2004 (3) TMI 111 - AT - Central Excise

Valuation (Central Excise) - clearing the T.V.s on payment of duty on the basis of the Maximum Retail Price (M.R.P.) - Departmental clarifications - Whether the duty was rightly discharged on the M.R.P. affixed on the T.V. packages or if it should include security deposits - HELD THAT - As per the definition of the retail sale price given above it is seen that the same refers to Maximum price at which the excisable goods in packaged form may be sold. In the instant case the price at which individual T.V. set have been sold is the same price which has been declared by the manufacturer on the T.V. sets. It is only when the said T.V.s have been sold under the basket scheme, which was optional, that less sales price has been charged then what was declared price on the T.V. sets. Inasmuch as the duty has been paid on the maximum price declared, we find no justification in the Revenue's case to discard the said maximum retail price. The explanation defining the retail sale price in the above notification refers to the maximum retail price on which the excisable goods may be sold to the ultimate consumer and does not refer to the price which is actually charged from the customers and which may be on the lower side. As such, we do not find any justification in the above stand of the revenue. We agree with the appellants contention that the six instances cannot be made the leading evidence so as to conclude that the appellants was charging more price from their customers than the one declared by them especially when there are around 12,000 dealers of Kitchen Appliance all over the country and there are no other circumstances showing that the invoices were raised at higher price. The appellants have contended that dealers also sold antennae, voltage stabilizer etc. and may offer optional delivery at the customers end and installation at their premises, in which case the higher charges would stand justified. As such, it cannot be said that the appellants have sold the T.V. set at a higher price than the declared maximum retail price. By applying ratio of the decision in 1999 (7) TMI 661 - SC ORDER , we are of the view that merely because in few cases the dealers have deviated from the instructions of the manufacturer, the appellants cannot be denied the benefit otherwise available to them under the law. The contravention has been committed by the dealer inasmuch as instead of selling the T.V. sets at the maximum retail price he has charged a little higher from the customer. In any case, we have taken note of the facts that the said two dealers, from whom statement have been recorded have not sold all the T.V.s at a higher rate but it is only in respect of three cases per dealer that a higher money has been collected. As rightly argued by the learned Advocate, there may be some circumstance under which the higher amount has been collected, which would have come on surface, if the Revenue would have agreed to allow cross-examination of the said dealers. In any case as already observed by us such, negligible number of instances cannot take the place of affirmative and legal evidence so as to held that the declared price, which has been followed by all other dealers all over the country, was not bona fide. Commissioner (Appeals) has relied upon the Board's Circular dated 23-11-1998 to hold that it is the responsibility of the manufacturer discharging duty liability of T.V. sets to ensure that final price charged from the ultimate consumer is not more than the declared maximum retail price and if found to be charged in excess, discharge duty at higher specific rate, Commissioner (Appeals) has observed that the said circular is binding on the Department. The appellant's contention is that a quasi judicial authority is not bound by the circular which is adverse to the assessee and the correctness of the same can be challenged by showing it to be contrary to law. It is only those circular which are in favour of the assessee which have been held to be of binding nature upon the Revenue's own officers. Circulars which are contrary to the correct legal interpretation are not binding on the judicial authorities. As we have already observed that sale of the T.V.s along with other electrical items being manufactured by the appellants under the basket scheme at a price lower than the declared retail sale price, would not influence such declared price and the appellants have correctly discharged their duty liability on the declared retail sale price. Thus, we allow the appeal filed by M/s. Videocon International Ltd. and reject the appeals filed by the Commissioner against M/s. Videocon International Ltd. and M/s. Kitchen Appliances India Ltd. We make it clear at this point that since the appeals are being allowed on the main issue itself we are not considering the other alternative appeals raised by as regards the quantification of the demand and the applicability of the notification in question w.e.f. 1-8-1995. In a nutshell appeals filed by the manufacturers are allowed with consequential relief to them and the appeals filed by the Revenue are rejected.

Summary

Issues Involved:
1. Whether the duty was rightly discharged on the maximum retail price (M.R.P.) affixed on the T.V. packages or if it should include security deposits.
2. Whether the appellants were required to pay duty at specific rates post 2-6-1998 due to the security deposits collected.
3. Whether the M.R.P. declared on T.V. sets sold under the "Basket Scheme" was influenced and thus not genuine.

Summary:

Issue 1: Duty on Maximum Retail Price (M.R.P.) vs. Inclusion of Security Deposits
The appellants, M/s. Videocon Communication Ltd., were clearing T.V.s on payment of duty based on M.R.P. u/s 4A(1) of the Central Excise Act, 1944. They introduced a "Money Back Scheme" where customers paid a security deposit refundable after a fixed period with interest. The Revenue issued a Show Cause Notice alleging that the security deposits should be included in the retail sale price for duty calculation. The Assistant Commissioner confirmed the duty demand and imposed a penalty, but the Commissioner (Appeals) set aside the demand for the period before 2-6-1998 and the penalty. The Tribunal held that the security deposits were not part of the T.V. price as they were refundable and shown as liabilities in the company's accounts. The Tribunal referenced Supreme Court decisions (e.g., United Breweries) to support that deposits do not constitute consideration for sale.

Issue 2: Duty at Specific Rates Post 2-6-1998
For the period post 2-6-1998, the Revenue argued that the security deposits meant the M.R.P. was not the sole consideration, thus specific rates should apply. The Tribunal disagreed, stating that the deposits were still refundable and did not influence the M.R.P. The Tribunal noted that the Board's Circular applied to exchange schemes, not to the appellants' situation where deposits were returned with interest.

Issue 3: M.R.P. Under "Basket Scheme"
M/s. Videocon International Ltd. sold T.V.s under the brand "Sansui" to M/s. Kitchen Appliances India Ltd., who sold them under a "Basket Scheme" at reduced prices when bundled with other items. The Revenue contended that this influenced the M.R.P., making it non-genuine. The Tribunal found that the scheme was optional and the T.V.s were also sold individually at the declared M.R.P. The Tribunal held that the M.R.P. declared was genuine and the duty was correctly paid on it. The Tribunal also dismissed the Revenue's reliance on a few instances where dealers charged more than the M.R.P., stating that such negligible evidence could not invalidate the declared M.R.P.

Conclusion:
The Tribunal allowed the appeals filed by the manufacturers, holding that the duty was correctly discharged on the M.R.P. and that the security deposits did not constitute additional consideration. The appeals filed by the Revenue were rejected.