2018 (10) TMI 897 - AT - Central Excise

MRP based Valuation - inclusion of optional service charges and rustproof protection charges in the maximum retail price for assessment - principles of natural justice - Held that - There is no allegation that the maximum retail price on the goods involved in the present dispute was in any way altered by the dealer to justify the invoking of the provisions for recovery of differential duty. The levy of duty under section 4A of Central Excise Act 1944 is necessarily to be on the maximum retail price marked on the package subject to permissible abatement. There is no evidence that in the present proceedings the marked price had been altered at any stage subsequently - There is also no allegation that the two charges are contractually fastened on every purchaser of the goods manufactured by the respondent. To the extent that the coverages remain optional it cannot be said that the maximum retail price should include such charges. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Interpretation of inclusion of 'optional service charges and rustproof protection charges' in the 'maximum retail price' for assessment.
2. Application of principles of natural justice in the recovery of differential duty.
3. Consistency in following previous orders by appellate authorities.
4. Distinguishing factors in the case from previous judgments regarding assessable value.

Analysis:

1. The case involved a dispute over the inclusion of 'optional service charges and rustproof protection charges' in the 'maximum retail price' for assessment. The Revenue challenged the order of the Commissioner of Central Excise (Appeals) which included these charges in the assessable value. The appellant argued that these charges were optional and should not be included in the 'maximum retail price' for assessment.

2. The appellant contended that the recovery of differential duty was disputed on grounds of denial of principles of natural justice, leading to a re-hearing by the original authority. The Authorized Representative urged acceptance of the grounds of appeal, emphasizing that the charges were included in the warranty and not segregated in the consumer invoice.

3. The issue of consistency in following previous orders was raised, with reference to a contrary order by the Commissioner of Central Excise, Pune-II. The appellant cited a previous decision of the Tribunal regarding inclusion of similar charges in the assessable value, arguing for consistency in approach by the appellate authorities.

4. The Tribunal analyzed previous judgments, including one involving the same appellant, where charges were included in the assessable value due to lack of evidence in costing records and consolidation of charges in customer invoices. However, in the present case, it was highlighted that the charges were optional and not contractually fastened on every purchaser, leading to a distinction from previous decisions.

5. Ultimately, the Tribunal upheld the impugned order, stating that there was no evidence of alteration in the marked price subsequently and no contractual obligation for every purchaser to opt for the additional charges. The appeal of the Revenue was dismissed, concluding that the inclusion of 'optional service charges and rustproof protection charges' in the 'maximum retail price' for assessment was not justified in this case.

This detailed analysis highlights the key legal issues, arguments presented by both parties, and the Tribunal's reasoning in arriving at the decision to dismiss the appeal of the Revenue.