2013 (4) TMI 82 - AT - Central Excise

Undervaluation - MRP Valuation u/s 4A - Respondent is engaged in the manufacture of Detergent Cake. The respondent cleared product weighing differently respectively at the same MRP. - Held that - Undisputedly the respondents had cleared product on payment of duty calculated in terms of Section 4A of the Central Excise Act, 1944. Contention of the appellant (revenue) is misconceived for the reason that Explanation 2 to Section 4A deals with the situation where on the same package of an excisable goods more than one MRP is declared. - Merely because under marketing scheme the respondent had cleared detergent bar of 300 gms. at the rate equivalent to the detergent cake of 250 gms., it cannot be said that Section 4A of the Central Excise Act, 1944 would not come into play and the transaction value for the purpose of excise duty is to be assessed as per Section 4 of Central Excise Act. Thus, we find no merit in the appeal.

Summary

Issues:
- Appeal against order confirming dropping of excise duty demands
- Interpretation of Section 4A of the Central Excise Act, 1944
- Valuation of detergent cakes for excise duty purposes

Analysis:

1. The judgment involves an appeal against an order confirming the dropping of excise duty demands raised through show cause notices. The appeals relate to a specific show cause notice from June and July 1998, involving a duty demand of Rs. 10,18,953.

2. The facts of the case revolve around the respondent, a detergent cake manufacturer, clearing "Wheel Blue Cakes" of 250 gms. and 300 gms. at the same MRP of Rs. 5.25 per cake. The dispute arose when the appellant alleged undervaluation of the 300 gms. cakes for excise duty purposes, leading to the issuance of show cause notices. The Assistant Commissioner and the Commissioner (Appeals) both ruled in favor of the respondent, stating that excise duty was correctly paid based on MRP as per Section 4A of the Central Excise Act, 1944.

3. The argument presented by the appellant's learned AR focused on Explanation 2 to Section 4A, emphasizing that since goods of the same quality and brand were cleared at different prices, the higher valuation should apply for excise duty calculation. On the other hand, the respondent's representative contended that excise duty was correctly paid based on MRP as per the Act.

4. The Tribunal considered the contentions of both parties and examined the legal provisions. It was noted that the detergent cakes were subject to the Standards of Weights and Measures Act, requiring declaration of MRP and weight on the packets. Since the respondent cleared the goods based on MRP, Section 4A, which deals with valuation of excisable goods with reference to retail sale price, was applicable.

5. The Tribunal clarified that Explanation 2 to Section 4A applies when multiple MRPs are declared on the same package, which was not the case here. Therefore, the contention that the 300 gms. detergent cakes should be valued higher due to different assessable values of packets was deemed misconceived. The Tribunal upheld that Section 4A governs the valuation for excise duty purposes in this scenario.

6. Consequently, the Tribunal dismissed the appeal, stating that the impugned order was legally sound and upheld the respondent's payment of excise duty based on MRP as per Section 4A of the Central Excise Act, 1944.