2017 (8) TMI 216 - AT - Central Excise

Valuation - MRP Based valuation - it was seen that the appellant had adopted different prices for different branches / areas where the washing machines are to be sold and thus appellants had discharged duty liability on different assessable value - Held that - The consumer cannot be charged a price higher than the MRP. Assessment value of such commodities for the purpose of discharge of Central Excise duty is governed by the provisions of Section 4A of the CEA, 1944. There is no allegation in the SCN that the appellants have altered the MRP. There is also no allegation or evidence that the goods which were transferred from lower MRP to higher MRP branches, they were sold to customers only on the higher MRP. This being so, there is a clear observation and finding in the impugned order by Commissioner (Appeals) that the appellants have altered the MRP and therefore is liable to pay differential duty which in our view is factually wrong - where retail sale price declared on the packet is altered to increase the retail sale price, such altered retail sale price shall be deemed to be the retail sale price. The said amendment having come into effect on 14.5.2003, the demand made for the period prior to 13.5.2003 is not sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of Section 4A of the Central Excise Act, 1944 regarding duty liability on washing machines sold at different MRPs in various regions and subsequent inter-branch transfers leading to differential duty demands.

Analysis:
The case involved manufacturers of washing machines who were discharging duty liability based on MRP with abatement @ 40% under Section 4A of the Central Excise Act, 1944. Discrepancies arose when the appellants cleared goods to different branches at varying MRPs and later transferred them between branches with different MRPs, leading to differential duty demands. The original authority confirmed duty demands for the period from 12.5.2000 to 13.5.2003, which was upheld by the Commissioner (Appeals), prompting the appeal.

The appellant argued that the show cause notice was based on an erroneous interpretation of an amendment to Section 4A in 2003, emphasizing that they had not altered the MRPs but only transferred goods between branches for commercial reasons. The appellant contended that the Commissioner (Appeals) incorrectly concluded that MRPs were altered during inter-branch transfers, which was factually incorrect. The Tribunal noted that the law during the disputed period required the retail sale price declared in different areas to be considered for valuation, and any alteration in retail sale price was deemed to be the new price only after the 2003 amendment. As there was no evidence of MRP alteration during transfers, the demand for the period before 13.5.2003 was deemed unsustainable.

The Tribunal observed that the Maximum Retail Price (MRP) affixation is regulated by the Legal Metrology Act, and the assessment value for excise duty is governed by Section 4A of the Central Excise Act. It was noted that there was no evidence of MRP alteration during transfers or that goods sold at lower MRP branches were priced higher at higher MRP branches. The Tribunal concluded that the demands were unsustainable, setting aside the impugned order and allowing the appeal with any consequential relief.

Additionally, a miscellaneous application by the department for a change of cause title was dismissed as the concept of LTU (Large Taxpayer Unit) was deemed irrelevant after the implementation of GST, rendering the application inconsequential.