Customs, Excise and Gold Tribunal - Ahmedabad
Gujarat Goldcoin Ceramics Ltd. vs Cce on 9 January, 2008
Equivalent citations: 2008(126)ECC134, 2008(152)ECR134(TRI.-AHMEDABAD), 2008(223)ELT556(TRI-AHMD)
ORDER M. Veeraiyan, Member (T)
1.1. Appeal No. E/176/06 is against the order of the Commissioner No. 53/Commr(Adjudication)/2005 dt.21/10/2005 confirming a demand of duty Rs. 1,29,75,906/- relating to the period 1/8/2000 to 31/10/2002 and imposition of penalty of Rs. 1,29,75,906/-.
1.2. Appeal No. E/768/06 is against the order of the Commissioner No. 23 to 26/Commr/05 dt.13/12/2005 confirming a demand of duty Rs. 1,48,26,496/- relating to the periods from Nov., 2002 to March, 2005 and imposition of penalty of Rs. 1,48,26,496/-.
1.3. Appeal No. E/983/07 is against the order of the Commissioner (Appeals) No. 111 to 112/2007/COMMR(A)/RAJ dt.28/5/2007 confirming a demand of duty Rs. 17,88,032/- relating to the period April, 2005 to September, 2005 and imposition of penalty of Rs. 17,88,032/-.
1.4. Appeal No. E/984/06 is against the order of the Commissioner (Appeals) No. 111 to 112/2007/COMMR(A)/RAJ dt.28/5/2007 confirming a demand of duty Rs. 7,72,186/- relating to the period October, 2005 to March, 2006 and imposition of penalty of Rs. 7,72,186/-.
1.5. All these appeals by the same appellant involve a common issue and therefore are being dealt with by a common order.
2. Heard both sides.
The relevant facts, in brief, are as follows:
a. The appellants are engaged in the manufacturing of Ceramic Glazed Tiles falling under sub-heading No. 6906.10 and are assessed to excise duty adopting valuation under Section 4A of the Central Excise Act, 1944.
b. They were clearing the glazed tiles to different areas of the country and declaring different MRPs depending upon areas and paying duty on respective MRP; but they were not mentioning the area on packages for which the goods were intended to be cleared.
c. They were selling part of the glazed tiles to certain institutional/project buyers at reduced rates by adopting a lower MRP than the MRP adopted for others.
d. The Original Authority held that the non-mentioning of the area on the packages is in contravention of explanation to 2(c) of Section 4A and therefore the adoption of lower MRP was incorrect. He also held that the MRP declared on the packages of Ceramic tiles which were sold to institutional / project buyers was a contract price and therefore the same cannot be treated as correct MRP.
e. Commissioner (Appeals) upheld the order of the Original Authority.
3. Ld. Advocate for the appellant made the following submissions.
3.1. The decision of the Commissioner (Appeals) in rejecting different MRPs for different regions and choosing the highest MRP is not legally correct. The reliance placed on explanation 2(c) to Section 4A is not correct. The explanation 2 (a) to Section 4(A) shall be applicable only when individual package contains more than one MRP declared. In their case only one price is declared in any given package and different prices were being adopted in respect of packages of goods cleared to different regions and that there was no allegation or finding of selling the goods cleared to any particular region at a price higher than the declared MRP for the said region. There is no requirement of specifying the region for which a particular MRP would be applicable as the same is also not envisaged under the Standards of Weights and Measure (PC) Rules, 1977 which provides for nature of declaration to be made on the packages.
3.2. Relating to supplies made to institutional buyers / builders, he submits the following. Such customers form a separate class of buyers and are also ultimate customers and that there is a separate MRP declared for clearances made to them. Within the said MRP a lower price is being negotiated with each of the buyers and contract entered into. The supplies are made to them on the basis of contract price and the duty is being paid on the declared MRP minus admissible deductions.
3.3. The findings of the Commissioner (Appeals) that contract price to the institutional buyers is the MRP is factually incorrect. Their contract price is lower than the MRP and they have paid duty in many cases at assessable value which is higher than the actual contract price; the assessable value is based on the MRP applicable to the special category of buyers minus the admissible deductions.
3.4. He relies on the judgment of the Hon'ble Supreme Court in the case of Jayanti Food Processing (P) Ltd. 2007 (217) ELT 327 (SC) in support of his claim that when the sale price of such goods is lower the MRP printed on the retail packages of such goods, nature of sales is not relevant for application of Section 4A.
3.5. Ld. Advocate also relied upon the judgment of the Hon'ble Karnataka High Court in the case of H&R Johnson (India) Ltd. in support of his contention.
