2009 (5) TMI 766 - AT - Central Excise

Valuation - MRP based valuation - Section 4A of the Central Excise Act, 1944 - Held that - Where there is no requirement for declaring retail sale price, the provisions of Section 4 A will not get attracted - the respondent is not declaring the retail sale price on packages cleared to Indian Army/ITBP and is clearly indicating that the goods are for specific use of defence services only - appeal dismissed - decided against Revenue.

Issues Involved:
1. Applicability of Section 4A of the Central Excise Act, 1944 for assessment of soluble instant coffee supplied to Indian Army/ITBP.
2. Requirement of affixing MRP on packaged commodities supplied to Indian Army/ITBP.
3. Invocation of the extended period of limitation under proviso to Section 11A(1) of the Central Excise Act, 1944.
4. Allegation of suppression of facts by the assessee.

Issue-wise Detailed Analysis:

1. Applicability of Section 4A of the Central Excise Act, 1944:
The primary issue was whether the soluble instant coffee supplied to the Indian Army/ITBP should be assessed under Section 4A of the Central Excise Act, 1944, which involves valuation based on the Maximum Retail Price (MRP), or under Section 4, which involves transaction value. The assessee had been assessing the goods under Section 4, arguing that the goods were supplied without printing MRP and were not intended for retail sale. The Commissioner of Central Excise, Mysore, concluded that the provisions of Section 4A were not applicable as the goods were not meant for retail sale, supported by judicial pronouncements in similar cases (e.g., Commissioner of C. Excise and Customs, Bhubaneshwar v. Mehar Shoes Industries and M/s. ITI Limited v. Commissioner of C.Excise, Allahabad).

2. Requirement of Affixing MRP:
The Assistant Controller from the Metrology Department clarified that there was no exemption from affixing MRP on packaged commodities supplied to Indian Army/ITBP as per Rule 6(1)(f) of the Standards of Weights and Measures (Packed Commodities) Rules, 1977. However, the Commissioner of Central Excise found that these provisions only applied to retail sales, not to goods not meant for sale, thus rendering the Metrology Department's clarification irrelevant to the case.

3. Invocation of the Extended Period of Limitation:
The demand for differential duty was for the period from February 2004 to September 2006, with the show cause notice issued on December 1, 2006. The Commissioner noted that the department was fully aware of the nature of transactions as early as April 2002, when the assessee informed them about the duty discharge based on invoice value. Therefore, the demand for the period from February 2004 to November 2005 was deemed time-barred, and the extended period of limitation could not be invoked.

4. Allegation of Suppression of Facts:
The revenue alleged that the assessee suppressed facts by not disclosing sales to the Indian Army/ITBP in their monthly ER-I returns, intending to evade higher excise duty. However, the Commissioner found that the assessee had informed the department about their duty discharge method, negating the suppression allegation. The Tribunal supported this view, citing that the goods were marked for specific use by defense services and not for retail sale.

Conclusion:
The Tribunal upheld the Commissioner's order, rejecting the revenue's appeal. It was held that the provisions of Section 4A were not applicable as the goods were not intended for retail sale, and the extended period of limitation could not be invoked due to the department's prior knowledge of the transactions. The Tribunal relied on the Supreme Court's judgment in Jayanthi Food Processing Pvt. Ltd. v. Commr, which clarified that Section 4A applies only where there is a legal requirement to declare retail sale price on packages. Thus, the appeal by the revenue was dismissed.

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