HINDUSTAN APPLIANCES Vs. CCE

JUDGEMENT

(1.) THE appellants are manufacturers of domestic appliances like Juicers, Mixers, Grinders and Hand Blenders. These appliances are liable to Central Excise duty under Chapter Sub -heading 85.09 of Central Excise Tariff. Further, the assessable value of these goods were required to be fixed after reducing the permissible abatement from their MRP with effect from 2.6.98 in view of Notification No. 18/98 -CE(NT) dated 2.6.98 issued under Section 4A of the Central Excise Act, 1944. The impugned order has demanded a duty of over Rs. 41 lakhs in respect of these appliances removed by the appellant during the period 2.6.98 to 27.11.98. Apart from the duty, penalty of an amount equal to the duty has also been imposed on the appellant, in addition to demand of interest in respect of the amount demanded as duty. The ground for making the duty demand is that on the domestic appliances sold by them, the appellant did not pay duty on the basis of the correct MRP, but on the lower amounts of MRP mentioned in the sale invoices of the goods.

(2.) THE material facts and circumstances leading to the duty demand are that the MRP of domestic appliances in question are declared on the cartons in which they are packed. Appellants buy cartons from carton manufacturers. At the time of coming into force of the MRP based assessment w.e.f. 2.6.98, the appellants as well as their carton suppliers had in stock considerable quantities of cartons on which the MRP as prevalent had been printed. The appellant reduced the MRPs of domestic appliances in the context of change in the basis of Central Excise valuation. The reduced MRPs were printed on stickers and those stickers were affixed on top of the existing printed MRPs on the cartons. The valuation of the goods was done based on such revised MRPs affixed on the cartons and duty paid from 2.6.98. According to the appellant, this method of declaring MRP was adopted only to avoid the wastage and loss which would have resulted from the discarding of the cartons with the earlier MRPs printed on them. The Central Excise authorities carried out investigations during November, 1998 as to whether the appellant was paying duty based on the correct MRP. The investigation covered appellant's own premises as well as their dealers. The investigation revealed that certain quantities of domestic appliances with the earlier higher printed MRPs were available with a few of their dealers. Domestic appliances packed in cartons bearing earlier MRPs were also available in the appellant's factory. However, goods under removal from the appellant's factory and most of the goods in the distribution chain were found to be packed in cartons on which stickers declaring the raised lower MRPs had been affixed. The Commissioner who adjudicated the case rejected the appellant's explanation that they had declared correct retail sale prices on the packages through the printed stickers, that those prices were the relevant MRPs and that duty had been correctly paid after taking the amount of abatement permitted under the notification from the declared MRP.

(3.) AS against the above, learned Sr. Counsel representing the appellant took us through the relevant provisions under Section 4A of Central Excise Act, 1944 and the Weights & Measures Rules and submitted that the findings in the impugned order had no legal or factual basis. Section 4A(ii) provides that where goods are to be valued under Section 4A(i), "such value shall be deemed to be the retail sale price declared on such goods...." Thus, the valuation is to be done based on the price declared. Rule 6 of the Standards of Weights & Measures (Packages Commodities) Rules, 1977 relating to the method of declaration of sale price stipulates as under: