By TIOL News Service

MUMBAI, MAR 15, 2013: TO garner more Revenue and avoid valuation issues prevalent u/s 4, Section 4A of the CEA, 1944 was inserted in the statute w.e.f 14.05.1997 and which provides for valuing the notified excisable goods on the basis of the Retail sale price. Unfortunately, the departmental officers without understanding this ideology have time and again sought to value the notified excisable goods in terms of section 4 of the CEA, 1944 when the assessee values it u/s 4A and failed miserably…but for the sheer thrill or otherwise they continue on their mission!

In the present case, the applicant is manufacturing packaged drinking water and paying duty under Section 4A of the CEA, 1944 on MRP basis after availing abatement.

The Revenue is of the opinion that the packaged drinking water is being cleared to M/s. Amalgamated Bean Coffee Trading Co. (ABCTC) which is an institutional consumer and, therefore, the goods manufactured by the applicant are liable to duty as per the provisions of Section 4 of the CEA, 1944.

Since the lower authorities confirmed the demand of Rs.4,79,888/- and the associated penalty and interest, the appellant is before the CESTAT and submits the following -

++ that ABCTC is engaged in the business of coffee and snack bars and also selling packaged drinking water, therefore ABCTC cannot be considered as an institutional consumer.

++ that the applicant is buying the material for the manufacture and manufacturing goods on job work basis, therefore, it cannot be said that the applicant is manufacturing the goods on behalf of ABCTC, hence the demand is not sustainable.

The Revenue representative submitted that as per the contract with ABCTC, the perform, i.e. an input for the manufacture of bottle, was supplied by ABCTC and the said perform was converted into a bottle and then filled with mineral water and again supplied to ABCTC, therefore the applicant is manufacturing on behalf of ABCTC and ABCTC is an institutional buyer.

The Bench observed -

"6. We find that the applicant is purchasing raw material from the market for the manufacture of packaged drinking water and the same is cleared to ABCTC and ABCTC is further selling to their customers. Therefore, we find merit in the contention of the applicant that ABCTC is not an institutional consumer. In these circumstances, the applicant has made out a case for total waiver and recovery of the same is stayed during the pendency of the appeal. The stay petition is allowed."

(See 2013-TIOL-450-CESTAT-MUM)