2023 (11) TMI 367 - AT - Central Excise

Valuation of Excise Duty - adoption of maximum of the different retail selling price (RSP) for chargeability to duty under Central Excise Act, 1944 - HELD THAT - The entire proceedings has been premised on a clear lack of appreciation of objectives of Standards of Weights and Measures Act, 1976, or its successor Legal Metrology Act, 2009, and its relationship with Central Excise Act, 1944. Mandating the affixing of retail selling price (RSP) , on goods specified under these statutes was intended to protect customers from being overcharged at the retail stage on pain of penalties and detriments prescribed. Neither that law nor Central Excise Act, 1944 affords a mandate to customs officials, at the time of clearance of import, or central excise officials, at the time of clearance from factory, to determine the price at which the goods are sold - exclusively a decision of the manufacturer/importer. The goods imported by the appellant are repacked after clearance from customs control and such activity being manufacture erases the import that had taken place earlier to be superimposed with production of excisable goods in the hands of the manufacturer and subject to valuation under section 4A of Central Excise Act, 1944 for assessment to duties of central excise. The affixing of retail selling price (RSP) thereupon becomes the first, and final, declaration of price for assessment under Central Excise Act, 1944. There are, thus, no two prices and, therefore, the Explanation 2(a) below section 4A of Central Excise Act, 1944 would not come into play. In the case of the appellant for the earlier period, the issue has been decided by the Tribunal in their favour. Nothing remains in the demand confirmed in the impugned order which is set aside along with charging of interest and imposition of penalty to allow the appeal. Appeal allowed.

Summary

Issues:
The issues involved in the judgment are the confirmation of demand of duties of central excise, application of Explanation 2(a) below section 4A of Central Excise Act, 1944, and the interpretation of Standards of Weights and Measures Act, 1976/ Legal Metrology Act, 2009 in relation to Central Excise Act, 1944.

Confirmation of Demand of Duties of Central Excise:
The appeal was against the order of the Commissioner of Central Excise (Appeals) upholding the confirmation of demand of duties of central excise amounting to &8377; 49,41,692/- for the period from December 2011 to July 2012, along with applicable interest and penalty under the Central Excise Act, 1944. The appellant, engaged in the business of procurement and repacking of automobile parts, was required to affix labels indicating the maximum 'retail selling price (RSP)' on imported goods. The central excise authorities claimed that Explanation 2(a) below section 4A of the Central Excise Act, 1944 applied for chargeability to duty based on the 'retail selling price (RSP)' declared on the goods. The Tribunal found that the authorities lacked appreciation of the relationship between the Standards of Weights and Measures Act, 1976/Legal Metrology Act, 2009 and the Central Excise Act, 1944. The Tribunal held that the affixing of 'retail selling price (RSP)' after repacking became the final declaration of price for assessment under the Central Excise Act, 1944, and there was no legal basis for the demand raised. Consequently, the demand was set aside, and the appeal was allowed.

Application of Explanation 2(a) below Section 4A of Central Excise Act, 1944:
The central excise authorities contended that Explanation 2(a) below section 4A of the Central Excise Act, 1944 applied for resort to the maximum 'retail selling price (RSP)' for chargeability to duty. The Tribunal noted that the Explanation stipulated that the higher 'MRP' is to be considered only when more than one 'MRP' is affixed on the package of the articles. It was observed that since there was no difference in the 'MRP' declared on the packages at the time of importation and at the time of clearance, the demand based on the declared 'MRP' on the bill of entry was not sustainable. The Tribunal emphasized that Central Excise Duty is leviable on goods falling under section 4A with respect to the 'MRP' declared on the packages at the time of clearance from the factory. Therefore, the demand was set aside as there was no legal basis for it.

Interpretation of Standards of Weights and Measures Act, 1976/Legal Metrology Act, 2009:
The Tribunal highlighted that the affixing of 'retail selling price (RSP)' on goods specified under the Standards of Weights and Measures Act, 1976/Legal Metrology Act, 2009 aimed to protect customers from being overcharged. It was clarified that neither this law nor the Central Excise Act, 1944 empowered customs or central excise officials to determine the selling price of goods, which remains the decision of the manufacturer/importer. The Tribunal stressed that the affixing of 'retail selling price (RSP)' after repacking became the final declaration of price for assessment under the Central Excise Act, 1944. The Tribunal concluded that the demand was set aside, and the appeal was allowed based on the lack of legal basis for the demand.