TaxTMI 
TaxTMI 
2003 (10) TMI 140
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....lephone Instruments falling under Chapter 85 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 Deman....
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.... made, outside the purview of Section 4A of the Central Excise Act, 1944. Once the goods have been notified under that section 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 ....
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....hey are 'sold or not' or sold in bulk or retail". (b) At the outset it is submitted that the facts in the case of M/s. Bharati Systel Ltd., and the present case are identical, 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 neit....
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....the commodity contained in the package or where the commodity is packed or sold by number, the number of the commodity contained in the package; (d) The month and year in which the commodity is manufactured or pre-packed; (e) (Omitted by GSR 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....
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....ed supra, as there is no other decision of Superior Court in the matter. 7. After hearing both sides and considering the matter it is found :- (a) That instructions in Para 3 of Board's Circular No. 625/16/2002, dated 28-2-2002 are in conflict with the provisions of Para 2 & Para 4 thereof, which talk about resort to valuation under Section 4, only in such cases where MRP is 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) Lt....
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....t case has been decided on the applicability of Circular when claimed and not after considering the provisions of Section 4A(2) of the Central Excise Act, 1944 and the fact that there was no exemption for MRP markings as required on the Telephones. Thus this decision will not cause a bar to grant of Section 4A assessment in the case before us, when Telephones are notified under Section 4A. (e) It is found that the charge 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 con....
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....hat the manufacturers also make bulk supplies of telephone instruments to the Deptt. of Telecommunication (DOT) and the MTNL, who in turn provide these instruments, on rental basis, to the telephone subscribers. The ownership of the telephone instruments remains with the telephone deptt. and there is, therefore, no retail sale involved. The manufacturers also sell the instruments in the open market on which MRP is printed. The issue, therefore, was how to value the 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 W....
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....e DOT are to be assessed under the provisions of Sec. 4 of the Central Excise Act, 1944 and not under Sec. 4A. Para 6 of the said decision is as under :- "6. We do not find any merit in the objection raised by the ld. Departmental Representative. The binding nature of the Circular issued by the CBEC has been considered repeatedly by the Apex Court and it has been held that the Revenue cannot be heard to contend against a view taken in such circulars. According to the Apex 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 th....
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....hat clearances of telephone instruments to DOT/MTNL would be excluded from the provisions of Section 4A and that they would be valued under Section 4. It is pointed out that Section 4A applies to valuation of "specified goods" and for valuation under that Section, who the buyer is, is entirely irrelevant. Learned Counsel for the appellants has submitted that once goods are specified, Section 4 has no application for their valuation in view of the following non-obstante clause in sub-section (2) of Section 4A :- "Notwithstanding 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 o....
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....osition. There was no marking on the packages that the packages of the phones in question had been specifically packed for exclusive use in any industry or for the purpose of servicing any industry. Instead, the phone sets were packed like other telephone sets which were for sale to general public. The contract between the parties also did not provide for any such packing. 20. Learned SDR has submitted that since the Division Bench of the Tribunal had already upheld the valuation of sales of telephone instrument to DOT/MTNL under Section 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. ....