2018 (7) TMI 1276 - AT - Central Excise

Valuation - Colour television sets - abatement - goods notified under section 4A of the Central Excise Act - appellant declared the MRP on the colour TV sets to the extent of ₹ 2,321/- per set and discharged duty on the same after taking 30% abatements i.e. on ₹ 1,625/- per set in terms of provisions of section 4A of the Central Excise Act - Revenue entertained a view that inasmuch as duty was being paid on ₹ 1,625/- whereas the appellant was receiving the consideration of ₹ 1,925/- per set from their customers, the differential amount of ₹ 300/- is required to discharge duty of excise - time limitation. Held that - Section 4A of the Central Excise Act was introduced with the purpose of introduction of collection of excise duty on the basis of MRP. The entire purpose of the said section was to avoid litigation about the includibiliy of various elements in the assessable value of the excisable product - The said section provides for payment of excise duty on the basis of MRP affixed on the same. It is only when an assessee either removes the goods without declaring the retail sale price on the packages or declares a wrong MRP or tampers with or obliterate or alters the retail sale price declared on the packages after their removal from the place of removal, the section 4A can be discarded and the differential duty can be demanded. In the present case the MRP was declared on the TV sets at ₹ 2,321/- per set. It is not the Revenue s case that the TV sets have been sold at an MRP which is higher than ₹ 2,321/-. Further the said section provides for arriving at the assessable value after an abatement to the extent of 30%. As such the assessable value would be ₹ 1,625/-, on which the appellant have paid the duty - Admittedly after abatement, the assessable value is bound to be lower than the MRP declared and the actual sale price has no relevance with the assessable value as long as it is not more than the MRP. The sale price of goods being actually ₹ 1,925/- which is admittedly less than the declared MRP, would not become the assessable value of the goods by adding back the differential amount of ₹ 300/- per set in the assessable value. That would defeat the very purpose of introduction of section 4A of the Central Excise Act inasmuch as the same would amount to assessments under section 4 of the Act, which is not permissible. Time limitation - Held that - Admittedly the appellants were issuing the invoices clearly showing the prices of the goods as ₹ 1,925/-. In such a scenario, it cannot be said that there was any mala fide on the part of the appellant to evade payment of duty - also, the issue being a bonafide dispute of interpretation of the provisions of law and in the absence of any positive evidence to show the mala fide intention of the appellant, the extended period of limitation was not available to the Revenue. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of Section 4A of the Central Excise Act regarding payment of excise duty based on MRP.
2. Assessment of duty liability on color TV sets sold at a price higher than the assessable value.
3. Consideration of abatement percentage and its impact on the duty calculation.
4. Challenge to the demand notice by the appellant.
5. Application of limitation period for raising the demand.

Analysis:
1. The judgment revolves around the interpretation of Section 4A of the Central Excise Act, which mandates excise duty payment based on the Maximum Retail Price (MRP) declared on goods. The purpose of this section is to avoid disputes over assessable values. The Tribunal clarified that deviation from MRP declaration or tampering can lead to additional duty demands.

2. The case involved a discrepancy where the appellant sold color TV sets at a price higher than the assessable value calculated after applying the abatement percentage. The Revenue claimed duty on the price difference, but the Tribunal emphasized that as long as the sale price does not exceed the declared MRP, the assessable value remains valid.

3. The abatement percentage of 30% under Section 4A played a crucial role in determining the duty liability. The appellant paid duty based on the assessable value derived after abatement, even though the selling price was higher. The Tribunal highlighted that selling below the MRP does not affect the duty calculation.

4. The appellant contested the demand notice, arguing that they complied with Section 4A by paying duty on the declared MRP after abatement. The Tribunal noted the appellant's adherence to the legal provisions and dismissed the Revenue's claim for additional duty.

5. Regarding the limitation period for raising the demand, the Tribunal found in favor of the appellant. Since the invoices clearly showed the selling price, there was no evidence of mala fide intent to evade duty. As a result, the demand was considered time-barred, providing relief to the appellant.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal on both merit and limitation grounds, providing consequential relief to the appellant.