2016 (11) TMI 1115 - AT - Central Excise

Valuation - assessable value u/s 4A of Central Excise Act, 1944 - appellant statutorily required to affix MRP on the individual package since such package was not exempted under Clause A of Sub-rule 2 of Rule 34 of Weights & Measures Act, 1977 and if the goods in question are excluded under Rule 34 of Standards of Weights & Measures (Packaged Commodities) Rules, 1977, then only they are out of the operation of Section 4A ibid - Held that - sub-section (1) of Section 4A of Central Excise Act, 1944, provides that provisions of sub-section (2) of said Section 4A shall apply only to such specified goods in respect of which Central Government has issued a notification specifying them under the provisions of sub-section (1) of said Section 4A. Sub-section (2) of Section 4A ibid provided that in respect of such goods which are specified under said sub-section (1), the value for the purpose of assessment of duty shall be deemed to be retail sale price declared on such goods less such amount of abatement allowed by notification issued in the official gazette and for such goods anything contained in Section 4 ibid shall not be applicable. So, once goods are covered by notification issued under Section 4A, then irrespective of any other consideration such as whether the supply is in wholesale or in retail, provisions of Section 4 are not applicable to such goods. The Notification No. 5/2001 dated 01-03-2001 was issued under Section 4A ibid and Electric fans were covered at Serial No. 55 of said notification. Therefore, provisions of Section 4 was not applicable for arriving at assessable value in respect of Electric fans during the period covered by Show Cause Notice related to appeals in hand. We, therefore, hold that both the Show Cause Notices relevant to the appeals in hand were issued without authority of law and with wrong interpretation of the provisions of Section 4 and 4A of Central Excise Act, 1944 - appeal allowed.

Summary

Issues:
- Interpretation of Section 4A of the Central Excise Act, 1944 for valuation of specified goods
- Applicability of Section 4 for valuation when goods are covered by a notification under Section 4A
- Assessment of differential Central Excise duty on goods supplied against DGS&D rate contract

Analysis:

1. Interpretation of Section 4A for Valuation of Specified Goods:
The case involved a dispute regarding the valuation of Electric fans supplied against DGS&D rate contract by the appellant. The Revenue contended that the goods did not attract the provisions of Section 4A of the Central Excise Act, 1944, and should be assessed under Section 4. The appellant argued that the goods were covered by a notification under Section 4A, making the assessment under Section 4A appropriate. The Tribunal analyzed Section 4A, which specifies that for goods covered by a notification under this section, the valuation shall be based on the retail sale price less abatement, and Section 4 shall not be applicable. The Tribunal found that the Electric fans in question were covered by a notification under Section 4A, and therefore, the provisions of Section 4 were not applicable for valuation. The Tribunal held that the Show Cause Notices were issued without authority of law and with a wrong interpretation of the provisions of Section 4 and 4A.

2. Applicability of Section 4 for Valuation When Goods Covered by Notification Under Section 4A:
The appellant contended that once goods are specified under Section 4A, Section 4 is not applicable for valuation. The Tribunal examined the provisions of Section 4A and the notification issued under it, which specified the goods manufactured by the appellant. The Tribunal noted that when goods are covered by a notification under Section 4A, the provisions of Section 4 are not applicable for valuation purposes. The Tribunal referred to relevant case laws supporting this interpretation and concluded that the goods in question were covered by the notification under Section 4A, making the assessment under Section 4 appropriate. The Tribunal set aside the Order-in-Original and Order-in-Appeal, allowing the appeals with consequential relief to the appellant.

3. Assessment of Differential Central Excise Duty on Goods Supplied Against DGS&D Rate Contract:
The appellant had supplied Electric fans against DGS&D rate contract, leading to a dispute regarding the assessment of Central Excise duty. The Revenue proposed demands for differential Central Excise duty, interest, and penalties based on their interpretation of the applicable provisions. The Tribunal, after considering the arguments and provisions of the Central Excise Act, found that the assessment under Section 4A was appropriate for the goods supplied against the DGS&D rate contract. The Tribunal held that the demands made by the Revenue were not valid, as the goods fell under the purview of the notification issued under Section 4A, and thus, the differential duty was not payable by the appellant. The Tribunal allowed the appeals and provided relief to the appellant accordingly.

In conclusion, the Tribunal's judgment clarified the interpretation of Section 4A for valuation of specified goods, emphasized the inapplicability of Section 4 when goods are covered by a notification under Section 4A, and resolved the dispute regarding the assessment of Central Excise duty on goods supplied against DGS&D rate contract in favor of the appellant.