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2014 (3) TMI 164 - AT - Central ExciseUndervaluation - MRP based valuation u/s 4A - change in MRP subsequent to removal of goods - non declaration of the actual MRP on ceramic glazed tiles and vitrified tiles - two periods i.e. prior to 01.03.2008 and post 01.03.2008. - demand of differential duty and levy of penalty - Held that - 3 decisions of the Tribunal i.e. M/s Millennium Appliances India Ltd 2009 (3) TMI 855 - CESTAT, BANGALORE , M/s Ravi Foods Pvt. Ltd. 2010 (12) TMI 290 - CESTAT, BANGALORE , M/s ABB Ltd 2010 (12) TMI 1027 - CESTAT, BANGALORE have held a view that prior to 01.03.2008, in the absence of any provisions for re-determining the RSP, in the form of prescribed rules, the Revenue authorities cannot re-determine the RSP under any of the provisions available to them. It has to be noted that there is no contrary view which has been taken by the Tribunal. The ratio laid down by Apex Court in the case of M/s Mahim Patram Pvt. Ltd. 2007 (2) TMI 73 - SUPREME COURT OF INDIA does not in any manner support the case of the Revenue. There being no contrary judgment to the views expressed by the 3 decisions of the co-ordinate benches of the Tribunal on this issue, even assuming that there was mis-declaration of RSP, period prior to 01.03.2008 the RSP cannot be re-determined by the Revenue in any manner. Yet another angle to the entire case is absence of evidence as to there being alteration of RSP; in as much as when the investigations were conducted by the authorities, we find that the investigating authorities have not seized a single carton of the offending goods in the Pan India operation at different dealers premises, wherein different RSP was declared. It would be beyond imagination that the dealers could not have had any stocks of glazed/vitrified tiles received from the appellants, in their hands when the investigation took place. In the absence of such a crucial evidence, we are unable to hold that the appellant herein can be saddled with a liability of Central Excise duty based upon re-determined RSP, for the period prior to 01.03.2008. Further, the manufacturers may be unaware that the RSP on the box was obliterated or altered after the removal from their place of manufacturer, as none of the dealers have stated that the RSPs were changed on direction of manufacturer; or manufacturer was instrumental to order such a charge. Demand set aside - Decided in favor of assessee.
Issues Involved:
1. Valuation of final products cleared by the appellant. 2. Determination of the correct Maximum Retail Price (MRP)/Retail Sale Price (RSP) for the period prior to 01.03.2008 and post 01.03.2008. 3. Legality of re-determining MRP/RSP by the Revenue authorities. 4. Evidence of under-valuation and additional consideration. Analysis of the Judgment: 1. Valuation of Final Products Cleared by the Appellant: The core issue in these appeals is the valuation of ceramic glazed tiles and vitrified tiles manufactured by the appellants. The Revenue alleged that the appellants were engaged in large-scale evasion of Central Excise duty by not declaring the actual MRP on their products and invoices, leading to under-valuation. The appellants contested this, asserting that they had declared the correct MRP and discharged the duty accordingly. The adjudicating authority confirmed the demand based on evidence, including statements from dealers and shroffs/angadias, indicating additional consideration flowing back to the manufacturers. 2. Determination of Correct MRP/RSP for the Period Prior to 01.03.2008 and Post 01.03.2008: The appellants argued that the provisions of Section 4A of the Central Excise Act, 1944, which deals with valuation based on MRP, underwent changes effective from 01.03.2008. Before this date, there were no prescribed rules for re-determining MRP/RSP, making any such re-determination by the Revenue authorities legally untenable. The Tribunal agreed with this argument, citing previous judgments (e.g., Millennium Appliances India Ltd., Ravi Foods Pvt. Ltd., ABB Ltd.) that held re-determination of MRP/RSP prior to 01.03.2008 was not permissible due to the absence of prescribed rules. 3. Legality of Re-determining MRP/RSP by the Revenue Authorities: The Tribunal noted that the provisions of sub-section (4) of Section 4A, which allowed for the re-determination of MRP/RSP, were enacted on 14.05.2003. However, the rules prescribing the manner for such re-determination were only introduced via Notification No. 13/2008-CE(NT) on 01.03.2008. This gap meant that any re-determination of MRP/RSP by the Revenue for the period prior to 01.03.2008 was without legal backing. The Tribunal emphasized that the law requires specific rules to be framed for such re-determination, which were absent before 01.03.2008. 4. Evidence of Under-valuation and Additional Consideration: The Revenue's case was built on evidence from statements of dealers and shroffs, indicating that the appellants received additional cash payments over the invoiced amounts. The Tribunal found that while these statements suggested under-valuation, there was no concrete evidence showing that the appellants themselves altered the MRP on the tiles. The Tribunal highlighted the lack of seizure of any cartons with altered MRPs during the investigation, which weakened the Revenue's case. The Tribunal also noted that the manufacturers consistently declared an MRP on the boxes at the time of clearance, and any alteration post-clearance was not attributable to them. Conclusion: The Tribunal concluded that for the period prior to 01.03.2008, the re-determination of MRP/RSP by the Revenue was not legally sustainable due to the absence of prescribed rules. For the period post 01.03.2008, the Tribunal did not find sufficient evidence to support the Revenue's claims of under-valuation and additional consideration. Consequently, the appeals were allowed, and the demands and penalties imposed by the adjudicating authority were set aside.
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