2013 (1) TMI 246 - AT - Central Excise

Imposition of penalty - Rule 209A of Central Excise Rules, 1944 Penalty imposed on directors - Clandestine removal of goods without payment of duty - Short payment of duty - Assessable value determined u/s 4A i.e. declared MRP minus abatement Misdeclaration of MRP - MEL are the owner of brand name ONIDA - M/s. Onida Saka Ltd. (OSL) manufacture ONIDA brand colour TVs which are sold through the group company MEL Assessee (OSL) contended that as manufacturer had no control over the price at which the CTVs were sold by the dealers to the retail customers and, therefore, neither any duty can be demanded from OSL on the basis of higher MRP nor any penalty can be imposed on OSL and its Director Held that - As concluding from the facts of the case Director would also stand accused of knowingly dealing with the goods which he knew were liable for confiscation and as such the penalty. MEL who was controlling the marketing of the CTVs of ONIDA brand manufactured by OSL and it is MEL who were communicating the MRP to OSL for being declared to Central Excise Department and on the basis of which assessable value was to be determined and was also circulating the price lists to various dealers containing the retail prices at which various models were to be sold. MEL have also dealt with the goods in respect of which they knew that full duty liability has not been discharged and for this reason, the same are liable for confiscation. In favour of revenue

Summary

Issues:
Allegation of duty evasion against OSL, imposition of penalty on OSL, MEL, and Director of OSL, legality of duty demand and penalty upheld by CCE (Appeals), challenge to Tribunal's Final Order, justification for penalty on Director of OSL and MEL, involvement of MEL in marketing and pricing of CTVs, penalty under Rule 209A of Central Excise Rules.

Analysis:
The case involved allegations of duty evasion against OSL, a company manufacturing 'ONIDA' brand color TVs, leading to duty demands and penalties. The Additional Commissioner confirmed duty demand, interest, and penalties against OSL, including confiscation of assets under Central Excise Rules. Appeals to CCE (Appeals) were dismissed, prompting further appeals to the Tribunal. The Tribunal dealt with appeals by MEL and the Director of OSL, as the main appellant's appeal had been previously dismissed.

During the proceedings, the appellant's counsel argued that duty evasion allegations lacked basis, challenged the Tribunal's Final Order before the Supreme Court, and questioned the justification for penalties. The counsel cited a Supreme Court judgment and argued that OSL, as a manufacturer, had no control over retail prices, thus disputing duty demands and penalties. The Departmental Representative defended the impugned order by emphasizing MEL's role in setting prices and communicating MRPs to OSL, implying awareness of MEL and the Director of OSL regarding pricing discrepancies.

The Tribunal considered submissions from both sides and reviewed the records. It linked the imposition of penalties on the Director of OSL and MEL to duty demands against OSL for alleged clandestine removal and misdeclaration of MRPs. Upholding the duty demand against OSL led to the Director's penalty under Rule 209A. Regarding MEL, the Tribunal found that MEL controlled marketing and pricing, indicating awareness of pricing discrepancies. Consequently, penalties on MEL were deemed appropriate under Rule 209A. Ultimately, the Tribunal dismissed the appeals, upholding penalties on the Director of OSL and MEL based on their involvement in the pricing and marketing practices of the CTVs.

In conclusion, the Tribunal found no merit in the appeals, leading to their dismissal. The judgment was pronounced on 25-6-2012, affirming the duty demands and penalties imposed on OSL, MEL, and their Director.