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TMI Blog2014 (3) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... rer of ceramic tiles. The office of DGCEI collected intelligence that the manufacturer of ceramic glazed tiles and vitrified tiles were engaged in large scale evasion of Central Excise duty by not declaring the actual MRP on their product and Central Excise invoices. It was also gathered by the DGCEI that the manufacturers were declaring only part of the actual MRP and consequently evading the payment of Central Excise duty and in fact mis-declared the actual ex-factory price of such tiles and recovered the same from their dealer in cash and did not account the same in statutory records. Based upon such intelligence, the officers of DGCEI visited all the tile manufacturers in their area and undertook the investigation. After conducting detailed investigation and recording statements of various manufacturers, dealers, and other persons, show cause notices were issued to all assessee/appellants directing them to show cause as to why the value declared by them on ceramic glazed tiles and vitrified tiles be not rejected and re-determined based upon the intelligence collected and differential duty be not demanded, demand interest thereof and also seeking to impose penalty on the main as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs/dealers. It is also the submission that the tiles when they were removed from the factory premises, MRP was printed on the said tile boxes. It is the submission that all the appellants herein discharged the Central Excise duty based upon such declared MRP on the boxes of tiles after availing the eligible abatement. It is the submission that the statements which were recorded by the investigating officers, specifically stated that the goods when they were removed from the factory premises, there was a MRP which was declared on such boxes. After taking us through various statements of dealers and other persons, ld. Counsel submit that the dealers have specifically stated that MRP was declared on the tile boxes which were cleared from the factory premises but the dealer had sold the said tile boxes at higher price to the purchasers of such tiles. It is the submission that it would indicate that there was changing of MRP after the tiles were removed from the factory premises. After making these submissions, ld. Counsel would take us through the provisions of Section 4A of the Act and also the definition of 'manufacturer' as it would apply to the product in question as enumerated in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le having been framed during the relevant period, provisions of Section 4A (4) was not operational. It was further submitted that in the case of Sinnamani (2012) 5 SCC 759; Babu Varghese (1999) 3 SCC 422, Mira Sahani (2008) 9 SCC 177 for the proposition as to when the statute provides a thing to be done in a particular manner, then the thing has to be done in that manner only and no other manner. It is also the submission that in absence of any relevant facts being brought on record, adverse inference ought to be drawn against the Revenue as has been held in the case of Panasonic AVC Network India Co. Ltd - 2013 (288) ELT 413 (Tri-Del); Tex-AGE 2008 (221) ELT 395, Vishwajyoti Impex - 2009 (238) ELT 257 (Tri-Mum), Pratapsingh & Anr - (2005) 13 SCC 624; and it was submitted that the Revenue authorities did not bring on record that the MRP declared on the boxes of tiles cleared from the factory premises was altered by the appellants/manufacturer; that the dealers who had stated in the statements that there was sale of the tiles at a price higher than what was cleared from the factory premises. In continuation of such submission, it was stated that in the current scenario, it cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clared MRP total totally infeasible. It is his further submitted that the investigations conducted with 11 firms of shroffs located in Rajkot/Morbi who handled the task of reaching the cash payment received from dealer to the manufacturer, revealed a modus operandi which was well executed; transfer of cash amount by their dealers was handled in different modes and methods i.e. within Gujarat cash was transferred to angadiya and from outside Gujarat cash amounts were either collected personally by authorized representative of the manufacturer or their sales personnel during their visit to dealer. He would submit most common method used for collection of cash amount was through bank accounts opened in different private banks in the name of large number of fictitious trading firms; shroffs deposited the amount in such bank account number and transmit the bank account number, pin number to the manufacturer and the manufacturer through their network withdrew cash deposited in such account. It is his submission that the details of investigations also reveal that the amount involved was very huge. It is his submission that the statements recorded of the representatives/ partners/owners of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was declared on the package were only dealers prices and not maximum retail prices at which the goods may be sold to ultimate consumer, and the statements of the individuals indicate that they have not taken into consideration the expenses such as freight, profit of dealers, sub-dealers and payment of VAT while fixing the MRP, would in itself indicate the RSP which were declared on the boxes were incorrect. He would also take us through the figures which are illustrated in the impugned order to show that if the dealers costs and profit are included along with cash payment, the declared MRP is less. It is also his submission that the intention of the manufacturers were very clear as they had declared one single MRP for each grade irrespective of size, quality and design, though the cost of production would have been different on account of these factors. It is also his submission that the arguments raised on legal issues basically concern the interpretation of the provisions of Section 4A of Central Excise Act, 1944 which relates to the determination of value of excisable goods based on the concept of RSP i.e. maximum price at which the specified goods may be sold to the dealer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion in the case of M/s Millenium Appliances - 2009 (248) ELT 713, M/s Ravi Foods Pvt.Ltd. - 2011 (256) ELT 399 and M/s ABB Ltd 2011 (272) ELT 706 are mis-placed in as much as in all these cases, Tribunal has always stated that re-determination of RSP was permissible, in the