Custom, Excise & Service Tax Tribunal
M/S.C & S Electric Ltd vs Cce, New Delhi on 19 April, 2012
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing:19.04.2012
Date of decision:
Excise Stay Application No.3255 of 2011 in
Central Excise Appeal No.2510 of 2011
M/s.C & S Electric Ltd. ...Appellants
Vs.
CCE, New Delhi Respondent
Coram: Honble Shri Justice Ajit Bharihoke, President Shri Rakesh Kumar, Member (Technical) Appearance:
Shri S.P. Sahu, Advocate with Shri Prashant Shukla, Advocate for the appellants. Shri Sanjiv Jain, Authorised Departmental Representative For the respondent.
Order No. .
Per Rakesh Kumar:
The appellant manufacture electric relays chargeable to central excise duty under Heading 8536 of the Central Excise Tariff. The period of dispute is from 1.4.2004 to 31.3.2009. During this period vide Notification No.13/02-CE (NT) dated 1.3.2002 and No.2/06-CE (NT) dated 1.3.2006, issued under Section 4A of the Central Excise Act, 1944 all the goods of heading 8536, other than the goods covered under 85367000 i.e. all the goods of heading 8536 except connectors for optical fibres, optical fibre bundles or cable were notified for assessment of duty on value determined under Section 4 A. The dispute is in respect of clearance to dealers on which the appellant paid duty on the transaction value determined under Section 4 of the Act. However, according to the department, since
(a) these goods are notified for assessment of duty on value determined under Section 4 A; and
(b) in terms of the provisions of Standards of Weights and Measures (Packaged Commodity) Rules, 1977 (hereinafter referred to as SWM Rules), there is requirement to declare maximum retail price and other particulars on the packages of these goods ) the duty on clearance to the dealers should have been paid on MRP minus abatement as specified in the notification. On this basis, the jurisdictional Additional Commissioner vide order-in-original no.4/2010-11 dated 31.5.2010 confirmed the duty demand of Rs.24,53,392/- against the appellant company along with interest on it under Section 11 AB and imposed penalty of equal amount on them under Section 11 AC. The Commissioner (Appeals) vide order-in-appeal No.255/CE/D-II/2011 dated 21.7.2011 upheld the CCE (Appeals)s order. Against this order of the CCE (Appeals), this appeal along with stay application has been filed.
2. Heard both the sides in respect of stay application.
3. Shri S.P. Sahu, advocate and Shri Prashant Shukla, Advocate, the learned Counsel for the appellant, pleaded that the electric relays being manufactured by the appellant are meant for heavy duty electrical installations in industries and institutions, which are sold by technical parameters, that these items are not sold by weight, measures or number or in packaged form, that these items are, therefore, outside the purview of standards of Weights & Measures Act, 1976 (SWM Act) and SWM Rules and, hence, there is no requirement for declaring MRP on their packages, that in this regard he relies upon the Tribunals decision in case of Controls & Switchgears Contactors Ltd. Vs. CCE, Noida reported in 2005 (183) ELT 95 (Tribunal), that civil appeal filed by the department against the above mentioned judgement of the Tribunal was dismissed by the Apex Court vide judgement reported in 2011 (274) ELT A-109 (SC), that Honble Karnataka High Court in case of EWAC Alloys Ltd. Vs. Union of India reported in 2012 (275) ELT 193 (KAR) has held that the word consumer in SWM Act/ Rules means individual who buys goods for himself or his family or household use and excludes producers/ manufacture/purchasers for any commercial purpose, that the goods manufactured by the appellant, being meant for industrial use, are not covered by the provisions of SWM Act or the Rules made thereunder, and hence there is no requirement of declaring MRP on the goods, in question, and for this reason, in view of the Apex Courts judgement in case of Jayanti Food Processing Pvt. Ltd. Vs. CCE reported in 2007 (215) ELT 327 (SC), the provisions of Section 4 A are not applicable, that the departments case that the goods, in question, were being sold in retail to individuals for their use, is based on the statements of dealers, which can not be relied upon as their cross examination has not been allowed, that in any case, since Central Excise (Determination of Retail Sale price of Excisable goods) Rules, 2008 came into force w.e.f. 1.3.2008, for the period prior to 1.3.2008, the duty cannot be demanded in view of judgement of the Tribunal in case of Ravi Foods Pvt. Ltd. Vs. CCE reported in 2011 (206) ELT 399, that extended period of limitation can not be invoked and hence bulk of the duty demand is time barred, that there is no justification for imposition of penalty and that in view of this the amount of Rs.7,52,166/- already deposited by the appellant during investigation be considered sufficient for compliance with the provisions of Section 35 F and the requirement of pre-deposit of balance amount of duty demand, interest and penalty may be waived for hearing of the appeal and recovery thereof may be stayed till the disposal of the appeal.
4. Shri Sanjiv Jain, the learned Senior Departmental Representative opposed the stay application and reiterating the findings of the Commissioner (Appeals) in the impugned order pleaded that
(a) statements of the dealers to whom the electric relays were being sold indicate that the relays were being sold in retail also at the prices mentioned in the price lists circulated by the appellants and this together with the fact that the goods were being displayed by the dealers in their shops indicates that the electric relays were being sold in retail to individual customers at the retail prices mentioned in the price list circulated by the appellant and, hence, there was requirement to declare the MRP as the package in terms of the provisions of SWM Rules and
(b) although inspite of the requirement to declare MRP on the packages the appellant had not declared the same, the prices for various types of relays mentioned in the price lists were actually the retail price and the same have been correctly adopted for determining the assessable value under Section 4 A and the Tribunals judgement in the case of M/s. Ravi Foods (supra) cited by the learned counsel for the appellant is not applicable to the facts of this case.
