2016 (1) TMI 969 - AT - Central Excise

Valuation of Ceramic/ Glazed Tiles - Transaction value u/s 4 or MRP based value u/s 4A - The Department is of the view that the clearances made by the appellant to customers like contractors schools, colleges, hospitals, hotels, builders, etc. are sales to the institutional buyers. Hence, these goods are assessable under Section 4 of the Central Excise Act, 1944. - Held that - As the issue is no more res integra in the light of the decisions of this Tribunal in the case of H & R Johnson (India ) Ltd. (2014 (6) TMI 453 - CESTAT MUMBAI) and NITCO Tiles Vs. CCE, Raigad (2014 (11) TMI 117 - CESTAT MUMBAI), therefore, we hold that the appellant has correctly discharged their duty liability under Section 4A of the Central Excise Act, 1944. Consequently, they are not liable to pay duty as per Section 4 of the Central Excise Act. - Decided in favor of assessee.

Summary

Issues:
Appeal against demand of duty, interest, and penalty based on undervaluation under Section 4 of the Central Excise Act, 1944.

Analysis:
The appellant, a manufacturer of Ceramic/Glazed Tiles, was under scrutiny for selling goods directly to customers like contractors, schools, colleges, hospitals, hotels, builders, etc., apart from sales to dealers. The Department contended that these sales were to institutional buyers, thus assessable under Section 4 of the Central Excise Act, 1944. A show cause notice was issued, leading to the demand of duty, interest, and penalties. The appellant appealed against this order.

The Tribunal referred to similar cases involving ceramic tile manufacturers and institutional buyers, where the issue was whether duty should be paid under Section 4 A or Section 4 of the Central Excise Act, 1944. The Tribunal analyzed the nature of packaging and declarations made on the packages sold to different types of buyers. It noted that the goods were supplied in standard packages with declared MRP, without specific markings for industrial or institutional consumers. Legal Metrology authorities clarified that such goods were not exempt from MRP declaration. The Tribunal also cited the conditions set by the Supreme Court for Section 4 A applicability, emphasizing the requirement of MRP declaration on packages.

Relying on previous decisions and the Supreme Court's stance, the Tribunal concluded that the duty liability for tiles supplied in retail packages to real estate developers and similar buyers should be discharged under Section 4 A of the Central Excise Act, 1944. Therefore, the demands made under Section 4 were deemed unsustainable in law. The Tribunal held that the appellant had correctly discharged their duty liability under Section 4 A, and thus, they were not liable to pay duty under Section 4. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.