2023 (4) TMI 1072 - AT - Central Excise

Method of Valuation - be assessed under Section 4A or under Section 4 of the CEA 1944 - table top wet grinders - institutional consumers or industrial consumers? - 1000 Table top wet grinders cleared to TNCSC in December 2012 without payment of any duty was proper - invocation of extended period of limitation - HELD THAT - As per the Explanation to the Rule 3 prior to its amendment, Institutional consumer means institutional consumer like Transportation, Airways, Railways, Hotels, Hospitals or any other service institutions who buy packaged commodities directly from the manufacturer for use by that institution. This rule has subsequently been amended. As per the amendment brought to Rule 3 by G.S.R.359(E) Notification Dated 06/06/2013, published in the Gazette of India on 06/06/203, the definition of industrial consumers or industrial consumers has been made adding clauses (bb) and (bc) to Rule 2 and omitting the explanation given in Rule 3. Since the period covered by the impugned order is from December 2012 to December 2015, the law as it stood pre and post amendment will be both relevant in deciding the matter. Pre-amendment period of Rule 2 and 3 - HELD THAT - Sub section 4 of Section 4A states that where the manufacturer removes such goods from the place of manufacture, without declaring the retail sale price of such goods on the packages such goods shall be liable to confiscation and the retail sale price of such goods shall be ascertained in the prescribed manner and such price shall be deemed to be the retail sale price for the purposes of this section. Hence the appellant has correctly applied Section 4A of CEA 1944 for clearance of the impugned goods during this period. Post-amendment (notification dated 06/06/2013) - HELD THAT - The amended Rule 2 and 3 of LMPCR, 2011, was not made a part of the show cause notice, for the relevant period and the appellants were not required to meet that legal challenge. This being so the demand by quantifying the duty based on the value of goods determined under Section 4 of CEA 1944, for the post amendment period must also fail - The demand for duty on the impugned goods quantified under section 4 of CEA 1944 for the entire period covered by the impugned order is not legal and proper. With duty not payable the penalty imposed, on the foundation of the incorrect valuation of goods, is also not legally sustainable. Hence the demand for duty quantified under section 4 of CEA 1944 and the penalty imposed in this regard are set aside. Whether the 1000 Table top wet grinders cleared to TNCSC in December 2012 without payment of any duty was proper? - HELD THAT - The duty was payable on the 1000 Table top wet grinders cleared to TNCSC in December 2012, is not in dispute. The valuation for the same would also be as per section 4A of CEA 1944. Hence the appropriation of the amounts paid during investigation is hence correct and is upheld. Extended period of limitation - HELD THAT - Having found that no differential duty, as was quantified in the impugned order, is payable for the entire period, the question, whether the invocation of extended period for issue of show cause notice will be attracted in the present case, loses relevance. It is however noticed that the appellant during the hearing, in pursuance of their submissions against invocation of extended period, has relied on audit report Gr.3/November 2012/CBE II Division Coimbatore II-B Range wherein, purportedly as per Advisory Note VII, by the Central Excise Department they were advised to follow Sec. 4A price for the branded goods for future clearance. It is found that this important matter, involving a critical document that would be fatal to the departments allegation of suppression of facts, was not agitated by the appellants before the Lower Authority. It does not find mention in the impugned order nor was it a point in the appeal filed by them before this Authority. Suddenly, it is found that the document (copy) being introduced at the end of oral submissions through the Synopsis submitted by the appellant. No petition was filed by the Learned Counsel to accept the document at the appellate stage as per the relevant provisions of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982. Moreover, it is found that the so-called audit report is neither addressed to anyone nor is it issued under the letter head of the Central Excise Department or signed by any authority. It has also not been authenticated by the Learned Counsel or the appellant, making the whole thing very suspicious and unreliable. Advocates / consultants / departmental representatives all represent their respective parties to help the Tribunal in the administration of justice. They owe a duty to their parties and can, following the proper procedure, place before the appellate forum all that can be fairly, reasonably and legally submitted on behalf of the parties and not more. We sincerely hope that we do not come across another such occasion in future. Appeal allowed as per law, except for the amounts confirmed in the impugned order relating to 1000 table top wet grinders cleared to TNCSC in December 2012 - appeal allowed in part.

Summary

Issues Involved:

1. Assessment of Table Top Wet Grinders under Section 4A or Section 4 of the CEA, 1944.
2. Clearance of 1000 Table Top Wet Grinders to TNCSC without payment of any duty.
3. Invocation of extended period for the issue of show cause notice.

Summary:

Issue 1: Assessment under Section 4A or Section 4 of CEA, 1944

The primary issue was whether the table top wet grinders sold by the appellant to TNCSC should be assessed under Section 4A or Section 4 of the CEA, 1944. The Tribunal examined the legal provisions of the Legal Metrology (Packaged Commodities) Rules, 2011 (LMPCR, 2011) and their applicability. It was determined that TNCSC is not an "institutional consumer" as per Rule 3 of LMPCR, 2011, as it then stood. The Tribunal referenced the case of Butterfly Gandhimathi Appliances Ltd Vs Commissioner of C Ex Chennai III, 2015 (327) E.L.T. 115 (Tri. - Chennai), which held that TNCSC is not a service institution and thus the goods should be assessed under Section 4A of CEA, 1944. The Tribunal found that the appellant had correctly applied Section 4A for the clearance of the impugned goods during the pre-amendment period. For the post-amendment period, the Tribunal noted that the amended Rule 2 and 3 of LMPCR, 2011, which introduced broader definitions, were not part of the show cause notice, and thus the demand based on Section 4 of CEA, 1944, for the post-amendment period must fail.

Issue 2: Clearance without payment of duty

The Tribunal considered whether the clearance of 1000 Table Top Wet Grinders to TNCSC in December 2012 without payment of any duty was proper. It was noted that the appellant had paid the duty along with interest during the investigation. The Tribunal upheld the appropriation of the amounts paid during the investigation as correct, affirming that duty was payable on the 1000 Table Top Wet Grinders cleared to TNCSC in December 2012, and the valuation for the same would be as per Section 4A of CEA, 1944.

Issue 3: Invocation of extended period for show cause notice

The Tribunal found that with no differential duty payable for the entire period, the question of invoking the extended period for the issue of a show cause notice lost relevance. The appellant's reliance on an audit report advising them to follow Section 4A was found to be suspicious and unreliable, as it was not authenticated or properly introduced during the proceedings.

Conclusion:

The appeal was allowed with consequential relief, except for the amounts confirmed relating to the 1000 Table Top Wet Grinders cleared to TNCSC in December 2012. The Tribunal set aside the demand for duty quantified under Section 4 of CEA, 1944, and the penalty imposed, as they were not legally sustainable. The appeal was disposed of accordingly.