2006 (3) TMI 392 - AT - Central Excise

Summary

Issues:
Assessment of excise duty based on declared vs. actual retail sale price; Treatment of rental charges for bottles in valuation.

Analysis:
The judgment by the Appellate Tribunal CESTAT, New Delhi involved a case where the appellant, a bottler of soft drinks, was contesting excise duty demands for the period June 1999 to May 2000. The issue revolved around the valuation of soft drinks for excise duty purposes under Section 4A of the Central Excise Act. The appellant had valued the soft drinks based on declared prices, but subsequent show cause notices alleged that the actual retail sale price was higher than the declared price. The authorities relied on evidence from dhabas and hotels selling the soft drinks at a higher price, along with rental charges collected for bottles, to support the duty demand.

The appellant argued that duty payment should be based on the declared retail price less any abatement, as per Section 4A, and that the actual sale price should not replace the declared price for assessment purposes. Additionally, they contended that treating rental charges for bottles as a flow-back was incorrect. The appellant also questioned the reliability of evidence regarding the higher actual sale price and their involvement in it, suggesting that the higher prices in certain outlets were due to other factors like cooling and serving charges.

During the proceedings, the appellant referred to a Supreme Court judgment and a Tribunal decision to support their stance. The Supreme Court ruling emphasized that the declared maximum retail price (MRP) is conclusive for excise assessment, and differential duty cannot be demanded based on actual retail prices exceeding the declared MRP. The Tribunal decision highlighted that hire charges for bottles should not be included in the assessable value of beverages.

Ultimately, the Tribunal found the impugned order unsustainable due to the legal provisions under Section 4A, which mandate assessment based on declared prices with abatement. The judgment emphasized that actual retail prices should not replace declared prices for valuation and that rental charges for bottles are separate from the value of goods sold in them. The appellant's declared prices were deemed sufficient to cover costs and profits in the distribution chain, leading to the setting aside of the impugned order and allowing the appeals in favor of the appellant.