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TMI Blog2019 (1) TMI 560X X X X Extracts X X X X X X X X Extracts X X X X ..... E. & S.T.-Rajkot, C.C.E. & S.T.-Ahmedabad-iii MR. RAMESH NAIR, MEMBER (JUDICIAL) And MR. RAJU, MEMBER (TECHNICAL) For Appellant: Mr. Amal Dave, P.D. Rachchh, Shubham Jhanjharia, Devashish Trivedi (Advocates) For Respondent: Mr. J. Nagori (AR) ORDER Per: Raju These appeals have been filed by various tile manufacturers against orders of Commissioner in respect of on the goods cleared by them. 2 The DGCI in the year 2008 initiated proceedings against the number of tile manufacturers. The appellants in this case are all manufacturers of ceramic tiles. Ceramic tiles are goods notified for assessment under Section 4A of the Central Excise Act. At the material time the goods were covered by the provisions of Standard of Weights and Measure Act, 1976 and rules made thereunder and thus it was mandatory to declare the Retail Sale Price (RSP) of the goods on the ceramic tiles cleared by the appellants. 2.1 The investigations made by DGCEI suggested that the Retail Sale Price (RSP) declared by the appellant was not the correct RSP. The investigations revealed that the RSP at which the goods were actually sold to the customer was much higher than the RSP declared by the appellant on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es took place at much higher Retail Sale Price, the money was being collected in cash over and above the actual sale price declared at the time of clearance, through the intricate mechanism involving Angadias, personal representatives and through bank/ shroffs. 3 The matter was argued by various Counsels namely, Mr. Amal Dave, P.D. Rachchh, Shubham Jhanjharia, Devashish Trivedi. All the arguments essentially relied upon the decision of Tribunal in the case of Acme Ceramics 2014 (304) ELT 542 and 2014 (304) ELT 588, which was followed by Tribunal in case of Suzuki Ceramics 2016 (334) ELT 169. It was argued that since most of the cases decided by the orders in the case of Acme Ceramics (Supra) which was followed by Tribunal in case of Suzuki Ceramics (Supra), involved similar common investigation and identical facts, the said decisions should be followed in this case as well. Reliance was also placed on the decision of Hon'ble Apex Court in the case of SANT LAL GUPTA reported in 2010 (262) E.L.T. 6 (S.C.). It is seen that the core issue decided in the case of ACME (Supra) was RSP cannot be re-determined for period prior to 1.3.2008 because the rules for determination of RSP were not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excisable goods with reference to retail sale price. - (1) The Central Government may, by notification in the Official Gazette, specify any goods, in relation to which it is required, under the provisions of the Standards of Weights and Measures Act, 1976 (60 of 1976) or the rules made thereunder or under any other law for the time being in force, to declare on the package thereof the retail sale price of such goods, to which the provisions of sub-section (2) shall apply. (2) Where the goods specified under sub-section (1) are excisable goods and are chargeable to duty of excise with reference to value, then, notwithstanding anything contained in Section 4, such value shall be deemed to be the retail sale price declared 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. Explanation 1. - For the purposes of this section, "retail sale price" means the maximum price at which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncludes all taxes, local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like and the price is the sole consideration for such sale : Provided that in case the provisions of the Act, rules or other law as referred to in sub-section (1) require to declare on the package, the retail sale price excluding any taxes, local or otherwise, the retail sale price shall be construed accordingly. Explanation 2. - For the purposes of this section, - (a) where on the package of any excisable goods more than 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be determined by the assessing officer using reasonable/best judgment based upon material available and consistent with principles and provisions of Section 4A of the Central Excise Act, 1944. (2) The list price cannot be adopted as MRP as per Rule 4(a)(ii) of Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008. OR The list price or (with suitable adjustment for VAT/local taxes, etc.) of the manufacturer which is basis for all transactions between manufacturer, distributor, stockiest, retailer as also consistent with the price informed to public on their website can be adopted as MRP of the product under reasonable/best judgment method before 1-3-2008 and on and after 1-3-2008 under Section 4(a)(ii) read with Rule 6 of the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 in the facts and circumstances of the present cases, particularly when the same is used by the appellants themselves for subsequent period. (3) Demands for extended period is not sustainable in view of reasons enumerated in Para 19 above. OR Demand for extended period is sustainable in view of the conduct of appellants as enumerated in Para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount 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. Explanation 1. - For the purposes of this section, "retail sale price" means the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer and includes all taxes, local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like, as the case may be. Explanation 2. - Where on any excisable goods more than one retail sale price is declared, the maximum of such retail sale price shall be deemed to be the retail sale price for the purposes of this section" 29.1 There is no dispute between the Member (Judicial) and the Member (Technical) with regard to the question as to whether the provisions of Section 4A applies to the goods manufactured by the appellants. The order of the Director, Legal Metrology as also the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns drawn by the learned Member (Judicial) that prior to 1-3-2008 the goods were liable to be assessed for excise duty purposes under Section 4 of the Act and not under Section 4A. 29.2 The next question for consideration is whether for the period prior to 1-3-2008, the maximum retail price of the impugned goods can be determined by the assessing officer using reasonable/best judgment method based on the materials available and consistent with the provisions of Section 4A of the Central Excise Act, 1944, in the absence of a machinery provision available for determination of the MRP of the product. 