2013 (11) TMI 489 - AT - Central Excise

Valuation - MRP Based duty u/s 4A or transaction value u/s 4 Goods sold as retail packages solvents, industrial adhesives, sealants and other chemicals - Held that - With effect from 13-1-2007, the Packaged Commodities Rules, 1977 was amended whereby only when the goods are sold directly by the manufacturer/packer to industrial or institutional consumers, there were excluded from the provisions of Packaged Commodities Rules - When the goods are sold through dealers/distributors in retail packages by affixing labels indicating MRP, the obvious conclusion is that the goods are meant for retail sale - Prima facie, the demand of differential central excise duty in respect of the goods manufactured by the appellant for the period from 13-1-2007 to 14-5-2008 is sustainable in law. Imported and traded goods Activity of re-labeling amounts to manufacture as per section 2 (f) of Central excise act - Mis-declaration by the assessee Goods were not captively used but traded - Held that - The requirement of affixing MRP was statutorily provided for in Rule 2(p) of Packaged Commodities Rules as the same applied to imported packages also. Therefore, it was incumbent upon the importer to get the re-labeling done before they were cleared through the Customs - The appellant declared in the import documents that the goods are meant for captive use and not for trading - there was a clear mis-declaration on the part of the appellant. Extended period of limitation Waiver of Pre-deposit Held that - The extended period of time has also been correctly invoked for demand of excise duty - the goods in respect of which the claim is made is not covered by the Third Schedule of the Act, this claim would need verification also, the claim for Cenvat Credit of the duty paid on imported goods also would need verification which can be done at the time of final disposal - appellant has not made out any prima facie case for complete waiver of the pre-deposit of the dues the appellant directed to make a pre-deposit of Rs. 2 crore - upon such submission rest of the duty to be waived till the disposal Partial stay granted.

Summary

Issues:
1. Duty liability on goods sold in retail packages.
2. Applicability of Section 4A of the Central Excise Act.
3. Time-barred demand.
4. Mis-declaration and evasion of duty on imported goods.
5. Prima facie case for pre-deposit waiver.

Analysis:

1. Duty liability on goods sold in retail packages:
The appellant, a manufacturer of various chemicals, including solvents and adhesives, sold goods in retail packages through dealers/distributors. The Central Excise Department found discrepancies in the duty payment method as the appellant discharged duty liability based on transaction value rather than the Maximum Retail Price (MRP) declared on the retail packages. The Tribunal upheld the duty demand for the period before the appellant started affixing MRP labels, emphasizing that selling goods in retail packages with MRP indicates they are meant for retail sale.

2. Applicability of Section 4A of the Central Excise Act:
The appellant contested the duty demand under Section 4A, arguing that they supplied goods to industrial consumers and were not covered under the Packaged Commodities Rules (PCR). However, the Tribunal found that the goods were sold through dealers/distributors in retail packages, making them liable under Section 4A. The Tribunal ruled that the demand for excise duty on manufactured goods was sustainable under the law.

3. Time-barred demand:
The appellant raised the issue of the demand being time-barred, but the adjudicating authority confirmed the duty demands for both manufactured and traded goods along with penalties. The Tribunal did not find merit in the time-barred argument and upheld the duty demands for the specified period.

4. Mis-declaration and evasion of duty on imported goods:
Regarding the imported goods, the appellant declared them for captive use to avoid duty payment based on MRP at the time of importation. Statements from various individuals associated with the import process revealed mis-declaration and willful suppression of information by the appellant. The Tribunal concluded that the imported goods were meant for retail sale based on evidence of re-labeling and affixing MRP, leading to duty liability under the Central Excise Act.

5. Prima facie case for pre-deposit waiver:
The Tribunal considered the appellant's submissions for a pre-deposit waiver but found no prima facie case for complete waiver. The balance of convenience favored ordering a pre-deposit to safeguard the revenue's interest. The Tribunal directed the appellant to make a pre-deposit and report compliance within a specified period, with the possibility of waiving the balance of dues upon compliance.

This detailed analysis of the judgment highlights the key issues addressed by the Tribunal concerning duty liability, applicability of relevant legal provisions, time-barred demands, mis-declaration on imported goods, and the criteria for pre-deposit waiver.