2013 (9) TMI 694 - AT - Central Excise

Application of Section 4A - MRP based duty - Commissioner upheld duty and penalty u/s 11A - Held that - The goods cleared in loose condition to spare parts division for being packed for retail sale are not the packaged commodity and hence there would be no requirement to declare MRP and the provision of Section 4A would not have applicable - provisions of Section 4A are not attracted to goods cleared by their Daruhera Unit to their spare parts division - Following decision of Jayanti Food Processing (P) Ltd. v. CCE, Rajasthan 2007 (8) TMI 3 - Supreme Court and Malhotra Shaving Products (P) Ltd. v. CCE, Hyderabad 2009 (8) TMI 489 - CESTAT, BANGALORE - Decided in favor of assessee.

Summary

Issues:
1. Applicability of duty payment provisions on goods cleared in loose condition.
2. Interpretation of Section 4A in relation to goods cleared for re-packing.
3. Justification for invoking extended period and imposition of penalty.

Issue 1: Applicability of duty payment provisions on goods cleared in loose condition:
The appellant, engaged in manufacturing motorcycles and parts, cleared goods in bulk to their spare parts division for re-packing. The dispute arose regarding duty payment on these goods, with the department claiming duty under Section 4A, while the appellant paid duty based on cost of production. The Tribunal analyzed the situation and held that since the goods were cleared in loose condition for re-packing, the duty should not be based on Section 4A. The Tribunal referred to previous judgments, emphasizing that duty under Section 4A is applicable only to goods packaged for retail sale, not to goods cleared in bulk for subsequent packaging. Consequently, the Tribunal set aside the duty demands and penalties imposed on the appellant.

Issue 2: Interpretation of Section 4A in relation to goods cleared for re-packing:
The Commissioner had upheld the duty demands against the appellant under Section 4A for goods cleared to the spare parts division for re-packing. However, the Tribunal disagreed with this interpretation. Citing the Apex Court's judgment in a similar case, the Tribunal clarified that the requirement to declare MRP under SWM Rules applies only to commodities packaged for retail sale. Since the goods in question were cleared in loose condition for re-packing, the Tribunal ruled that Section 4A did not apply. The Tribunal distinguished this case from previous judgments where goods were cleared in packed condition for retail sale, emphasizing the specific circumstances of loose goods being re-packed. Consequently, the duty demands and penalties were deemed unsustainable by the Tribunal.

Issue 3: Justification for invoking extended period and imposition of penalty:
The appellant contested the justification for invoking the extended period and imposing penalties, arguing that there was no suppression of facts or intention to evade duty payment. The appellant also highlighted the revenue-neutral aspect of duty payment between units. The Tribunal considered these arguments but focused on the core issue of duty payment provisions. Since it ruled in favor of the appellant on the duty payment aspect, the Tribunal found the extended period invocation and penalties unwarranted. Consequently, the Tribunal set aside the orders confirming duty demands and penalties, allowing the appeals filed by the appellant.

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