as the retail sale price of such goods: (ii) if the retail sale price cannot be ascertained in terms of clause (i), the retail sale price of such goods shall be ascertained by conducting the enquiries in the retail market where such goods have normally been sold at or about the same time of the removal of such goods from the place of manufacture : Provided that if more than one retail sale ....
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.... determining MRP/RSP in the facts of the present case. We also note that after these show cause notices were issued, all the appellants have started paying duty on the basis of list price. When the appellants themselves now use list price as the basis for determining MRP, there is no reason, not to use the same for past period. 24.6 In our view, in the present cases list price (with suitable adjustment for VAT/local taxes) is a very accurate and reasonable substitute for MRP and accordingly hold so. 25. Issue No. D. "Whether demands for the extended period of limitation are sustainable or not". Learned Brother has observed in Para 19 above : "19. As the appellants are having good case on limitation also as the appellants were having the understanding that the goods are meant for industrial/institutional use, they are not required to affix MRP. The issue was settled by the Hon'ble High Court of Bombay on Writ Petition filed by the appellants. Therefore, the extended period of limitation is not invocable". In case of appellant Siemens Ltd., in one notice extended period is invoked. It is seen that they had approached Director, Legal Metrology to exempt g....
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....ble Goods) Rules, 2008 in the facts and circumstances of the present cases, particularly when the same is used by the appellants themselves for subsequent period. (3) Demands for extended period is not sustainable in view of reasons enumerated in Para 19 above. OR Demand for extended period is sustainable in view of the conduct of appellants as enumerated in Para 26 above including the reason recorded in impugned orders. (Pronounced in Court on 1-8-2013) Sd/- (P.K. Jain) Member (Technical) Sd/- (Ashok Jindal) Member (Judicial) ORDER ON DIFFERENCE OF OPINION 26. [Per : P.R. Chandrasekharan, Member (T)]. - The difference of opinion referred to me for consideration is reproduced below : "(1) The demands for the period prior to 1-3-2008 are not sustainable as there was no machinery provisions available to determine MRP of the product. OR The demands for the period prior to 1-3-2008 are sustainable as MRP of the product can be determined by the assessing officer using reasonable/best judgment based upon material available and consistent with principles and provisions of Section 4A of the Central Excise Act, 1....
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....-declaration but also the power to make best judgment based assessment, if the retail sale price cannot be ascertained in accordance with the 2008 Rules. None of the clauses of the Finance Act, 2003 nor the C.B.E. & C. Circular dated 30-8-2003 clarifying that the amendment made in sub-section (4) of Section 4A was to empower the Central Government to make rules laying down the manner of ascertaining the retail sale price in a case where MRP is not declared or in a case where MRP declared was subsequently altered or tampered with prescribe the manner of ascertainment. Further, the rules under sub-section (4) of Section 4A were framed and made operational only effective from 1-3-2008 and, therefore, for the period prior to 1-3-2008 the assessing officer did not have the powers to determine the MRP. Since the rules were only prospective in nature, prior to 1-3-2008 the Central Excise officer could not have exercised the power retrospectively. Reliance is placed on the decision of the Apex Court in the case of Govind Ganga Saran v. Commissioner of Sales Tax - 1985 (SUPP) SCC 205 and the decision of the Larger Bench of this Tribunal in the case of Bhayana Builders Pvt. Ltd. v. Commissio....
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....tail sale price. In the absence of a declaration of the RSP by the manufacturer or the packer, there is no provision in law prior to 1-3-2008 for deeming the RSP. Accordingly, it is argued that Section 4A cannot be invoked in cases where the retail sale price is not declared on the package and as such it has no application and in such cases the assessment has to be made in terms of the provisions of Section 4 of the Central Excise Act, 1944, prior to 1-3-2008. 27.2 As regards the question whether the list price with suitable adjustment for VAT and local taxes can be accepted as an accurate and reasonable substitute for the MRP as held by the Member (Technical), it is contended that the list-price is not intended for any person other than the stockists and as per the agreement with the stockists there is nothing in the agreement that prohibits the stockists from selling at a price higher than that mentioned in the price lists. The stockist is allowed to sell its goods at his discretion at a price lower than the ruling price lists. Even though some of the stockist whose statements were recorded have stated that the list price is the maximum retail sale price, they were not al....
