2019 (3) TMI 1093 - AT - Central Excise

Concessional rate of duty - Clearance of watches on specific order given by some industrial organizations to be given for free distribution to the employees of such industrial organizations - contract price less than ₹ 500/- per watch or not - Section 4A of the Central Excise Act, 1944 - N/N. 10/2003-CE dated 01.03.2003 - Held that - Section 4A deals with Valuation of excisable goods with reference to retail sale price . Sub-Rule (1) of Section 4A provides that the Central Government may, by Notification in the Official Gazette, specify any goods in relation to which it is required under the provisions of the Legal Metrology Act, 2009 (Standards of Weights and Measures Act, 1976) or the rules made thereunder or under any other law for the time being in force to declare on the package thereof the retail sale price of such goods to which the provisions of Sub-Section (2) shall apply. Thus, Section 4A has a reference to the Standards of Weights and Measures Act, 1976. However, the Notification does not have any reference to the Standards of Weights and Measures Act, 1976. In the case of goods which are assessable under Section 4A, when the goods are cleared to industrial consumers, as per the provisions of the Standards of Weights and Measures Act, there is no requirement to affix the M.R.P. In such cases, the goods would be assessable under Section 4 of the Central Excise Act, 1944 - In the present case, the Notification does not refer to the Standards of Weights and Measures Act, 1976. Thus, even if the goods are cleared to industrial consumers or otherwise, if they are sold to the ultimate consumer at a price which is not exceeding ₹ 500/- per piece, the clocks or watches would be eligible for the benefit of the Notification. The name of the industry/organization was engraved on the watches and the assessee has put forward a specific plea that these were sold to the industrial organizations for being distributed to their employees as complimentary gifts. The Department has not put forward any evidence to show that there has been a further sale by the industry/ organization to another person. Therefore, in the present case, the ultimate consumer is the industry/organization to which the assessee has sold the watches. This being so, the retail sale price being less than ₹ 500/-, the assessee are eligible for the benefit of the Notification. Appeal dismissed - decided against Revenue.

Summary

Issues Involved:
1. Eligibility for concessional rate of duty under Notification No. 10/2003-CE.
2. Applicability of Section 4 versus Section 4A of the Central Excise Act, 1944.
3. Definition and relevance of "retail sale price" in the context of the Notification.
4. Evidence of sales price and nature of consumers (institutional versus retail).

Issue-wise Detailed Analysis:

1. Eligibility for Concessional Rate of Duty under Notification No. 10/2003-CE:
The primary issue was whether the assessee was eligible for the concessional rate of duty of 8% under Notification No. 10/2003-CE for watches sold at a price below ?500. The Department contended that the concessional rate was not applicable as the sales were made to industrial organizations and not for retail purposes. The Tribunal found that the Notification does not specifically require the goods to be assessed under Section 4A to avail the concessional rate. The definition of "retail sale price" in the Notification is for its purposes only and does not necessitate compliance with the Standards of Weights and Measures Act, 1976.

2. Applicability of Section 4 versus Section 4A of the Central Excise Act, 1944:
The Department argued that the watches should be assessed under Section 4A, which deals with valuation based on retail sale price, and since the watches were sold in bulk to institutions, they should be assessed under Section 4. The Tribunal clarified that the Notification does not reference the Standards of Weights and Measures Act, and thus the benefit of the Notification applies irrespective of whether the goods are assessed under Section 4 or Section 4A, provided the sale price is below ?500.

3. Definition and Relevance of "Retail Sale Price" in the Context of the Notification:
The Tribunal emphasized that the definition of "retail sale price" in the Notification is specific to the Notification itself and does not extend to the Standards of Weights and Measures Act. The Tribunal noted that even if the goods are sold to industrial consumers, if the sale price is below ?500, the benefit of the Notification is applicable.

4. Evidence of Sales Price and Nature of Consumers (Institutional versus Retail):
The Tribunal observed that the Show Cause Notice itself acknowledged that the watches were sold at a price below ?500 to institutional consumers. The Tribunal found the Commissioner (Appeals)'s observation that there was no evidence of sales price below ?500 to be factually incorrect and beyond the scope of the Show Cause Notice. The Tribunal concluded that the ultimate consumers were the industrial organizations, and there was no evidence of further sales, thus making the assessee eligible for the concessional rate.

Conclusion:
The Tribunal set aside the impugned order denying the benefit of the Notification and allowed the assessee's appeal, granting consequential reliefs as per law. The Department's appeal was dismissed. The Tribunal emphasized that the Notification's benefit applies if the sale price is below ?500, irrespective of whether the goods are assessed under Section 4 or Section 4A.