2005 (12) TMI 149 - AT - Central Excise

Summary

Issues: Valuation of Television sets under exchange scheme, Addition of value to MRP, Assessment based on clean sale prices, Valuation of woofer, Seizure of goods and penalty

Valuation of Television sets under exchange scheme:
The dispute revolved around the valuation of color Television sets marketed by two manufacturers through an exchange scheme. The assessable value was determined based on the Maximum Retail Price (MRP) affixed on the sets under Section 4A of the Central Excise Act. The manufacturers declared the MRP as "RSP" (Retail Sale Price) and indicated prices sizewise. The main contention was whether the 'exchange price' could be considered as MRP. The Commissioner accepted a proposal to add Rs. 2000 to the RSP for valuation, as it was beneficial to revenue. The Revenue challenged this, suggesting adding Rs. 4500 based on related bills issued. However, the respondent argued that Rs. 2000 was appropriate, considering various factors like repair costs, warranty, and market prices of old sets. The Commissioner's decision to add Rs. 2000 per set for valuation was upheld, as it was found to yield the correct MRP.

Addition of value to MRP:
Both parties agreed before the Commissioner that the MRP of outright sale sets could be used for valuing sets sold under the exchange scheme. The clean sale prices were considered, and the addition of Rs. 2000 per set was deemed appropriate for valuation. The Commissioner's decision was supported as it was in revenue's favor and provided a rational and uniform basis for assessment. It was noted that the addition of Rs. 2000 per set was sufficient for obtaining the correct MRP, and there was no merit in the Revenue's challenge.

Assessment based on clean sale prices:
The Commissioner found that using clean sale prices for valuation was suitable and eliminated the controversy regarding the cost of old Television sets received during the exchange scheme. It was concluded that assessing CTVs sold under the exchange scheme based on the RSP declared for non-exchange sales was beneficial and provided a uniform basis for assessment. The Commissioner's decision to load the RSP of exchange scheme CTVs by Rs. 2000 was upheld as rational and advantageous to revenue.

Valuation of woofer:
The Revenue's grievance regarding the valuation of woofers was dismissed by the Commissioner, stating that woofers were not part of the Television set and were cleared and sold separately. The MRP-based assessment applied to Television sets and not their accessories, which were to be valued under Section 4 of the Central Excise Act.

Seizure of goods and penalty:
The Revenue's contention that seized goods should be liable for confiscation and the respondent for penalty was rejected. It was found that full facts regarding MRP declarations were disclosed by the appellant, including differentiation between exchange and clean sale prices. In the absence of intent to evade duty payment and full disclosure of facts, confiscation and penalty were deemed unnecessary. The order of the Commissioner was confirmed, rejecting the appeals and cross-objections.