By TIOL News Service

MUMBAI, MAY 12, 2014 : BY a Majority decision, the CESTAT in the case of Schneider Electrical (I) Pvt. Ltd., Larsen & Toubro & Ors 2014-TIOL-337-CESTAT-MUM while dismissing the appeals filed by the appellants had inter alia held thus –

Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 is a curative provision to deal with a situation where the RSP is not declared or tampered with - they are entirely procedural in nature and, therefore, retrospective in nature and can be applied to all proceedings which are pending or which arise after the rule has been introduced - 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 CEA, 1944 even if rules for ascertainment of the same were not framed earlier and came about later.

While reporting this decision we had mentioned that this decision was going to badly hurt the manufacturers.

Admittedly, the appellant L&T had taken the matter to the Bombay High Court inter alia seeking interim relief and their appeal was admitted on the following substantial questions of law:-

(a) Whether the Appellate Tribunal was right in not following its Final Orders in the cases (I) Millennium Appliances India Ltd v/s Commissioner of Central Excise, Hyderabad reported in 2009 (248) ELT 713 (Tri. Bang) 2009-TIOL-2594-CESTAT-BANG; (ii) ABB Ltd B/s. Commissioner of Customs, Bangalore reported in 2011 (272) ELT 706 (Tri. Bang) 2011-TIOL-792-CESTAT-BANG; (iii) Ravi Food Pvt Ltd v/s Commissioner of Central Excise, Hyderabad reported in 2011 (266) ELT 399 (Tri. Bang) 2010-TIOL-1806-CESTAT-BANG; (iv) Final Order No. A/1773-1776/ 13/CSTB/CI in the case of Legrand India Private Limited 2013-TIOL-1800-CESTAT-MUM; and (v) Final Order No. A/11683-111693/ 2013 dated 12.12.2013 in the case of Mesrs. Acme Ceramics and others; holding that in the absence of the Rules being framed under Section 4A of the Act, the Respondents have no jurisdiction to determine the retail sale price in the absence of retail sale price being declared on the package prior to 1st March, 2008 when the Appellants (specifically cited before the Appellate Tribunal the orders of the coordinate bench?

(b) Whether in the facts and circumstances of the case, the Appellate Tribunal is right in holding that the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008, are clarificatory and retrospective in operation?

(c) Whether in the facts and circumstances of the case, the Appellate Tribunal was right in treating the price from the list circulated by the Appellants to their Stockiest as retail price of the package, even when no price was declared on the package?

(d) Alternatively and in the event of it being held that Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008, are clarificatory and retrospective in operation, whether in the facts and circumstance of the case, the Appellate Tribunal was right in taking the actual list price of the stockiest as MRP?

(e) Whether in the facts and circumstances of the case, the Appellate Tribunal was right in relying upon the statements of the dealers of the Appellants without being offered for cross examination by the Respondent?

(f) Whether in the facts and circumstances of the case, the Appellate Tribunal was right in holding that the demand for the extended period is sustainable?

(g) Whether the findings recorded by the Appellate Tribunal for sustaining the extended and relying upon the irrelevant documents and is perverse in the legal sense of the term?

(h) Whether the switchgear products of the Appellants are commodity in packaged form within the meaning of Standard of Weights and Measures Act, 1976 and Standards of weights and Measures (packaged Commodities) Rules, 1977 and the Appellants were required to declare the retail price on the packages of their switchgear products?

(i) Whether the Appellate Tribunal was right in sustaining the demand, interest and penalty?

(j) Whether in the facts and circumstances of the case, the Appellate Tribunal was right in dismissing the appeal of the Appellants?

At the outset, the High Court observed -

++ We would have decided this appeal at the stage of admission itself on the first question raised by the appellant. There was a difference of opinion between the Judicial Member and the Technical Member. The appeal before the Tribunal was therefore referred to a third member. The third member held against the appellant/assessee. Prior to the decision of the third member, there was a decision of the Tribunal which supported the appellant's contention before the Tribunal. That decision was brought to the notice of the learned third member before passing the order. The third member was bound to consider the judgment of the Tribunal. He, however, did not do so. We would have had no hesitation therefore in setting aside the order of the third member and remanding the matter to him for passing a fresh order.

The Counsel for the Revenue submitted that the appeal relates to “valuation” and hence the appeal would be maintainable only before the Supreme Court in terms of s.35L of the CEA, 1944.

The High Court, therefore, observed -

++ In view thereof, we are not inclined at this stage to dispose of the appeal on this ground.

++ The appeal is accordingly admitted, but subject to the point of maintainability.

It was further held that in the exceptional facts of the case, the High Court is inclined to grantstay of the demand for the previous years on account of the following circumstances –

+ A Division Bench of this Court in a similar matter Schneider Electric India Pvt Ltd v/s Commissioner of C. Ex., Nashik granted a stay even against pre-deposit. The Tribunal had directed a pre-deposit. The Division Bench held that the issue as to whether the 1977 Rules are applicable to the case of the appellant itself is in doubt. The Division Bench, accordingly, quashed and set aside the order and directed the CESTAT to dispose of the appeal filed by the appellant therein on merits without insisting on pre-deposit. The Division Bench, therefore, prima facie at least held that the law as it stands is in favour of the appellant.

+ There is another important aspect. Prima facie , at least, even before the Tribunal the position of law appears to be in favour of the appellant. Unfortunately, the third member did not consider the judgment of the Tribunal. In a group of matters, the first of which was the case of M/s Acme Ceramics v/s CCE Rajkot, the Tribunal by an order dated 12th December 2013 in fact considered the order of the Technical Member and held as follows:

"14: …In our considered view, the differing Member has incorrectly applied the law in the case of M/s Mahim Patram Pvt Ltd [2007-TIOL-23-SC-CT], to take a different view from the views already existing. …We are of the view that the ratio laid down by Apex Court in the case of M/s MahimPatramPvt 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/ redetermination 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, there being no contrary judgment to the views expressed by the 3 decisions of the coordinate benches of the Tribunal on this issue, even assuming that there was misdeclaration of RSP, period prior to 01.03.2008 the RSP cannot be re-determined by the Revenue in any manner.”

+ We obviously refer to the order not because it has any precedent value in this court but is an indication of what the impugned order of the third member may well have been, had the judgment been considered by the learned third member. The judgment had been placed before the third party member but was not considered by him.

In fine, the High Court granted adinterim order in terms of prayer clause (b). Nonetheless, the statement on behalf of the appellant that the tax has been paid and will be continued to be paid with effect from April 2008 was accepted and it was so ordered.

(See 2014-TIOL-708-HC-MUM-CX)