2009 (5) TMI 418 - AT - Central Excise

Valuation- Notification No. 20/2001-C.E. (N.T.)- the appellants were clearing seconds hosiery marked as B category of finished goods under Section 3(2) of the Central Excise Act, 1944 adopting a Tariff value of 60% of their retail price without affixing any MRP sticker even though there was a price list of the said goods. Further they were collecting an amount greater than the tariff value for which they had not discharged differential duty amounting to Rs.1,06,240/- for the period from 1-4-2003 to 8-7-2004. Therefore they were issued with a show cause notice dated 16-8-2005, proposing to demand the said amount with interest under Section 11AB and, impose penalty under Section 11AC of the Central Excise Act, 1944, and impose penalty under Section 11AC of the Central Excise Act, 1944, and the same was confirmed without imposing any penalty vide Order-in-Original. Commissioner (Appeals) uphold the order in original. Held that- It can be seen from the Notification that Government in their own wisdom has fixed tariff value of 60% of the retail sale price i.e., declared or required to be declared on the packages of articles of apparels. In this case, both the lower authorities have not disputed the existence of pricelist issued by the appellant to the dealer and it is also not disputed that the price as contained in the pricelist, as issued by the appellant, was taken by the appellant to arrive at 60% of the value for discharge of duty liability. We have already held that in this case the tariff value has been fixed, the provision of Section 4 could not be invoked for demand of differential duty. If the tariff value is fixed by the Government of India, then that needs to be taken into consideration for discharge of duty liability, we find that the impugned order is liable to be set aside and we do so. Appeal is allowed with consequential relief, if any.

Summary

Issues:
- Applicability of Notification No. 20/2001-C.E. (N.T.) on goods cleared by the appellant.
- Determination of correct value for the purpose of levying duties under Central Excise Act, 1944.
- Interpretation of provisions of Section 3(2) and Section 4 of the Central Excise Act in the context of tariff value fixation.

Analysis:

Issue 1: Applicability of Notification No. 20/2001-C.E. (N.T.) on goods cleared by the appellant:
The case involved the clearance of seconds hosiery marked as 'B' category of finished goods by the appellant without affixing any MRP sticker. The appellant adopted a tariff value of 60% of the retail price under Section 3(2) of the Central Excise Act, 1944. The contention was that despite discharging duty liability as per the notification, the issue was brought under Section 4 or 4A of the Act. The Tribunal analyzed the provisions of Notification No. 20/2001-C.E. (N.T.) which fixed the tariff value for articles of apparel at 60% of the retail sale price declared on the packages. The Tribunal noted that the lower authorities did not dispute the existence of the price list issued by the appellant, which was used to calculate the duty liability. As the tariff value was fixed by the government, the Tribunal held that Section 4 could not be invoked for demanding differential duty, and the tariff value needed to be considered for discharging duty liability.

Issue 2: Determination of correct value for levying duties under Central Excise Act, 1944:
The dispute centered around whether the transaction value should be held as applicable in the case where the appellant collected money over and above the invoice amount. The Tribunal held that the provisions of Section 4, which deal with transaction value, could not be made applicable to Section 3(2) of the Act. Section 3(2) empowers the government to fix tariff values for levying duties, and the Tribunal emphasized that the power to fix tariff values lies within the jurisdiction of the government. Therefore, in cases where tariff values are fixed by the government, the provisions of Section 4 for transaction value determination do not apply.

Issue 3: Interpretation of provisions of Section 3(2) and Section 4 of the Central Excise Act in the context of tariff value fixation:
The Tribunal clarified that the provisions of Section 4 regarding transaction value could not override the valuation aspect in Section 3(2) of the Act. Section 3(2) specifically empowers the government to fix tariff values for articles chargeable with duty ad valorem. The Tribunal highlighted that the tariff value fixation under Section 3(2) precludes the application of transaction value provisions under Section 4. By analyzing the specific language of the relevant sections and the notification, the Tribunal concluded that the impugned order was liable to be set aside, allowing the appeal with consequential relief.

In conclusion, the Tribunal's judgment emphasized the importance of adhering to the tariff values fixed by the government under Section 3(2) for the purpose of discharging duty liability, and clarified the inapplicability of transaction value provisions in such cases.