2014 (8) TMI 216 - AT - Central Excise

Valuation - labelling of goods has to be undertaken in bond prior to ex-bond clearances - Whether the excise duty demanded on the basis of MRP is a revenue neutral exercise inasmuch as the appellant has discharged CVD liability on the imported goods on the same MRP - Held that - appellants would have been entitled to CENVAT credit of the CVD paid on the imported goods, even if there was a variation in the MRP declared to the Customs and the MRP on which excise duty liability is being demanded. In these circumstances, we are of the view that the matter has to go back to the adjudicating authority for verification of the fact whether MRP on which CVD liability has been discharged and the MRP on which excise duty is being demanded are one and the same. If they are found to be same, the question of demand of any excise duty liability would not arise at all. The appellants are directed to furnish before the adjudicating authority all the evidences by way of Bills of Entry and other documentary evidences in support of their contention that they have discharged CVD liability on the same MRP on which excise duty is being demanded vide the impugned notice and the order. - Matter remanded back - Decided in favour of assessee.

Summary

Issues: Duty demand confirmation, penalty imposition, goods confiscation, redemption fine, penalty on individual, revenue neutrality of excise duty, verification of MRP.

Duty Demand Confirmation and Penalties:
The judgment involves appeals and stay petitions against an Order-in-Original confirming a duty demand of significant amounts against two companies for specific periods. The duty demand was accompanied by penalties, confiscation of goods, and imposition of fines on the appellants and an individual. The appellants challenged these decisions before the tribunal, seeking relief from the confirmed demands and penalties.

Revenue Neutrality of Excise Duty and Verification of MRP:
The appellants, engaged in trading imported healthcare products and cosmetics, argued that the activities they undertook, such as labeling and packing, were revenue neutral. They contended that the CVD liability discharged on the goods matched the MRP on which the excise duty was demanded. They highlighted that the CVD paid would be available as CENVAT credit for excise duty discharge. The tribunal noted that this crucial aspect was not verified by the adjudicating authority. Therefore, the tribunal directed the matter to be remanded for verification of whether the MRP for CVD liability and excise duty was the same. The appellants were instructed to provide documentary evidence to support their claim during the verification process.

Conclusion:
The tribunal allowed the appeals by way of remand, emphasizing the need for verification regarding the MRP issue. The stay petitions were also disposed of accordingly. Additionally, a copy of the order was to be sent to the Chief Commissioner of Central Excise for necessary directions to prevent unnecessary litigation. The judgment focused on the crucial aspect of revenue neutrality in excise duty demands and the importance of verifying the consistency of MRPs for CVD and excise duty liabilities.