2018 (6) TMI 124 - AT - Central Excise

Undervaluation - goods sold over and above MRP Declared - value in terms of Section 4A of the Central Excise Act 1944 - Held that - The appellant has shown MRP at 675/- and paying duty after claiming abatement thereof but charging 830/- per stove from their buyers which shows that the appellant has undervalued the assessable value. MRP shown on the stove has no relevance for payment of duty - the duty has rightly been demanded by the Revenue under Section 4A of the Act ascertaining the fact that the goods have been sold by the appellant over and above MRP declared - appeal dismissed - decided against appellant.

Summary

Issues:
- Appeal against duty demanded under Section 4A of the Central Excise Act, 1944 based on valuation of goods supplied.
- Applicability of Section 4A and Notification No.2/2006-CE (NT) dated 01/03/2006 on the valuation of bio-mass Chulha (Stoves).
- Allegation of undervaluation by the appellant and charging a higher price than the declared MRP.

Analysis:
1. The appellant contested the duty demand under Section 4A of the Central Excise Act, 1944, concerning the valuation of goods supplied. The appellant was engaged in manufacturing stoves and other electrical products, supplying bio-mass Chulha (Stoves) to a specific entity. The revenue alleged that the appellant was recovering amounts exceeding the MRP, leading to the demand for duty under Section 4A. The appellant challenged this demand through an appeal.

2. The appellant argued that the product, bio-mass Chulha (Stoves), was subject to valuation under Section 4A and Notification No.2/2006-CE (NT) dated 01/03/2006. The appellant contended that the price paid by the ultimate customer matched the declared RSP of &8377; 675, with no additional consideration. Citing the Indica Laboratories Pvt. Ltd. case, the appellant asserted that Section 4A, not Section 4, should apply to the valuation.

3. Conversely, the Revenue argued that the appellant displayed an MRP of &8377; 675 per stove but invoiced M/s.B.P. Energy India Pvt. Ltd. for &8377; 830, indicating a value suppression. After hearing both sides and examining the records, the Tribunal found that the appellant undervalued the stoves by showing an MRP of &8377; 675, yet charging &8377; 830 from buyers. This discrepancy led to a higher assessable value than declared, justifying the duty demand under Section 4A.

4. The Tribunal distinguished the present case from Indica Laboratories Pvt. Ltd., where the assessee did not charge prices exceeding the MRP. In this case, the appellant's pricing strategy indicated undervaluation, rendering the MRP irrelevant for duty payment. Consequently, the Tribunal upheld the duty demand under Section 4A, as the appellant sold goods above the declared MRP. The appeals were dismissed, finding no merit in the appellant's contentions.

This detailed analysis outlines the key arguments, counterarguments, and the Tribunal's rationale in deciding the appeal related to the valuation and duty demand under Section 4A of the Central Excise Act, 1944.