2019 (8) TMI 1021 - AT - Central Excise

Valuation - applicability or non-applicability of provisions of Section 4A of the Central Excise Act - manufacture of chemical for footwear, varnishes, adhesive, polish etc. for footwear - goods in question were for industrial consumers - extended period of limitation - HELD THAT - Admittedly the appellant s final products were carrying the MRP on the same. The goods were being sold through distributive channels and by displaying the same in retail outlets. The explanation to Section 3 of the Legal Metrology (Packaged Commodities) Rule 2011 define the expression industrial consumers and institutional consumers. A sale would be considered as a sale to institutional consumer or industrial consumer if the packaged commodities are directly purchased from the manufacturer. In the present case admittedly the goods were not being directly purchased by the industrial consumers from the present manufacturer appellant. Extended period of limitation - HELD THAT - The appellants were maintaining all the records required to be maintained in the ordinary course of their business and in fact it is audit of those records only which led the Revenue to find out that the duty was being paid under Section 4A. In such a scenario no mala fide can be attributed to the appellant so as to invoke the extended period - Extended period cannot be invoked. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Applicability of Section 4A of the Central Excise Act for duty payment based on MRP.
2. Interpretation of Legal Metrology (Packaged Commodities) Rules 2011 for goods sold to industrial consumers.
3. Contestation of duty liability under Section 4 of the Central Excise Act.
4. Imposition of penalty by the Original Adjudicating Authority.
5. Limitation period for raising demand of duty.

Detailed Analysis:
1. The dispute in the judgment revolves around the applicability of Section 4A of the Central Excise Act for duty payment based on the Maximum Retail Price (MRP) of goods manufactured. The appellant had been paying duty under Section 4A, which requires duty payment based on MRP. The goods were sold through distributive channels and displayed in retail outlets with MRP labels.

2. The Revenue contended that goods meant for industrial consumers, exempt under the Legal Metrology (Packaged Commodities) Rules 2011, should have been cleared based on assessable value under Section 4 of the Central Excise Act. The appellant argued that since the goods were not directly sold to industrial consumers but through distributive channels, MRP fixation was mandatory, and they discharged duty under Section 4A.

3. The appellant contested the duty liability under Section 4 of the Central Excise Act, emphasizing that MRP fixation was not required only for direct sales to industrial/institutional consumers. They argued that the duty was correctly paid under Section 4A, as affirmed by the Weight & Measure Authorities and competitors following the same practice.

4. Despite the appellant's submissions, the Original Adjudicating Authority confirmed the duty demand and imposed a penalty. The Commissioner (Appeals) upheld this decision, leading to the present appeal challenging the imposition of duty under Section 4 instead of Section 4A.

5. The judgment highlighted that the demand raised in 2015 for the period 2010-11 to 2013-14, invoking an extended limitation period, was unjustified. The Revenue was aware of the appellant's duty payment method under Section 4A through filed returns and previous audits without objections. Citing a precedent, it deemed the show cause notice issued after 22 months from the audit as time-barred, supporting the appellant's belief in discharging duty under Section 4A.

In conclusion, the Appellate Tribunal set aside the impugned order, allowing the appeal and providing consequential relief to the appellant based on the non-applicability of Section 4 for duty payment and the limitation period for raising the demand.