absence of rules prescribing the manner of ascertainment of RSP. It is his submission that the ratio laid down by the judgments of M/s Millenium Appliances, M/s Aditya Cement ought not to be applied to the present case at all as the facts are different and in the case of M/s Ravi Foods Pvt. Ltd., the facts were totally different and the application of the judgment of M/s Millenium Appliances was improper. It is his submission that in the case of ABB Ltd., the issue was not related to demand of Central Excise duty but CVD and the reliance was again placed on Millennium Appliances India Ltd. It is his submission that the Revenue would like to rely upon the decision in the case of M/s Planet Sports Pvt.Ltd. - 2005 (180) ELT 206, M/s Media Industries Ltd. - 2006 (199) ELT 345 and M/s Onida Saka Ltd. - 2011 (267) ELT 101, wherein the re-determination of RSP was upheld and re-determination of RSP on best judgment bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .100/-, how the purchaser or the ultimate consumer would have paid a price which was more than Rs.100/-. He would submit that the decisions relied upon by the ld.Special Counsel for the Revenue have not considered the law which has been laid down by the Tribunal in the case of M/s Millenium Appliances India Ltd, M/s Ravi Foods Pvt. Ltd., and M/s ABB Ltd. He would submit that the law as has been relied upon by the Revenue in the case of M/s Mahim Patram Pvt. Ltd is totally incorrect as the judgment of Apex Court was considering a different issue in as much as the said ratio is not in respect of non-existent set of rules but the said ratio, in fact, supports the case of the assessee as there was a provision in the rule which indicated that the rules which are framed under the Central Act would be relied upon for calculation. It is his submission that the Revenue has not put forth any argument as regards the demand was based on generalization for the entire period and could not be done so. 8. We have considered the detailed submissions made by both sides and perused the records as also the written submissions filed by both sides after the conclusion of hearing. 9. Essentially, the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on such goods less such amount of abatement, if any, from such retail sale price as the Central Government may allow by notification in the Official Gazette. (3) The Central Government may, for the purpose of allowing any abatement under sub-section (2), take into account the amount of duty of excise, sales tax and other taxes, if any, payable on such goods. (4) Where any goods specified under sub-section (1) are excisable goods and the manufacturer - (a) removes such goods from the place of manufacture, without declaring the retail sale price of such goods on the packages or declares a retail sale price which is not the retail sale price as required to be declared under the provisions of the Act, rules or other law as referred to in sub-section (1); or (b) tampers with, obliterates or alters the retail sale price declared on the package of such goods after their removal from the place of manufacture, then, such goods shall be liable to confiscation and the retail sale price of such goods shall be ascertained in the prescribed manner and such price shall be deemed to be the retail sale price for the purposes of this section. Explanation 1. -For the purposes of this section, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gages in their production or manufacture on his own account; (g) 'prescribed' means prescribed by rules made under this Act;12. For the period prior to 01.03.2008, we have to record that the provisions of sub-section (4) of Section 4A were enacted in the statute which is reproduced hereinabove, if read, would indicate that if the manufacturer declares retail price which is not the correct retail price as required to be declared under the provisions of the Act, then the ascertainment of such retail sale price will be done in a prescribed manner. We find that though the provisions of sub-section (4) of Section4A was brought into statute from 14.05.2003, how to re-determine the RSP in the case of mis-declared RSP was not 'prescribed' by the Central Government till the issuance of Notification No.13/2008-CE(NT), dt.01.03.2008. This would effectively mean that the legislature in its wisdom has considered a situation wherein the RSP which is declared could be wrong RSP, thought of remedying the situation by inserting the provision of sub-section (4) in Section 4A, but had not prescribed the rules how the re-determination has to be done till 01.03.2008. It can be seen from the definitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... settled by the Apex Court. We find that our this view is fortified by the decision of the co-ordinate Bench of the Tribunal in the case of M/s Ravi Foods Pvt. Ltd, wherein similar issue came before the Bench. In the case of M/s Ravi Foods Pvt. Ltd., the Revenue sought to re-determine the RSP of the goods which were covered under the provisions of Section 4A of the Act, by adding the value/amount received not accounted for by the appellant therein. The relevant paragraphs from the said judgment are reproduced herein below. 12.We find that the provisions of Section 4A during the relevant period needs to be considered for coming to a conclusion whether the amount quantified by the authorities in the show-cause notice as indicated hereinabove would stand test of law or not. The provisions of Section 4A are as under :- SECTION 4A. Valuation of excisable goods with reference to retail sale price. The Central Government may, by notification in the Official Gazette, specify any goods, in- (1) relation to which it is required, under the provisions of the Standards of Weights and Measures Act, 1976 (60 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one retail sale price is declared, the maximum of such retail sale prices shall be deemed to be the retail sale price; (b) where the retail sale price, declared on the package of any excisable goods at the time of its clearance from the place of manufacture, is altered to increase the retail sale price, such altered retail sale price shall be deemed to be the retail sale price; (c) where different retail sale prices are declared on different packages for the sale of any excisable goods in packaged form in different areas, each such retail sale price shall be the retail sale price for the purposes of valuation of the excisable goods intended to be sold in the area to which the retail sale price relates. It can be seen from the above reproduced Section 4A of the Central Excise Act, 1944, that the said section provides for determination of duty payable on excisable goods on the basis of RSP as per the provisions of Standards of Weights and Measures Act, 1976 and Rules made there under. It is undisputed that in the month of December, 2001 and January, 2002, the appellants filed monthly returns indicating the assessable value after availing the abatement in accordance to the notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the powers conferred by Section 37 read with sub-section (4) of Section 4A of the Central Excise Act, 1944 (1 of 1944), the Central Government hereby makes the following rules, namely :- RULE 1. (1) These rules may be called the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008. (2) They shall come into force on the date of their publication in the official Gazette. RULE 2. In these rules, unless the context otherwise requires. 