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2024 (1) TMI 980 - AT - Central ExciseMethod of Valuation - section 4 (on the transaction value) or under section 4A (on the RSP minus abatement)? - bulbs sold by the appellant to EESL - what should be reckoned as the RSP- the price at which EESL sold the bulbs to the consumers or the price at which the appellant sold bulbs in the market? - invocation of extended period of limitation. Are the bulbs sold by the appellant to EESL liable to be charged to excise duty under section 4 (on the transaction value) or under section 4A (on the RSP minus abatement)? - HELD THAT - If the Metrology Rules are interpreted to include the bulbs sold to EESL, it means that very conditions of the contract of the scheme implemented by the EESL which mandates that the RSP shall not be indicated on the bulbs supplied to it and further, the condition to be printed on the bulb and the packing that it was not meant for retail sale would be violating the requirement of the Metrology Rules which require the RSP to be printed on the goods. Evidently, the purpose of not printing the RSP and further prohibiting their retail sales by printing it on these bulbs is to prevent their diversion and sale in the market. If the retail sale price in the market of a bulb is about Rs. 225/- and it is being supplied by the EESL through its network for about Rs. 75/-, some checks are required to prevent the EESL bulbs from being diverted and sold in the market for profit. If it is interpreted that the Metrology Rules to cover these bulbs, it would mean that RSP should have been printed on them and the very condition of the contract issued by EESL is illegal. At any rate, it is not in dispute that these bulbs were not sold in the market and were only distributed through EESL (though after collecting some price). If that be the case, to say that the RSP should have been printed is incongruous. How can a retail price be printed on the goods whose retail sale is banned?. It is therefore found that LED bulbs sold by the appellant to EESL were not covered by Metrology Rules and hence section 4A of the Act will not apply and self assessment has been correctly done by the appellant on the basis of transaction value as per section 4. If the bulbs sold to EESL are liable to be charged to excise duty under section 4A, what should be reckoned as the RSP- the price at which EESL sold the bulbs to the consumers or the price at which the appellant sold bulbs in the market? - HELD THAT - There is no retail sale but only supply of LED bulbs through EESL, there cannot be a retail sale price. Retail sale of these bulbs is explicitly prohibited. Therefore, these bulbs cannot fall under the same category as the bulbs which can be freely sold in the market and hence have a RSP. It is true that EESL was supplying these bulbs to consumers of electricity as per a scheme and was also collecting an amount from them but in our considered view that does not make it RSP as per Metrology Rules or as per section 4A. Was extended period of limitation correctly invoked in this case? - HELD THAT - There can be two or more views on the same issue and the assessee will self-assess the duty as per its view and understanding and is not required to foresee what view the officers may take sometime in the future after consulting other departments. The Excise Rules provide not only for self-assessment of duty and filing of returns by the assessee in ER-1, but also scrutiny of the returns by the officers. Duty of excise is charged on excisable goods manufactured or produced in India but the duty becomes payable on removal (Rule 4). The assessee has to self- assess (Rule 6) the duty and pay it by the fifth day of the following month (Rule 8) and file Returns (Rule 12). The officers have to scrutinize the returns and can, for the purpose call for documents and records which the assessee is bound to produce. The officer scrutinising the returns can call for any documents and records from the assessee which is bound to provide them. Had the officer, who is an expert in taxation, scrutinised the returns as he was mandated to do and called for any records as he was authorised to call for, the fact that the appellant had paid duty for the bulbs supplied to EESL under section 4 and not under section 4A would have come to light and an SCN could have been issued under section 11A within the normal period of limitation. The issue is found in favour of the appellant and against the Revenue, both on merits and on limitation - appeal allowed.
Issues Involved:
1. Applicability of Legal Metrology Rules to the bulbs sold on contract to EESL. 2. Determination of Retail Sale Price (RSP) for the LED bulbs sold to EESL. 3. Invocation of the extended period of limitation under Section 11A. Summary: 1. Applicability of Legal Metrology Rules to the bulbs sold on contract to EESL: The appellant, M/s. Surya Roshini Ltd., contended that the LED bulbs sold to Energy Efficiency Services Ltd. (EESL) were not covered under Section 4A of the Central Excise Act, 1944, as EESL is considered an 'institutional consumer' under Rule 3 of The Legal Metrology (Packaged Commodities) Rules, 2011. The appellant received a confirmation from the Inspector of Legal Metrology that the sales to EESL did not require the declaration of the Retail Sale Price (RSP). Conversely, the Revenue argued that EESL did not qualify as an 'institutional consumer' since it further sold the bulbs, thus necessitating the declaration of RSP under the Legal Metrology Rules. The Tribunal concluded that LED bulbs sold to EESL were not covered by the Metrology Rules, as they were not meant for retail sale and the RSP was not required to be printed, thereby validating the appellant's self-assessment under Section 4. 2. Determination of Retail Sale Price (RSP) for the LED bulbs sold to EESL: The appellant argued that if the bulbs sold to EESL were to be considered under Section 4A, the price at which EESL sold the bulbs to consumers should be the RSP. The Tribunal found that since the bulbs were not sold in the market but distributed through EESL with a prohibition on retail sale, there could not be an RSP. Thus, the bulbs sold to EESL did not fall under the same category as those sold in the market and did not require an RSP under Section 4A. 3. Invocation of the extended period of limitation under Section 11A: The appellant contended that the demand was time-barred as the extended period of limitation could not be invoked without evidence of fraud, collusion, or willful misstatement. The Tribunal noted that the appellant had filed ER-1 returns and self-assessed the duty based on its interpretation. The Revenue's uncertainty and subsequent referral to the Legal Metrology department indicated a lack of clarity rather than an intent to evade duty by the appellant. The Tribunal held that the extended period of limitation was not applicable, as there was no suppression of facts or intent to evade duty. Conclusion: The Tribunal ruled in favor of the appellant on both merits and limitation, setting aside the impugned order dated 31.03.2021 and allowing the appeal with consequential relief.
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