TaxTMI 
TaxTMI 
2003 (10) TMI 140
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....5 of the Central Excise Tariff Act, 1985 and clearing the same by resorting to MRP based assessment under 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 :- SCN No. Date Period Duty Demanded 2/2000-01 18-12-2000 1-3-2000 to 31-8-2000 40....
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.... vide notification 9/2000, dated 1-3-2000 and 5/2001, dated 1-3-2001. Merely because instruments are lent to the subscribers of the telephone services of DOT/MTNL by itself will not be a ground to hold that such instruments will not be entitled to the assessment under Section 4A. (d) Merely 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 o....
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....ntical, in the sense in both cases Telephone instruments are cleared in bulk to DOT/MTNL and who in turn provide the instruments to their customers. No retail sale is involved in both the cases. The Hon'ble Tribunal has upheld the views of the Board's Circular (supra). It cannot be said that 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 reta....
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....SR 521 (E), dt. 26-6-1995) (f) the (retail sale price of the package)". Section 4A will apply to such goods where retail sale price has to be declared on the package. "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 Standard Weights & 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." 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 rel....
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.... not required to be printed. In the case of Telephones sold in bulk to DOT/MTNL, there is no exemption from the printing requirement of MRP. Para 4 of the Circular in this case when considered would render eligible assessments to be only under Section 4A in light of the fact that no exemption from requirement of MRP printing of the Telephones under the Weights & Measures Act and the Rules framed thereunder especially Chapter V has been brought out in the order. Assessments under the Central Excise Law cannot be 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....
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....ge in the notices and as recorded by the Commissioner (Appeals) is regarding the claim of abatement of 40% from the Contract Price and this, if true on facts, it is not permissible. The abatement, as notified, is permissible from the MRP declared. The matter is therefore required to be sent back to the original authority to verify the actual quantum of abatement permissible from MRP and thereafter determine short levy of duty if any. (f) In view of the facts of this case, we do not find any case or cause to invoke 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 spec....
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....e telephone sets, which were sold by the manufacturer in bulk to the telephone deptt. The matter was referred to the Ministry of Law, who have opined that valuation of telephone instruments supplied in bulk to telephone deptt. will be done as per Sec. 4 of the Central Excise Act, 1944 and the instruments sold in the market, with printed MRP, would be assessed u/s 4A of the Act. The Ministry has accepted the opinion of the Law Ministry." 13. It was submitted on behalf of the party that Section 4A(1) refers to 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 ....
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....ex Court such view will prevail over even a view taken by the Court or statutory provision. Revenue cannot challenge the position taken in the Circular even though it is open to challenge in the hands of the assessee. Following decisions of the Supreme Court are on the same issue. Paper Products Ltd. v. CCE reported in 1999 (112) E.L.T. 765 (S.C.) and CCE, Vadodara v. Dhiren Chemical Industries reported in 2002 (139) E.L.T. 3. In the light of the binding pronouncement of the Apex Court, the Revenue cannot 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 th....
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....ing anything contained in Section 4, such value of specified goods shall be deemed to be the retail sale price declared on such goods less such amount of abatement". According to the learned Counsel, exception can arise only in cases where the consignments/supplies of specified goods in question are excluded under Rule 34 of Packaged Commodities Rules from the requirements of Standards of Weights and Measures Act, 1976 and Packaged Commodities Rules. Learned Counsel 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 ....
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....n 4 of the Central Excise Act (M/s. Bharati Systel Ltd.) in conformity with Circular No. 625/16-CX., dated 28th February, 2002 of the Board, this case is also required to be decided following that decision. He also submitted that sale in retail was a requirement for valuation in terms of Section 4A of the Act. According to him, the goods which are sold in bulk for further retail sale would be liable to valuation under Section 4A, and not the goods which are sold in 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 sinc....