KINETIC ENGG. LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellant -company was engaged in the manufacture of excisable goods including Colour Television Sets (CTV Sets) falling under Sub -heading 8528.90 of the CETA Schedule, during the material period. Prior to 16.9.1997, they were paying duty on CTV in terms of Section 4 of the Central Excise Act. From the said date, they paid duty on the goods on the basis of MRP in terms of Section 4A of the Act considering the fact that the product was notified by the Central Government for MRP -based assessment to duty. The department, upon scrutiny of the records of the assessee, found that the invoices issued by them at the time of clearance of the goods from the factory after 16.9.1997 indicated both the assessable value under Section 4 and the MRP under Section 4A. For instance, the invoice dated 18.11.1997 covering the clearance of 28 CTV sets to one of their dealers (depots) at Bangalore showed assessable value as Rs. 27,537/ - per set and the MRP to be Rs. 15,500/ - per set. This invoice also furnished further particulars such as discount, insurance and transportation charges, which were relevant to determination of the net assessable value for purposes of Section 4 of the Act. Besides these particulars, the abatement claimed (30%) under Section 4A was also given in the invoice. Thus, for purposes of Section 4, the invoice worked out the assessable value of each CTV sets at Rs. 12,470/ - by deducting discount (Rs. 15,377/ -) and insurance and transportation charges (Rs. 310/ -) from the price of the goods (Rs. 27,537/ -). For the purpose of Section 4A, this invoice worked out the effective MRP for the purpose of payment of duty at Rs. 10,850/ - per unit after abating Rs. 4,650/ - from the MRP of Rs. 15,500/ -. Duty was paid at the rate of 18% on the basis of the assessable value of Rs. 10,850/ - per unit. It appears, a few other invoices issued by the assessee during the period of disputes were also of a similar kind. It further appears from the records that the assessee resorted to provisional assessment during the period of dispute by furnishing the requisite bond along with bank guarantee, in which exercise they paid duty on the assessable value loaded to the extent of 25%. A show -cause notice was issued by the department proposing to finalize provisional assessment on the basis of the assessable value of CTV sets mentioned in the relevant invoices under Section 4. This show -cause notice proceeded on the premise that the higher amount mentioned under Section 4 in the invoice might have been recovered by the assessee's dealer (depot) from the ultimate consumers as is evident from the fact that the assessee was alleged to have failed to declare the depot sale price inclusive of all expenses. In adjudication of this show -cause notice, the original authority dropped the proposal after holding that no additional consideration was given by the assessee to their depot and that the depot at Bangalore sold CTV sets to customers at the rate of Rs. 15,000/ -. The order of adjudication was reviewed by the Commissioner and accordingly an appeal was filed with the Commissioner (Appeals). The learned Commissioner (Appeals) allowed that appeal and ordered for reassessment. The present appeal of the assessee is against the appellate Commissioner's order.

(2.) THE authorized representative of the appellant -company submits that, as some confusion prevailed in the matter of valuation of the goods shortly after the introduction of MRP -based assessment under Section 4A of the Act, the appellant happened to mention in the relevant invoices not only the particulars required under Section 4A but also those required under Section 4 of the Act. Hence it so happened that every such invoice indicated the assessable value under Section 4 apart from the MRP of the goods under Section 4A. It is submitted that, though there was no statutory requirement in those days for the appellant to declare the MRP in advance to the department, they chose to make a declaration in Annexure 2C. We have seen a copy of this declaration filed by the party on 29.10.1997. In this document, MRP of Rs. 15,500/ - was declared for the CTV sets which were to be cleared to the Bangalore depot and abatement to the extent of 30% was also claimed. Particulars such as discount, transportation and transit insurance charges, sales tax etc. were also furnished in this declaration, which were relevant to Section 4 of the Act. This declaration, in its remarks column, provided he following calculation: <FRM>JUDGEMENT_138_LAWS(CE)3_2010.htm</FRM>

(3.) AFTER considering the submissions, we have found no case for the Revenue. Admittedly, the assessee had declared their MRP for CTV sets after the MRP -based assessment was introduced under Section 4A of the Act. This MRP was marked on each carton containing CTV set cleared from the factory to the depot. In the relevant invoice, all the particulars such as MRP, abatement claimed and the net assessable value were furnished as required under Section 4A. Duty was paid on the net assessable value. In fact, a higher amount of duty was paid at the instance of the department as a condition for provisional assessment. The show -cause notice was issued with the purported purpose of finalization of this assessment. The appellate authority dropped the proposal for enhancing the assessable value, thereby accepting the MRP -based assessment done by the assessee. The appellate authority found a case for enhancing the assessable value and ordered for reassessment. We are at a loss to understand the rationale behind the direction for reassessment. The concept of provisional assessment and its finalization is not applicable to MRP -based assessment. As rightly submitted on behalf of the appellant, duty of excise was correctly paid by them on the notified goods in terms of Section 4A of the Act. The department has no case that the assessee had not declared the MRP of the goods on its package as required under the provisions of the Standards of Weights & Measures Act, 1976 or the Rules made thereunder. The fact is that they had marked the MRP on every carton containing CTV at the time of its clearance from their factory to the depot. If such declaration of MRP on the package was made as required under the Standards of Weights & Measures Act, 1976 and the Rules made thereunder, it was equally good for purposes of Section 4A of the Central Excise Act. All the essential particulars required for MRP -based assessment under Section 4A of the Central Excise Act, were also furnished in the relevant invoices. The abatement to which the assessee was entitled under Section 4 A was duly claimed. Duty was paid on the net assessable value. We also note that, though it was not required for them to give advance declaration of MRP to the department during those days, the assessee chose to declare the MRP to the department prior to clearance of the goods. The requirement of such prior declaration of MRP to the department came into force only in the year 1999.