29.2.1 There is no dispute that the Central Government acquired the powers to ascertain in the prescribed manner the retail sale price of such goods and the retail sale price so ascertained shall be deemed to be retail sale price for the purpose of the Section vide Finance Act, 2003 which substituted sub-section (4) of Section 4A. The rules were notified only w.e.f. 1-3-2008. The question is, prior to 1-3-2008 whether the provisions of the said Rules could be applied for determination of RSP using the best judgment method. 29.2.2 The provisions of Central Excise (Determination of Retail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the retail sale price, so ascertained, shall be taken as the retail sale price of all such goods. Explanation. - For the purposes of this rule, when retail sale price is required to be ascertained based on market inquiries, the said inquiries shall be carried out on sample basis. RULE 5. Where a manufacturer alters or tampers the retail sale price declared on the package of goods after their removal from the place of manufacture, resulting into increase in the retail sale price, then such increased retail sale price shall be taken as the retail sale price of all goods removed during a period of one month before and after the date of removal of such goods : Provided that where the manufacturer alters or tampers the declared retail sale price resulting into more than one retail sale price available on such goods, then, the highest of such retail sale price shall be taken as the retail sale price of all such goods. RULE 6. If the retail sale price of any excisable goods cannot be ascertained under these rules, the retail sale price shall be ascertained in accordance with the principles and the provisions of Section 4A of the Act and the rules aforesaid." 29.2.3 If one carefully ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I to Section 4A. Thus, what RSP is clearly indicated in the Act and what the Rules purport to do is, how to ascertain the RSP. In other words, the ascertainment of RSP is purely procedural in nature. 29.2.5 A similar issue came up for consideration before the Hon'ble Apex Court in the case of C.W.T v. Sharvan Kumar Swarup & Sons - 1994 SCC (6) 623. The question before the Apex Court was whether Rule 1BB of the Wealth-tax Rules, 1957 is a provision which affects and alters the substantive rights or is merely procedural and whether the Rules is attracted to all the proceedings pending at its enactment. The said Rule 1BB was concerned with mode of valuation of a house property wholly or mainly used for residential purposes, for the purposes of ascertaining the net wealth under the Wealth-tax Act, 1957. The Hon'ble Apex Court in that context held as follows : "10. The basis of distinction between statutes affecting rights and those affecting merely procedure is well-recognised. Dixon, C.J. in Maxwell v. Murphy drawing upon the following words of Lord Justice Mellish in Republic of Costa Rica v. Erlanger said : "No suitor has any vested interest in the course of procedure, nor any ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of justice seeks. Procedural law deals with the means and instruments by which those ends are to be attained. The latter regulates the conduct and relations of courts and litigants in respect of the litigation itself; the former determines their conduct and relations in respect of the matters litigated. '... What facts constitute a wrong is determined by the substantive law; what facts constitute proof of a wrong is a question of procedure. '... So far as the administration of justice is concerned with the application of remedies to violated rights, we may say that the substantive law defines the remedy and the right, while the law of procedure defines the modes and conditions of the application of the one to the other.'" 29.2.6 The Hon'ble Apex Court further held that : "a distinction has to be made by Court while interpreting the provisions of a taxing statute between charging provisions which impose the charge to tax and machinery provisions which provide the machinery for the quantification of the tax and the levying and collection of the tax so imposed. While charging provisions are construed strictly, machinery sections are not generally subject to a rigorous constru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltra vires. There again, the question was the rate of cess and what should be the maximum rate. In the absence of a maximum rate prescribed under the rules, it was held that the levy was ultra vires. Similarly, in the case of Dhrangadhra Chemical Works Ltd. (supra), the issue was whether the Municipality could levy enhanced octroi. The law in that case mandated that there should be a resolution and rules specifying the class or class of persons who is liable to pay tax and the amount of rate at which the tax should be collected. However, no rules were framed and hence it was held that the levy was ultra vires. In other words, in this case also the person liable to pay tax and the rate of tax was the issue. Since these elements are core of the tax system and are substantive in nature, the levy was held to be illegal in the absence of proper prescription. That is not the case before me. 29.2.10 In the present case, the charging section provides for the levy, the rate of tax is specified in the schedule, the person liable to pay the tax is the manufacturer of the goods under Rule 4 of the Central Excise Rules, 2002 and the measure of tax is defined under Section 4A. Thus, all the cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereto. Under that provision the Central Government is empowered to make rules for permitting at the request of the owner mutilation of imported goods so as to render them unfit for use for a purpose other than the one for which they are imported. This is an enabling provision which indicates that Parliament had conceived of a situation where further mutilation on import may be necessary to render the material unfit for use for a purpose other than the one for which the same was imported. In the absence of rules and till such rules are framed, the spirit underlying this provision can be invoked by directing the customs authorities to permit further mutilation on import before clearance." 