2019 (2) TMI 843 - AT - Central Excise

Valuation - clearance to job worker of Lux Toilet Soaps for bundling/repacking in to 12 units a pack - cost construction method in terms of Rule 6 (b) (ii) of the Valuation Rules - It is the case of the appellant that Statutory Returns being RT-12 were filled from time to time declaring the semi finished goods - valuation under Rule 6(b)(i) of the Valuation Rules - from 01/11/1997 to 31/03/1998 - SCN was issued on 12/03/1999 - Held that - The issue is no more res-integra in view of the decision of the Tribunal in the case of Cadbury India Ltd. Vs. Commissioner of Central Excise, Pune-I 2013 (9) TMI 130 - CESTAT MUMBAI , where it was held that This case of repacking of one type of retail pack into another type of retail pack-assortment pack called Celebrations by a job worker cannot be called bulk sale to an intermediary for further sale or distribution in smaller quantities - appeal dismissed - decided against appellant.

Summary

Issues: Valuation of goods sent to job worker, Short payment of Central Excise Duty, Applicability of Section 4A of CEA, 1944, Invocation of extended period, Penalty under Section 11AC

Valuation of goods sent to job worker:
The appellants sent Lux Toilet Soap to a job worker for bundling/repacking, claiming it as manufacture under Note 6 to Chapter 34. The appellant adopted a cost construction method for valuation. The Ld. Advocate argued that valuation should be based on cost construction + job charges as per relevant case laws. The show cause notice was challenged for adopting valuation under Rule 6(b)(i) instead of Section 4A of CEA, 1944. The appellant cited judgments like Toyo Engineering and Ballarpur Industries to support their stance.

Short payment of Central Excise Duty:
A Show Cause Notice was issued alleging under-valuation, resulting in short payment of Central Excise Duty. The Adjudicating Authority confirmed the demand along with interest and imposed a penalty under Section 11AC. On appeal, the Ld. Commissioner upheld the order, leading to the present appeal before the tribunal. The appellant contended that there was no intention to pay less duty, citing cases like Jay Yushin Ltd and Nirlon Ltd to argue against the invocation of the extended period.

Applicability of Section 4A of CEA, 1944:
The Tribunal analyzed the applicability of Section 4A based on the requirement to declare Maximum Retail Price (MRP) on packages under relevant laws. Citing the decision in Cadbury India Ltd. Vs. Commissioner of Central Excise, Pune-I, the Tribunal emphasized the need for MRP declaration on retail packages for Section 4A to apply. The judgment highlighted the importance of MRP printing on packages for the section's invocation.

Invocation of extended period:
The appellant argued that the demand was time-barred due to the absence of suppression, citing judgments like Swastik Engineering and Tinplate Company of India to support their stance. They contended that the extended period should not be invoked as there was no intent to evade duty. The appellant maintained that duty payment was made using the cost construction method, and the job worker cleared the goods at the wholesale price declared by the appellant.

Penalty under Section 11AC:
The appellant asserted that there was no malafide intent to evade duty, as evidenced by their compliance with the cost construction method and subsequent clearance at the declared wholesale price. They argued against the imposition of penalty under Section 11AC. The Ld. DR supported the impugned order, referencing decisions like Liebherr Machine Tools India P. Ltd. Vs. C.C.E. (Appeals), Bangalore. The tribunal upheld the impugned order, rejecting the appeal and emphasizing the requirement of MRP declaration on retail packages for the application of Section 4A.