By TIOL News Service

MUMBAI, OCT 22, 2013: THE appellantis a manufacturer of packaged drinking water which commodity is notified for assessment u/s 4A of the CEA, 1944 i.e. on MRP basis. The case against the appellant is that the appellant adopted an MRP of Rs. 30/- for the period prior to 20 th July 2011, Rs.35/- as MRP for the period 31/07/2011 and MRP of Rs.50/- for the period 01/08/2011 onwards, so as to be within the purview of exemption limit of Rs.1.5 crore available to small scale manufacturers of excisable goods.

Inasmuch as it is alleged by the department that the appellant had all through the period under reference sold the goods at an MRP of Rs.50/-. By re-computing the excisable turnover and after granting the abatement, a duty demand of Rs.57,78,462/- was raised against the appellant for the period from 2007-08 to 2011-2012 and confirmed by the CCE, Pune.

Before the CESTAT the appellant submitted that the Revenue has not adduced any evidence in support of their allegations and also that the procedure prescribed for ascertainment of the MRP as envisaged in section 4A of the CEA, 1944 had not been followed.

The Revenue representative supported the findings of the adjudicating authority by adverting to the purchase orders.

The Bench observed -

++ even though there is no ascertainment at the retail market as prescribed under the Rule, if one examines the purchase orders placed by the institutional customers it is seen that the goods have been sold at prices ranging from Rs.43/- and Rs. 48/- during July 2008 to July 2010.

++ Such prices also envisage rendering of additional services such as providing free water dispensers and supply of goods free of delivery charges. However, what is worth noting in these purchase orders is that for a quantity of 6000 numbers of water jars a price of Rs.48/- per unit has been charged in July 2008 from M/s. Sparkle Aerated Water Pvt. Ltd., whereas in July 2010 for a lesser quantity of 2500 number of jars, a lower value of Rs.43/- has been charged when all other conditions remained the same.

++ It is also worth noting that the rate of excise duty was 8% during July 2008 while the rate of duty went upto 10% in 2010. From these facts available on record, it is evident that there is no nexus between the declaration of retail sale price and the prices at which the goods are sold to institutional customers. Further some of the institutional customers have also admitted that in the water jars received by them, the MRP was printed as Rs.50/-.

Taking a view that the declaration of retail sale price by the appellant at Rs.30, Rs.35 or Rs.50/- is not borne out from the evidences available on records, the Bench directed the appellant to make a pre-deposit of 25% of the duty adjudged and report compliance.

In passing : In the case of Schneider Electrical India (P) Ltd.&Ors. [2013-TIOL-1502-CESTAT-MUM], the CESTAT, WZB, on account of difference in opinion, the question as to whether demands for the period prior to 1.3.2008 are sustainable as there was no machinery provisions available to determine MRP of the product, has been referred to the Third Member.

(See 2013-TIOL-1560-CESTAT-MUM)