5. We have carefully considered the submissions from both the sides. The point of dispute in this case is as to whether the provisions of Section 4 A are applicable to the electric relays of various types being manufactured by the appellants and sold to dealers. For application of Section 4A to any goods manufactured, two conditions must be satisfied - (i) in respect of the goods there is requirement to declared MRP on their packages in terms of the provisions of SWM Act and the Rules made thereunder, (ii) the goods are notified by a notification issued under Section 4 A for determination of assessable value under the provisions of this Section.
5.1 In this case, there is no dispute that the goods are covered by notification issued under Section 4 A. The dispute is only on the point as to whether there is requirement, in terms of the provisions of SWM Act and the Rules made thereunder to declare MRP on the packages in which the goods are sold. According to the appellant, all the relays manufactured by them and sold, including these sold to dealers, are meant for heavy duty electrical installations and are usable only by the industrial or institutional consumers and, hence, there is no requirement to declare MRP in terms of the provisions of Rule 34(a) of SWM Rules, as the same stood during period prior to 13.1.2007 and Rules 2 A ibid, as the same stood during period w.e.f. 13.1.2007. However, according to Department, the goods, in question, are displayed by the dealers in their shops and according to statements of dealers, the same are sold in retail, which indicates that the goods are being sold in retail packages to retail buyers and, therefore, there would be requirement to declare MRP on the packages of the goods.
6. The provisions of SWM Act and the SWM Rules are applicable to pre-packaged commodities , as defined in Rule 2 (l) of SWM Rules which is a commodity placed in a package of whatever nature whether sealed or open, without the purchaser being present, so that the commodity contained therein has a pre-determined value the packaging includes those packagings, where the commodity packed can be taken out for testing or inspection e.g. electric bulbs, switches, etc. The requirement of declaring MRP is on retail packages and the exemption from this requirement is in respect of
(a) packages covered by Rule 2 A i.e. packaged commodities meant for industrial consumers or institutional consumers, as defined in this rule, and packages of Commodity containing more than 25 kgs. or 25 litrs. excluding cement and fertilizer sold in bags upto 50 kgs., and
(b) retail packs covered by Rule 34, which cover retail packs of commodities containing less the 10 gm. or 10 ml. if sold by weight or measure; fast food packages packed by restaurant/hotels, etc. agricultural/ farm produce of above 50 kg. packs and medicines covered under Drugs (Price Control) Order, 1955.
In this case, the records prima facie indicate that the electric relays being manufactured and sold by the appellant are individually packed. Though the appellant plead that these relays are meant for exclusive use of industrial/institutional consumers and cannot be used by individuals, prima facie, there is no evidence in this regard to support this claim. On the contrary, according to the Department, these items, sold to dealers, are displayed by them in their shops and are sold in retail to individual customers.
7. In the case of Controls & Switchgear Contracts Ltd. Vs. CCE, Noida decided by the Tribunal vide judgement reported in 2005 (183) ELT 95, which has been cited by the appellant, Tribunals findings were based on the fact that on each package, there was a specific declaration that the goods were specially packaged for exclusive use of industries as raw materials and are not-intended to the displayed for sale at retail outlets. In this case, there are no such declarations on the packages and, therefore, this judgement, prima facie, is not applicable to the facts of this case.
8. Another plea of the appellant is that during period prior to 1.3.2008, there was no mechanism in form of rules for determining MRP in cases where the same, though required under the law, is not declared and on this basis, relying upon the judgement of Tribunal in case of Ravi Foods(supra), it has been pleaded that demand for period prior to 1.3.2008 can not be raised.
8.1 We are of, prima facie, view that this plea is not acceptable as the records indicate that the dealers were selling the relays from their shops as per the prices mentioned in the price list circulated by the appellant and thus, it cannot be said that retail prices for the goods, in question, did not exist. It is these prices which have been adopted as MRP.
9. As regards limitation, the records indicate that the appellant have not disclosed all the relevant facts to the Department and hence, longer limitation period appears to have been correctly invoked. In any case, the question of limitation is a mixed question of facts and law which can be examined in detail only at the stage of final hearing.
10. In view of the above discussions, the appellant have not been able to establish prima facie case in their favour and hence, this is not a case for total waiver. The appellant are, therefore, directed to deposit an amount of Rs.6.5 Lakhs towards compliance with the provisions of Section 35 F within a period of four weeks from the date of this order. This pre-deposit would be in addition to an amount of Rs.7,52,166/- already deposited by them. Compliance to be reported on 13.06.2012. On deposit of this amount within the stipulated period, the requirement of pre-deposit of balance amount of duty demand, interest and penalty shall sand waived for hearing of this appeal and recovery thereof stayed till the disposal of the appeal.
[pronounced on 8.5.2012.] ( Justice Ajit Bharihoke ) President ( Rakesh Kumar ) Member (Technical) Ckp.
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