2017 (11) TMI 986 - AT - Central Excise

Valuation - cement to its own workers under concessional price - MRP based valuation - Held that - price printed on the packages being the maximum MRP which may be charged from the ultimate customer, duty was required to be paid on such MRP after permissible abatements - The Central Excise duty is payable on MRP as per the Central Excise Act. When it is so, we do not find any reason to interfere with the impugned order - demand of duty sustained. Penalty - Held that - the difference of duty was paid by the appellant suo moto - when the duty is paid suo moto before issuance of show cause notice, penalty is not leviable. Appeal allowed in part.

Summary

Issues:
1. Calculation of excise duty based on Maximum Retail Price (MRP) for cement sold at concessional rates to workers.
2. Applicability of penalty when duty is paid suo moto before issuance of show cause notice.

Analysis:
1. The appellant, engaged in cement manufacturing, sold cement to its workers at a concessional rate of ?100 per bag of 50 kgs, while the printed MRP was ?189 per bag. The duty was discharged at ?350 per metric ton. The department demanded duty at ?600 per metric ton based on MRP, leading to the appeal against Order-in-Appeal No. 358/2010 dated 31.8.2010.

2. The Tribunal observed that duty is required to be paid on the MRP printed on packages after permissible abatements, as it represents the maximum price chargeable to the ultimate customer. Despite the reduced price for workers, duty is payable based on MRP as per Section 4A of the Central Excise Act. The Tribunal agreed with the lower authorities that the reduced price cannot be printed on packages, upholding the demand of duty based on MRP with applicable abatements. The impugned order was sustained, directing the computation of duty difference with interest from the appellant.

3. Regarding penalty, the Tribunal referenced the Gujarat High Court case of CCE vs. Tripura Containers, establishing that when duty is paid suo moto before the issuance of a show cause notice, penalty is not leviable. Consequently, the penalty was canceled even though the duty demand was sustained. The appeal filed by the appellant was partially allowed, maintaining the duty demand but canceling the penalty.