2014 (11) TMI 117 - AT - Central Excise

Valuation of goods - MRP based valuation or Transaction Value - Section 4 or section 4A of Central Excise Act - revenue is of the view that tiles have been cleared to industrial or institutional consumers, they are not required to discharge Central Excise duty as per Section 4A as clearance to these institutional or Industrial Consumer is exempt to affix MRP - Held that - As the goods were already manufactured and intended for retail sale, therefore, they have correctly discharged the duty and the goods cleared in bulk does not mean that they are meant for industrial/Institutional consumers. It should be meant for Industrial/Institutional consumers under the Standard Weights & Measures Rules to pay duty under Section 4 of the Central Excise Act, 1944. appellant has rightly discharged their duty liability. Accordingly, impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
Central Excise duty demand on ceramic tiles sold to institutional/industrial buyers under Section 4 vs. Section 4A of Central Excise Act, 1944.

Analysis:
The appellant, a ceramic tile manufacturer, appealed against a demand for Central Excise duty, interest, and penalty on sales to institutional/industrial buyers, arguing they correctly discharged duty under Section 4A. The revenue contended that duty should be paid under Section 4 for sales to such consumers exempt from affixing MRP. The key dispute was whether the goods were intended for retail sale or industrial/institutional use.

The appellant maintained that all tiles, even those sold in bulk, were intended for retail sale as per Package Commodity Rules, thus correctly paying duty under Section 4A. They cited a similar case precedent where duty was rightly discharged under Section 4A. The revenue argued that as per Rule 2A, goods for industrial/institutional consumers didn't require MRP, necessitating duty under Section 4.

Upon review, the Tribunal found that the appellant consistently affixed MRP on tiles, indicating retail sale intent. Purchase orders and swift supply confirmed goods were for retail, not industrial/institutional use. Citing legal clarifications and precedents, the Tribunal upheld that duty under Section 4A was appropriate for tiles intended for retail sale, setting aside the demand under Section 4.

The Tribunal emphasized that for duty under Section 4A, goods must be excisable, sold in packages with MRP requirements, and specified by the Central Government. Precedents supported duty under Section 4A for bulk sales in retail packages. As the goods were manufactured for retail sale, the Tribunal ruled the duty was correctly discharged under Section 4A, not Section 4 for industrial/institutional consumers.

In conclusion, the Tribunal held that the appellant correctly discharged duty under Section 4A for tiles intended for retail sale, setting aside the impugned order. The appeal was allowed, granting consequential relief as per law.