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....is conclusion on the fact that way back in 2002, the Director, Legal Metrology, had clarified that the appellants were required to declare MRP which they did not do and they filed a writ petition against the said order only in 2007 which was rejected by the Hon'ble Bombay High Court vide judgment passed in 2007. Consequently, Director, Legal Metrology passed the order on 6-7-2007 holding that the appellants were required to declare MRP on the retail packages of the goods manufactured by them. Challenge against the said decision of the Director, Legal Metrology was dismissed by the Hon'ble Bombay High Court vide judgment reported in 2012 (275) E.L.T. 153. It is also contended that the appellants had, as early as on 26-11-1999, submitted to the jurisdictional Range Superintendent that retail sale price is not applicable as the goods cleared by the appellants were meant for industrial use and were exempt from the provisions of PCR and therefore, RSP declaration was not required in terms of Rule 34 of the PC Rules. When the goods were notified under Section 4A in 2002, vide letter dated 20-3-2002 the appellant had informed the department that they were not required to pay differential ....
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.... "Specially packed for the exclusive use of any industry as raw material or for the purpose of servicing of any industry, mine or quarry." However, the PC Rules provided that if the goods are sold by numbers or length and displayed for sale at the retail outlets, the exemption from declaring RSP under Rule 34 would not be available. The appellants were selling their goods through stockists who were under contractual obligation to display prominently the impugned goods in their premises and were available for purchase by individuals. Thus the non-declaration of the MRP on the retail packages of the appellants on the impugned goods was clearly in violation of the PC Rules as it stood prior to 13-1-2007. The PC Rules were amended and as per the amended provisions effective from 13-1-2007 exemption from declaration of RSP was available only when the goods are sold by the manufacturer or packer directly to the industrial/institutional consumers. In the present case, the appellants were selling their goods through stockists/retailers. Therefore there was no exemption available to the manufacturer-appellants exempting them from declaration of RSP. It is also pointed out that bo....
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....he intent of the law and to obviate the situation of Section 4A being rendered redundant. In Rupani Spinning Mills Pvt. Ltd. v. Union of India - 1992 (60) E.L.T. 77, the Hon'ble High Court of Gujarat had occasion to examine a similar situation and it was held that in the absence of rules and till such rules are framed, the spirit underlying the provision can be invoked. 28.5 Adopting the ratio of the above decision, in the present case also, it can be held that the Central Excise officers could use reasonable means to determine RSP even for the period prior to 1-3-2008 inasmuch as the enabling power to frame the rules were provided in the law in 2003 itself. Reliance is also placed on the decisions of the Hon'ble Delhi High Court in the case of Great Eastern Shipping Co. Ltd. v. Union of India [2002 (150) E.L.T. 1403 (Del.)] and of Hon'ble Madras High Court in the case of Shipping Corporation of India Ltd. v. Collector of Customs, Chennai - 1998 (98) E.L.T. 78. In the present case, it has been clearly held by the Bombay High Court that the appellants' goods are liable to declaration of RSP and there is no exemption available. It is further contended that as per the decision....
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....luding taxes. The stockist of the appellants in their statements recorded before the investigating authorities had clearly admitted to these facts. Therefore, the argument that the price lists cannot be adopted as a basis for determination of MRP is without any substance inasmuch as the appellants and their stockists had understood the price lists to be the maximum price excluding the tax at which the goods could be sold. Therefore, the adoption of the said price list as the basis for determination of RSP by the departmental officers is clearly sustainable in law. It is also argued that violators of law cannot be allowed to take advantage of the law itself and the principle of law is that those who violate the provisions of law has to suffer and that violation cannot be made use of in any other proceedings and make gain out of it. Reliance is placed on the decision of the Hon'ble High Court of Karnataka in the case of Commissioner of Income Tax v. Jayaram Metal Industries - 2007 (220) E.L.T. 56 (Kar.) in respect of the above contention. In view of the above, it is prayed that the impugned demands are sustainable in law and the impugned orders need to be upheld. 29. I hav....
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....ition is that there should be a requirement under 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 the RSP on the packages of the goods. The second condition is that the goods should be notified under sub-section (1) of Section 4A. If these two conditions are satisfied, then notwithstanding anything contained in Section 4, the value for the purpose of assessment of duty will be the retail sale price minus the amount of abatement, if any, as specified by the Central Government. The expression used is 'notwithstanding anything contained in Section 4'. The non obstante clause is generally appended to a section with a view to give the enacting part of the section, in case of conflict, an overriding effect over the provision in the same or other Act mentioned in the non obstante clause. It is equivalent to saying that in respect of the provisions of the Act mentioned in the non obstante clause, the provision following it will have its full operation, or the provisions of embraced in the non obstante clause will not be an impediment for the operation of the enactment of the provision in which the no....
