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2013 (10) TMI 397 - AT - Central ExciseAssessable Value of Goods - Revenue was of the view that the assessable value for calculation of the duty on the VCDs cleared was determined on the basis of MRP as it had not been declared by the assesse - Held that - Duty would be chargeable on the clearances of VCD players cleared for free supply along with sale of certain models of CTVs and the duty had to be charged on the basis of the assessable value determined in terms of the provisions of Section 4A i.e. after giving the abatement from MRP of the VCD player during this period - since there was no MRP of VCD during the period of dispute, the same has to be determined on the basis of some reasonable criteria and in this regard, the MRP prevailing in 2001 cannot be adopted. De novo Quantification of duty - Order set aside Matter Remanded back to the original adjudicating authority for de novo decision for re-quantification of the duty demand in accordance with our above observations and also re-determination of the quantum of penalty imposable under Rule 25(1)(a) of the Central Excise Rules, which would be in proportion to the quantum of duty demand confirmed against the assesse.
Issues Involved:
1. Whether VCD players given free with certain models of CTVs are chargeable to duty separately. 2. Whether the MRP declared for the combo pack of CTVs and VCD players should be considered as the combined MRP. 3. Whether the duty demand calculation and penalty imposition by the department were correct. Detailed Analysis: Issue 1: Duty on VCD Players Given Free with CTVs The appellant manufactured VCD players and CTVs, and during the disputed period, they cleared combination packs of CTVs with VCD players given free. The department argued that the VCD players were cleared without payment of duty since the MRP of the combo pack was considered as the MRP of CTVs only. The Tribunal held that duty would be chargeable on the VCD players even if supplied free, as the duty is levied on the manufacture of goods, irrespective of whether they are sold or given free. The Tribunal cited the case of G.S. Enterprises v. CCE, where duty was charged on razors supplied free with blades, to support their decision. Issue 2: Combined MRP for Combo Pack The appellant contended that the MRP of the combo pack should be treated as the combined MRP of both the CTVs and VCD players, referring to the Tribunal's judgment in Millennium Appliances India Ltd. The Tribunal, however, distinguished this case from Millennium Appliances, noting that in the latter, the products were sold under a combined MRP without any claim of free supply. In contrast, the VCD players in the present case were explicitly given free to promote the sale of CTVs. The Tribunal concluded that the MRP declared for the CTVs could not be treated as the combined MRP of both products. Issue 3: Calculation of Duty Demand and Penalty The department adopted an MRP of Rs. 3325 per VCD, which was the price in 2001, without any abatement. The Tribunal found merit in the appellant's plea that the MRP should reflect the prevailing prices in 2003, which had significantly decreased. The Tribunal agreed that the MRP of Rs. 2500 per VCD with a 40% abatement should be considered, leading to a reassessment of the duty demand. Consequently, the matter was remanded to the original adjudicating authority for re-quantification of the duty demand based on the correct MRP and abatement. Regarding the penalty, the Tribunal held that since the VCD players were cleared without discharging duty liability, a penalty under Rule 25(1)(a) was justified. However, the penalty should be proportional to the re-quantified duty demand. Conclusion: The Tribunal set aside the impugned order and remanded the matter back to the original adjudicating authority for a de novo decision on re-quantification of the duty demand and re-determination of the penalty. The appeals were disposed of accordingly.
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