4. Ld. SDR submits that when different MRPs are adopted for different regions, printing of the name of the region is necessary. He draws our attention to the extracts of Rule 6 of Standards of Weights and Measure Rules, 1977, which reads as follows:
(1B) It shall not be permissible to affix individual stickers (labels) on the package for altering or making declaration required under these rules:
PROVIDED that for reducing that Maximum Retail Price (MRP), a sticker with the revised lower MRP (inclusive of all taxes) may be affixed and the same should not cover the MRP declaration made by the manufacturer or the packer as the case may be, on the label of the package.
(1C) It shall be permissible to use stickers for making any declarations other than the declaration required to be made under these rules.
Ld. SDR also submits that the bulk customers are not selling the products further. Therefore the MRP fixed by the appellant in respect of such buyers should not be relied upon and the maximum MRP applicable to general category of dealers has been rightly adopted by the Commissioner (Appeals).
5. We have carefully considered the submissions from both sides.
5.1. The submission by the Ld SDR that the packages cleared to different areas should contain the name of the areas or regions is not flowing from the provisions of Standards of Weights and Measure Act or the Rules made there under.
5.2. Such a condition has also not been envisaged in Section 4A Section 4A as it stood during the period 2001-2002 and as it stood during the period 2003-2004 are reproduced below:
During 2001-2002 SECTION [4A. Valuation of excisable goods with reference to retail sale price. The -- (1) 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 reference to value, then, notwithstanding anything contained in Section 4, such value shall be deemed to be the retail sale price declared on such goods less such amount of abatement, if any, from such retail sale price as the Central Government may allow by notification in the Official Gazette.
(3) The Central Government may, for the purpose of allowing any abatement under Sub-section (2), take into account the amount of duty of excise, sales tax and other taxes, if any, payable on such goods.
Explanation 1. --For the purposes of this section; "retail sale price" means 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, and all charges towards advertisement, delivery, packing, forwarding and the like as the case may be.
Explanation 2. --(a) where on any excisable goods more than one retail sale price is declared, the maximum of such retail sale price shall be deemed to he the retail sale price for the purposes of this section.
During 2003-2004:
SECTION [4A. Valuation of excisable goods with reference to. retail sale price. The -- (1) 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 reference to value, then, notwithstanding anything contained in Section 4, such value shall be deemed to be the retail sale price declared on such goods less such amount of abatement, if any, from such retail sale price as the Central Government may allow by notification in the Official Gazette.
(3) The Central Government may, for the purpose of allowing any abatement under Sub-section (2), take into account the amount of duty of excise, sales tax and other taxes, if any, payable on such goods.
[(4) If any manufacturer removes from the place of manufacture any excisable goods specified under Sub-section (1) without declaring the retail sale price of such goods on the packages or declares a retail sale price which does not constitute the sole consideration for such sale, or tampers with, obliterates or alters any such declaration made on the packages after removal, such goods shall be liable to confiscation Explanation 1. -- For the purposes of this section, "retail sale price" means 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, and all charges towards advertisement, delivery, packing, forwarding and the like and the price is the sole consideration for such sale:
Explanation 2. --(a) where on the package of any excisable goods more than one retail sale price is declared, the maximum of such retail sale prices shall be deemed to be the retail sale price for the purposes of this section.
(b) where different retail sale prices are declared on different packages for the sale of any excisable goods in packaged form in different areas, each such retail sale price shall be the retail sale price for the purposes of valuation of the excisable goods intended to be sold in the area to which the retail sale price relates.] 5.3. Therefore, it is seen that Section 4A does not envisage that the area to which such retail sale price relate to need be declared on the package.
5.4. Section 4A defines the retail price for the purpose of applying the provisions of the said section. The retail price as per the definition means "the maximum price on which the excisable goods in packaged form may be sold to the ultimate consumer". In respect of sales made to the industrial customers, bulk buyers admittedly, there are no further sales by such buyers. In other words, they are the ultimate consumers. If there is a maximum price fixed for such class of buyers, the same would also qualify for being considered as "retail sale price". It is not disputed that the retail sale price has been such fixed for the class of buyers and sales have been effected at prices lower than the MRP so declared. The Department is not disputing that the assessment to such buyers shall be on the basis of MRP. They are ignoring the MRP fixed by the appellant for this class of buyers and have chosen the highest MRP applicable among the MRPs applicable the general category of buyers in different regions. This is also not permissible.
6. In view of the above, we hold that there is no authority for insisting on declaring / specifying the areas for which a lower MRP is applicable. In the absence of any evidence that goods with lower MRP claimed for a particular area has been sold at a higher price, the different MRPs declared by the appellant for different areas for the same product require to be accepted. We also hold that in respect of sales to institutional buyers / builders the MRP declared by the appellant is not same as the contract price as held by the Commissioners.
7. In view of the, appeals are allowed with consequential relief.
(Pronounced in Court on 9/1/08)