'Act' means the Central Excise Act, 1944 (1 of 1944), (a) 'retail sale price' means the retail sale price as defined in (b) Section 4A of the Act; and Words and expressions used in these rules and not defined but (c) defined in the Act or any other rules made under the Act shall have the meaning as assigned therein. RULE 3. The retail sale price of any excisable goods under sub-section (4) of Section 4A of the Act, shall be determined in accordance with these rules. RULE 4. Where a manufacturer removes the excisable goods specified under sub-section (1) of Section 4A of the Act , - without declaring the retail sale price on the packages of such (a) goods; or by declaring the retail sale price, which is not the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pinion that if these rules came to be effective on 1-3-2008, the ascertaining of value of similar goods has to be done so, with effect from 1-3-2008 and cannot be used to determine the value for the clearances made prior to 1-3-2008. We find strong force in the contention raised by the learned Counsel that the decision of the Tribunal in the case of Aditya Cement (supra) would squarely cover the issue in favour of the appellants. The relevant ratio in Para 9 of the said decision is reproduced :- 9. It can be seen from the above reproduced rule that it was in context of the definition of 'person liable for paying the Service Tax'. This provision in itself may not suffice revenue to direct the appellant to discharge the service tax liability as service receiver, on the face of the fact that notification under Section 68(2) of the Finance Act, 1994, was issued by the Central Government only on 31-12-2004. If the contention of the learned SDR is to be accepted, then there was no necessity for the Government to issue Notification No. 36/2004-S.T. notifying the service receiver from non-resident having no office, to pay Servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Excise Act to demand the duty, as the said procedure came into statute from 1-3-2008 only. As regards the finding by the ld. adjudicating authority that suppression could be on account of volume, we have already recorded that there is no corroborative evidence nor there is any finding as to the exact quantity of goods clandestinely cleared to come to the conclusion that the value of Rs. 3.75 crores is attributable to the specific quantity of goods on amount of clandestine removal. In the absence of any such details, we are of the considered view that the impugned order is unsustainable. 16.Before parting with the case, we would like to record that since we disposed off all the appeals only on the merits of the case, we are not recording any finding on the other submissions made by both sides on various issues. 17. In view of the foregoing findings, we are of the view that the impugned order is not sustainable and is liable to be set aside and we do so. The impugned order is set aside and all the appeals are allowed with consequential relief. 13. Identical views were expressed by the Tribunal in the case of M/s ABB Ltd (supra), we would like to record here that the 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, 1948 as amended from time to time or the rules made thereunder would apply to the dealer liable for assessment under Central Sales Tax Act and U.P. Sales Tax Rules, 1948, Rule 44 (B) prescribed the manner of determining the turnover of the goods involved in execution of Works Contract. The relevant findings of the Apex Court were rendered on this factual aspect as contained in Para 27 of the judgment. In our considered view, the ratio decidendi from this judgment is that merely because the rules were not framed in Central enactment, it would not mean that no tax is leviable if rules have been framed under said enactment and there is a provision for referential incorporation of the said act in the Central act. We are of the view that the ratio laid down by Apex Court in the case of M/s Mahim Patram Pvt. Ltd. does not in any manner support the case of the Revenue as well as the view of the differing member in the case of M/s Schneider Electrical India Pvt. Ltd; in the cases in hand the ascertainment/re-determination of RSP has not been enacted or prescribed in any other enactment and as no provisions have been incorporated by reference under Central enactment. In our view, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered view, gets crystallized in the hands of such persons as goods become manufactured goods; is the law which can be deduced from the provisions of Central Excise Act, 1944. In the absence of any evidence suggesting as to who altered the MRP on the boxes of tiles, we are of the view that the Revenue authorities cannot turn around and take a stand that the manufacturers are liable to duty, which would effectively mean that they are the persons who have altered the RSP. Yet another angle to the entire case is absence of evidence as to there being alteration of RSP; in as much as when the investigations were conducted by the authorities, we find that the investigating authorities have not seized a single carton of the offending goods in the Pan India operation at different dealers premises, wherein different RSP was declared. It would be beyond imagination that the dealers could not have had any stocks of glazed/vitrified tiles received from the appellants, in their hands when the investigation took place. In the absence of such a crucial evidence, we are unable to hold that the appellant herein can be saddled with a liability of Central Excise duty based upon re-determined RSP, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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