Combined MRP of Combo Pack cannot be Basis for determining Assessable Value u/s 4A of Central Excise Rules: CESTAT [Read Order]
The Court viewed that sub-section (2) of Section 4 of excise Rules along with the Explanation thereto that the MRP mentioned is to be the sole consideration in arriving at the transaction value at whichs the excise duty is payable
CESTAT – Allahabad CESTAT -Determining Assessable Value – Customs Excise and Service Tax Appellate Tribunal – Tax news – Taxscan
CESTAT – Allahabad CESTAT -Determining Assessable Value – Customs Excise and Service Tax Appellate Tribunal – Tax news – Taxscan
The Allahabad bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) combined MRP of combo pack cannot be the basis for determining assessable value under Section 4A of Central Excise Rules, 1944. The Court viewed that sub-section (2) of Section 4 along with the Explanation thereto that the MRP mentioned is to be the sole consideration in arriving at the transaction value at which the excise duty is payable.
M/s Videocon Industries Ltd, the appellant was engaged in the manufacture of Color Television, Washing Machines, Refrigerator, Air Conditioners etc., classifiable under CETH 8528, 8450, 8418 and 8415 of the First Schedule to Central Excise Tariff Act, 1985.
During course of scrutiny of the ER-1 returns for the relevant period it was observed that the appellant cleared “refrigerator with Washing Machine” and “Refrigerator with VCD” as combination pack on “combination MRP” rather than combined MRP of the individual items, which resulted in short payment of Central Excise duty, contravening the provisions of Rule 4, 6 and 8 of Central Excise Rules, 2002 read with Section 4A of the Central Excise Act, 1944.
Co- incidentally, the abatement allowed for both the items is 40% but there are other consumer durables for which abatement allowed is 35%. There is no entry in which the combination of different commodities has been mentioned in this notification nor the abatement prescribed for such combination.
The notification under Section 4A of the Act determines the average quantum of post-clearance costs and profits, and this quantity expressed in the form of a percentage of the retail sale price has to be abated from the retail sale price declaration, made by the manufacturer on the package, for arriving at the assessable value.
The point of dispute is as to whether concerning clearances of such “combination packs”, duty liability is to be determined in respect of each item in the combination based on its individual MRP or duty is to be calculated by treating the combination as one item based on its combined MRP.
A two-member bench of Mr P K Choudhary, Member (Judicial) and Mr Sanjiv Srivastava, Member (Technical) observed that Rule 15 of the SWM Rules refers to the “combination pack” of dissimilar items that are packed in a bigger pack on which MRP is required to be declared.
It was clear from the reading of sub-section (2) of Section 4 along with the Explanation thereto that the MRP mentioned is to be the sole consideration in arriving at the transaction value at which the excise duty is payable.
The CESTAT allowed the appeal. Manish Raj, Authorised Representative appeared for the Respondents.
To Read the full text of the Order CLICK HERE
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