2017 (12) TMI 1369 - AT - Central Excise

Valuation - MRP based valuation u/s 4A - branded and unbranded readymade garments (RMG) falling under sub-heading 6204 69 90 of Central Excise Tariff Act, 1985 - Confiscation on the ground of failure to affix MRP on the branded readymade garments - Held that - Only such goods can be notified under Section 4A in relation to which the retail sale price is required to be declared on the package under the provisions of Legal Metrology Act, 2009. The goods which are covered for assessment u/s 4A have been notified by the Government from time to time under N/N. 49/2008 CENT dated 24-12-2008(as amended) - on a perusal of this notification it is seen that readymade garments are not specified in the said notification leading to the conclusion that at the relevant time, these goods were not covered under Section 4A - confiscation set aside. The duty is liable to be paid on the subjected goods by considering assessable value of such branded goods at the rate of 60 per cent of the retail sale prices in terms of the Tariff Value fixed by the Government as per N/N. 8/2001/CE(NT) dated 1-3-2001 as amended by N/N. 20/2001 dated 30-4-2001 - Since, the goods have been manufactured during the period when duty was liable to be paid on RMG with brand name, the duty demand amounting to ₹ 2,25,371 raised by the lower authorities under Section 11A of the Central Excise Duty Act, 1944 are to be upheld - The penalty imposed on M/s Om Sai Garments as well as M/s Om Sai Traders are also upheld. The penalty on Shri Rajiv Khera imposed under Rule 26 is set aside since penalty already stands imposed on the firm. Appeal allowed in part.

Summary

Issues:
1. Confiscation of readymade garments for failure to affix MRP.
2. Applicability of Central Excise Duty on branded readymade garments.
3. Justifiability of redemption fine imposed on seized goods.

Analysis:
1. The appellant's premises were searched, leading to the detention and subsequent seizure of readymade garments for non-production of legal documents. The lower authorities ordered confiscation based on the failure to affix Maximum Retail Price (MRP) on branded garments, assuming they were chargeable to Central Excise Duty under Section 4A. However, it was found that readymade garments were not specified under the relevant notification at that time, rendering the confiscation unjustified. Therefore, the confiscation order was set aside.

2. Central Excise Duty was levied on branded readymade garments for a specific period, and the investigation revealed that the appellant was involved in manufacturing garments with specific brand names. Despite the seized goods not bearing brand names, statements confirmed their clearance with brands. The duty demand was upheld based on the assessable value of the goods at 60% of the retail sale prices in accordance with Tariff Values fixed by the Government. The duty demand under Section 11A of the Central Excise Duty Act, 1944, was upheld, along with penalties on the appellant entities. However, the penalty on an individual was set aside due to an existing penalty on the firm.

3. The redemption fine imposed on the seized goods was considered unreasonable by the appellant. However, the Department justified the fine, linking it to the value of the goods. The Tribunal did not specifically address the redemption fine in its analysis but focused on the justifiability of duty demands and penalties. The order partially allowed the appeals, setting aside the confiscation order while upholding duty demands and penalties.

This detailed analysis of the judgment highlights the key issues of confiscation, Central Excise Duty applicability, and redemption fine imposition, providing a comprehensive understanding of the Tribunal's decision and the arguments presented by both parties.