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.... 1944 (1 of 1944), the Central Government hereby makes the following rules, namely :- RULE 1. (1) These rules may be called the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008. (2) They shall come into force on the date of their publication in the Official Gazette. RULE 2. In these rules, unless the context otherwise requires, - (a) 'Act' means the Central Excise Act, 1944 (1 of 1944); (b) 'retail sale price' means the retail sale price as defined in Section 4A of the Act; and (c) words and expressions used in these rules and not defined but defined in the Act or any other rules made under the Act shall have the meaning as assigned therein. RULE 3. The retail sale price of any excisable goods under sub-section (4) of Section 4A of the Act, shall be determined in accordance with these rules. RULE 4. Where a manufacturer removes the excisable goods specified under sub-section (1) of Section 4A of the Act, - (a) without declaring the retail sale price on the packages of such ....
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.... be ascertained in accordance with the principles and the provisions of Section 4A of the Act and the rules aforesaid." 29.2.3 If one carefully goes through the provisions of Section 4A and the Rules, 2008 cited above, it can be seen that there is no determination of RSP envisaged in the legal provisions. The declaration of RSP is mandated by the provisions of the Packaged Commodities Rules and the Standards of Weights and Measures Act and RSP by definition is 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, all charges towards advertisement, delivery, packing, forwarding and the like and the price is the sole consideration for such sale. Neither the Standards of Weights and Measures Act nor the Rules made thereunder provides for determination of RSP. It merely defines what RSP is. Since the declaration of RSP is mandated by the Standards of Weights and Measures Act or the Rules made thereunder, Excise law cannot prescribe a method for determination of RSP since the declaration of RSP is not mandated by the Central Excise....
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....y drawing upon the following words of Lord Justice Mellish in Republic of Costa Rica v. Erlanger said : "No suitor has any vested interest in the course of procedure, nor any right to complain, if during the litigation the procedure is changed, provided, of course, that no injustice is done." It is true that if one traces any substantive right back far enough it will be found secreted in the interstices of procedure. 11. In W.H. Cockerline & Co. v. IRC 10, Lord Hanworth quoted with approval a following passage from the judgment of Sargent, L.J. : "The liability is imposed by the charging section, namely, Section 38 the words of which are clear. The subsequent provisions as to assessment and so on are machinery only. They enable the liability to be quantified and when quantified to be enforced against the subject, but the liability is definitely and finally created by the charging section and all the materials for ascertaining it are available immediately." 12. In, Halsbury's Laws of England (Fourth Edn., Vol. 23, para 29), referring to the machinery provisions it is stated : "It is important to distinguish between charging provisions, w....
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....pose the charge to tax and machinery provisions which provide the machinery for the quantification of the tax and the levying and collection of the tax so imposed. While charging provisions are construed strictly, machinery sections are not generally subject to a rigorous construction. The courts are expected to construe the machinery sections in such a manner that a charge to tax is not defeated." Accordingly, it was held that, Rule 1BB which merely provides a mode of valuation is procedural in nature and, therefore, can be applied retrospectively in respect of matters pending. 29.2.7 When we apply the ratio of this decision to the facts of the present case, it can be easily seen that the provisions of the Rules, 2008 are entirely procedural in nature and therefore, it is retrospective in nature, can be applied to all proceedings which are pending or which arise after the rule has been introduced. 29.2.8 In the present case, the charging section is Section 3 of the Central Excise Act and the rate of tax is prescribed in the Schedule to the Central Excise Tariff Act, 1985. The value for the purpose of assessment is the retail sale price as defined in the Explanat....
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.... 29.2.10 In the present case, the charging section provides for the levy, the rate of tax is specified in the schedule, the person liable to pay the tax is the manufacturer of the goods under Rule 4 of the Central Excise Rules, 2002 and the measure of tax is defined under Section 4A. Thus, all the core ingredients of the tax system is specified in the law. The Rules 2008 merely provides for ascertainment of the measure of tax in a situation where it is not declared. Therefore, the ratio of these decisions has no application whatsoever to the facts of the present case and the arguments raised by the appellants in this regard have to be rejected. In view of the above, I hold that the demand for the period prior to 1-3-2008 and after 14-5-2003 when the Government acquired the power to frame the Rules is sustainable as MRP of the product can be determined by using reasonable means. 29.2.11 There is one more reason, why it should be so? The Hon'ble Apex Court in the case of Assistant Collector of Central Excise v. National Tobacco Co. of India Ltd. [AIR 1972 SC 2563 = 1978 (2) E.L.T. J416 (S.C.)] held that, in a situation where no assessment took place for the reason of ....