29.2.13 If we apply the ratio of this decision to the facts of the present case. Section 4A(4) enables the Government to frame rules for ascertaining the RSP. Section 4A(2) deems the value for the purpose of assessment of excise duty as the retail sale price declared on the packages of the goods minus the abatement. Therefore, even if in a situation the retail sale price are not so declared, it would be permissible to adopt any fair and reasonable means to ascertain the RSP so long as it is consis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecisions, there is absolutely no doubt that the MRP of the product can be ascertained by the assessing officer using reasonable/best judgment means based on the material available and consistent with the principles and the provisions of Section 4A of the Central Excise Act, 1944 even if rules for ascertainment of the same were not framed earlier and came about later. I answer the reference accordingly." 6.3 It can be seen that the question has been answered without reffering to any specific facts of the said case, treating it as a pure question of law. The decision of tribunal in case of Suzuki (Supra) differentiates this deision on the ground that the facts are different. In para 11 of the said decision following has been observed 11. Without dwelling into any further details, on perusal of the records and after considering the submissions made before us, we find that the entire cases were outcome of a common investigation and various show cause notices were issued. Few of the show cause notices got adjudicated and were contested before the Tribunal in the case of Acme Ceramics & Others (supra). We are of the clear view that the issue involved in all these appeals as filed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... envisaged in subsection 4A(4) even prior to issue of notification 13/2008-CE (NT) dated 1.3.2008. These are different decisions of Tribunal in identical facts. The decision of tribunal in case of Suzuki (Supra) is therefore per incuriam in so far as it differentiates on facts between the decisions of tribunal in the cases of ACME (Supra) and SCHNEIDER ELECTRICAL INDIA (P) LTD (Supra) when the relevant facts are identical. 6.4 Thus there are two diametrically opposite decisions of tribunal, one in case of ACME (Supra) and another in case of SCHNEIDER ELECTRICAL INDIA (P) LTD (Supra). In both a situation envisaged in subsection 4A(4) has arisen necessitating ascertainment of RSP. The issue regarding power of revenue to ascertain RSP by adopting reasonable means consistent with relevant provisions, has been adjudged in exactly opposite manner. While in the case of ACME (Supra) it is held that revenue cannot ascertain RSP for clearances prior to 1.3.2008, in case of SCHNEIDER ELECTRICAL INDIA (P) LTD (Supra) it is held that revenue can ascertain RSP using any reasonable/best judgment means based upon material available and consistent with principles and provisions of Section 4A of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department to first ascertain who has changed the said MRP. In our view, the person who has altered the RSP on the goods is the person who can be held as a manufacturer on alteration of RSP; as the definition of manufacturer in Section 2(f) of the Act (hereinbefore reproduced) specifically talks about the process of declaration or alteration of RSP on the product which are covered under the provisions of Section 4A of the Act would be considered as a manufactured product. As stated hereinabove, it is the case of the Revenue that there was an alteration of the MRP, there is nothing on record which indicates that the appellant-manufacturers herein are the persons who have altered the MRP in godown/places of the dealers. The dealers whose statements were recorded by the Revenue authorities state that they have sold the goods at a higher price than the price at which goods were cleared from factory premises of the appellants. We are unable to understand the investigating authorities' mind, as during the course of investigation there is a specific admission of the dealers that they have sold the goods at higher MRP than the declared MRP; no question was put any of the dealers as to who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1986) as amounting to manufacture; or (iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer; and the word "manufacturer" shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account; In the facts of the case, the evidence suggests that the entire modus operandi was being controlled by appellants in the said case and therefore the RSP was being changed at the behest and on behalf of the appellants in the said case. Thus the appellants were the deemed manufacturers under section 2(f) even in respect of the activity of RSP manipulations was physically done on their behalf by anybody else. It is seen that in the case of in the case of A.V. Papayya Sastry and Others v. Govt. of A.P. and Others, reported in (2007) 4 Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delivery, packing forwarding and the like, as the case may be; Section 4A of the Central Excise Act also defines the Retail Sale Price in Explanation 1 of the said Section as follows: "For the purpose of this section, 'retail sale price' means the maximum price at which the excisable goods in package form may be sold to the ultimate consumer and includes all taxes, local or otherwise, freight, transport charges, commission payable to dealer, and all charges towards advertisement, delivery, packing, forwarding and the like and the price is the sole consideration for such sale: Provided that in case of provisions of the Act, rules or other law as referred to in sub-section (1) require to declare on the package, the retails sale price excluding any taxes local or otherwise, the retail sale price shall be construed accordingly." A comparison of the definitions of RSP in Standards of Weights and Measures (Packaged Commodities) Rules, 1977 and in Central Excise Act, 1944, shows that they are different in one important aspect. While the Central Excise Act, 1944 prescribes that in RSP 'the price is the sole consideration for such sale' the definitions under Standards of Weights and Mea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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