2017 (10) TMI 646 - AT - Central Excise

Valuation - price-variation clause - Colour Television of various sizes and models - demand was raised on the assumption that the price difference between the branch of the appellant and the dealer has varied - Held that - There is no investigation, as regards whether there is an increase in the MRP at the time of sale of the CTVs from the dealers to the customers - Revenue could not establish that the appellants have sold the goods at a price and MRP which is more than the MRP declared on the products - demand does not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Assessment of duty on Retail Sale Price (RSP) for Colour Television (CTVs) sold by the appellant.
- Allegations of lowering RSP of CTVs and differential duty demand.
- Arguments regarding the effect of revised MRP, credit notes, and duty payment based on declared MRP.
- Dispute over the duty liability due to variations in prices between branches and dealers.
- Interpretation of Section 4A for excise duty payment based on MRP declared at the time of clearance.
- Conclusion on the demand for differential duty and the decision of the appellate tribunal.

Analysis:
The case involved the assessment of duty on Retail Sale Price (RSP) for Colour Televisions (CTVs) sold by the appellant. It was alleged that the appellant lowered the RSP of CTVs during a specific period, leading to a demand for differential duty. The investigation revealed discrepancies between the RSP declared at the factory and the prices at which the CTVs were sold by branches to dealers. The appellant argued that the goods were sold at RSP fixed at the time of clearance, and any subsequent price adjustments did not impact the duty liability as long as the sale price remained below the MRP. The duty was paid based on the MRP declared at clearance, even if the actual sale price was lower.

The Revenue contended that the duty demand was justified due to price variations between branches and dealers, resulting in underpayment of duty. However, the appellate tribunal analyzed the case and emphasized that the duty liability is determined by the MRP declared at the time of clearance, not the actual transaction prices. The tribunal noted that the duty had been paid based on the higher MRP declared initially, despite the goods being sold at lower prices later. As per Section 4A, the duty payment is linked to the declared MRP, and any discrepancies in actual sale prices do not affect the duty liability if the MRP at clearance was correctly considered.

Ultimately, the tribunal ruled in favor of the appellant, stating that the Revenue failed to prove that the goods were sold at prices exceeding the declared MRP. Without evidence of such discrepancy, the demand for differential duty was deemed unsustainable. Consequently, the impugned order was set aside, and the appeal was allowed, absolving the appellant of the duty demand. The judgment clarified the significance of MRP declaration at clearance for excise duty assessment, highlighting that actual transaction prices between manufacturer and dealer are irrelevant for duty calculation under Section 4A.