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....ion 4A(2) deems the value for the purpose of assessment of excise duty as the retail sale price declared on the packages of the goods minus the abatement. Therefore, even if in a situation the retail sale price are not so declared, it would be permissible to adopt any fair and reasonable means to ascertain the RSP so long as it is consistent with the provisions of Section 4A. A similar view was taken by the Hon'ble High Court of Delhi in the case of Great Eastern Shipping Co. Ltd. v. Union of India - 2002 (150) E.L.T. 1403 (Del.) where a question arose whether in the absence of any rules providing for certain set of precautions, is it possible to direct confiscation of the vessel under sub-section (2) of Section 115 of the Customs Act. The Hon'ble Delhi High Court held that in the facts and circumstances of the case, wherein the vessel was found to indulge in smuggling of contraband goods, it would be sufficient to bring it under the purview of Section 115(2) enabling confiscation even in the absence of rules providing for certain set of precautions. The same view was held by the Hon'ble Madras High Court in the case of Shipping Corporation of India Ltd. v. Commissioner of Customs,....
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.... (122) E.L.T. 321 (S.C.) wherein it was held that : "A price list is really no more than a general quotation. It does not preclude discounts on the listed price. In fact, a discount is calculated with reference to the price list." 29.3.2 In the case cited supra, the issue for decision was how the transaction value should be determined by the parties for levy of Customs duty. Section 14 of the Customs Act, 1962 prescribed that Customs duty shall be levied on the transaction value except where the transaction was influenced by relationship between the two parties and in such a situation the Customs Valuation Rules, 1988 prescribed method for determination of transaction value. It was in that context, the above decision was rendered holding that the list price cannot be treated as a transaction value. That is not the situation obtaining in the case before me. It is a well settled position in law that when the facts of a case are different, the ratio pertaining to another decision cannot be mechanically applied. In Bharat Petroleum Corporation Ltd. & Another v. N.R. Vairamani & Another - AIR 2004 SC 4778, the Hon'ble Apex Court held as follows :- "Courts shoul....
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....ppellant-manufacturers in this case, is the maximum price exclusive of taxes. Thus the understanding of the appellants and their stockists was that the list price constituted the RSP minus local taxes. Since RSP, by definition has to include the tax elements also, the duty demand has been made by adding 12.5% on the list price towards VAT/CST, 5.5% towards octroi. It is a well-known position that consumer items are charged to 12.5% VAT in almost all the States and, therefore, addition of 12.5% towards VAT cannot be faulted at all. The appellants have not lead any evidence before me to show that in a given case the States charge VAT/Sales Tax at a rate lower than 12.5%. Similarly, in the case of octroi also, the appellant has not lead any evidence to show that the average 5.5% octroi adopted is unreasonable or incorrect. If the appellant wants to adopt a different rates of sales tax/octroi it was their bounden duty to lead evidence in this regard to prove that the additions made by the Revenue in the impugned order, is incorrect or not applicable universally. In the absence of any such evidence, the additions made by the Revenue to the list price towards local taxes cannot be faulte....
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.... Maddi Venkataraman and Co. (P) Ltd. v. Commissioner of Income Tax - 1998 (229) ITR 534 (SC). In that case the appellant committed violations of Foreign Exchange Regulation Act and, therefore, he was penalised by levying a penalty of Rs. 35,000/- under the provisions of the said Act. The appellant claimed a deduction towards penalty in his income-tax returns claiming it to be legitimate business expenditure. The Hon'ble Apex Court held as follows : "The expenditure incurred for evading the provisions of the Act and also the penalty levied for such evasion cannot be allowed as deduction. As was laid down by Lord Sterndale in the case of Alexander Von Glehn (supra) that it was not enough that the disbursement was made in the course of trade. It must be for the purpose of the trade. The purpose must be a lawful purpose. Moreover, it will be against public policy to allow the benefit of deduction under one statute of any expenditure incurred in violation of the provisions another stature or any penalty imposed under another statute. In the instant case, if the deductions claimed are allowed, the penal provisions of FERA will become meaningless. It has also to be borne in mind ....
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....tockists and retailers. The appellants' agreements with the stockists required the latter to display these goods for sale and the stockists have also confirmed this fact in their statements given before the investigating authorities. There is also no dispute that the appellants' goods are sold by numbers. Thus to circumvent the law, the appellants resorted to misdeclarations, which clearly reveals their guilty mind. Thus the charge of suppression of facts and wilful misstatement of facts with an intent to evade excise duty is writ large and established beyond doubt. In such circumstances, invocation of extended period of time for demand of duty is completely justified and I agree with the findings of the ld. Member (Technical) in this regard. 30. In view of the above analysis, I answer the reference made to me as follows :- (1) The demands for the period prior to 1-3-2008 are sustainable as MRP of the product can be determined by the assessing officer using reasonable/best judgment means based upon material available and consistent with principles and provisions of Section 4A of the Central Excise Act, 1944. Further the Central Excise (Deter....