By TIOL News Service

NEW DELHI, AUGUST 20, 2014: THE appellant cleared ceramic tiles to different bulk buyers viz. builders, contractual, industrial buyers, hotel, schools, etc. and valued the same u/s 4A of the CEA, 1944 for the purpose of discharging CE duty. It is the allegation of the department that the CE duty ought to have been paid by valuing the goods in terms of the contract price u/s 4 of CEA, 1944.

A total demand of Rs.1.49 crores has been confirmed against the appellant by the CCE, Rohtak. Penalties and interest have also been added in a good measure. The Commissioner held that declaration of retail sale price was not required on the package cleared by the party to different bulk buyers under contract since such sales were not covered under definition of retail sale under Rule 2(q) of Standards of Weights & Measures (Packaged Commodities) Rules, 1977 being not sold, distributed or delivered through retail sale agencies or other instrumentalities for consumption by an individual or group of individuals or any other consumer. He, therefore, concluded that such clearances were not eligible for valuation under section 4A of the Act.

The appellant is in appeal before the CESTAT and inter-alia submits that there is no bar in the central excise law that a manufacturer cannot sell the goods in retail; that the goods which have been cleared to the builders, contractors, etc. were the very same goods which are sold by the appellants in retail; there was a requirement under the Standards of Weights & Measures Act, 1976 for affixing of the MRP and on the basis of the nature of the commodity, the appellants have affixed MRP on the package; that since the provisions of Rule 34 of the SW&M (PC) Rules are not attracted in the present case, the appellants were mandatorily required to affix the MRP on the package& assess the goods u/s 4A; that the demand is hit by limitation.

The Revenue representative relied upon the findings of the Commissioner wherein, he, after examining the bulk sale concept held that supplies made to aforesaid bulk buyers will not be considered as sale in retail and such clearance were to be assessed under section 4 of the CEA, 1944 even though packed in retail pack bearing MRP; that once goods were sold against contract even if MRP is printed thereon and some goods were also sold to retailers, that does not lead to a conclusion that assessment for all tiles should be done under section 4A only and not under section 4.

After hearing the submissions made by both sides, the Bench observed -

++ Commissioner has rightly arrived at the conclusion that assessment of goods supplied to bulk buyers should be done under section 4 and not under section 4A.

++ Commissioner held that findings of Metrology Department were not clear cut finding as they expressed their view while Department has to finally examine the matter in terms of provisions of the Act and Rules.

++ The clearances to different class of bulk buyers was on contracted prices for their use and not for retail sale. It was rightly concluded in adjudication that only due to departmental visit to the factory and scrutiny of invoices in respect of sales to such buyers the facts of supply on contracted price came to the notice. It is general practice in the trade that when the goods are meant for specific use for specific purpose, marking on the packages is done accordingly. But that was not done with the intention of getting the benefit of Rule 34 of PC Rules. Accordingly appellants are not entitled to the assessment of goods under section 4A of the Central Excise Act.

++ Valuation was done by appellant under section 4A with the sole intention to evade payment of duty as is revealed by the factual situation of the case. Suppressing of material facts was manifested resulting in invocation of extended period in terms of first proviso to section 11A of the Act. Once suppression was manifested, appellant was liable to the imposition of penalty and plea of time bar fails.

The order of the CCE was upheld and the appeal was rejected.

In passing: Incidentally, s. 4A came on to the scene in the month of May 1997 as a revenue garnering exercise. And the Board Circular 625 /16 /2002-CX, Dated: February 28, 2002 mentions this -

"7. The Standards of Weights & Measures Act, 1976, and the rules made there under, are administered by the State Governments. Instances of dispute could arise between the deptt. and the assessee as to whether, in respect of a particular commodity/transaction, the assessee is exempted from declaring the retail price or not. In case of such doubt a clarification may be obtained from the concerned Deptt. (generally the Metrology Deptt.) of the State Government."

(See 2014-TIOL-1545-CESTAT-DEL)