Penalty set aside when department unable to prove with cogent evidence that assessee misdeclared MRP.

PJ/Case Laws/2012-13/1508

Case:- PANASONIC AVC NETWORK INDIA CO.LTD. Versus COMMR. OF C. EX., MEERUT-II

Citation:- 2013(288) E.L.T. 413 (Tri.- Del.)

Brief Facts:-This appeal is directed against the order of the Commissioner (Appeal) dated 29-10-2004, whereby the partly accepted appeal against the order-in- original of Assistant Commissioner of Central Excise, Noida dated 28-2-2002 and set aside confiscation order relating to TV receiver S.No. RK-7312923328 valued at Rs. 14,490/- and confirmed confiscation order in relation to other 7 receiver sets. He also reduced redemption fine from Rs. 40000/- to Rs. 35000/- and reduced penalty imposed on the appellant MTAIL (now known as M/s. Panasonic AVC Network India Co. Ltd.) from Rs. 1 lakh to Rs.50,000/-.

M/s. Panasonic AVC Network India Co. Ltd. [earlier known as M/s. Matsushita TV & Audio (I) Ltd.], the appellant herein , being aggrieved of penalty of Rs. 50,000/- imposed by Commissioner (Appeals) has preferred this appeal.

The appellant were engaged in the manufacture of Panasonic Brand CTVs classifiable under sub-heading 8528 of Schedule of the Central Excise Tariff Act, 1985. The CTVs manufactured by the appellant were marketed by M/s. National Panasonic India Ltd.(for short NPIL). M/s. swagat, Fraser Road, Patna was a dealer of CTVs manufactured by the appellant.

On 10-12-1998, Anti-Evasion Wing of Central Excise department conducted search at the premises of the appellants, M/s. Urvashi Sales Pvt. Ltd., Patna and M/s. swagat, Fraser Road, Patna as MRP alleged printed on the carton of CTVs was more than the MRP declared to the department at time of removal of the goods from the factory. Details are given as under:-

Make	Model No.	Sl.No.	Qty	MRP Printed	MRP declared to the department
Panasonic	TC14L3	RK 7523316690	01	11490	10900
Panasonic	TC20L3	RK 7312923328	02	15490	14350
Panasonic	TC20S70	RK 8154506190 RK 8144506186 RK 8154506195	03	17490	17250
Panasonic	TC21E2	RK 823517080	01	17990	17450
Panasonic	TC21S90	RK 7613904481	01	22990	21750
Panasonic	TC25S100	RK 8144700507	01	30990	29990

Since there was mis-matched between MRP declared by the manufacturer and sale price of respective TVs, the statement of Shri Avinash Kumar Verma, Partner of M/s. Swagat, Fraser Road, Patna was recorded under Section 14 of Central Excise Act. Shri Avinash Kumar Verma in his statement inter alia stated that his firm was selling CTVs as per rate recorded by the company/distributors.

It is the case of the department that M/s. Urbashi Sales Pvt. Ltd. had issued price circular to its dealers effective from 24-10-1997 and 1-8-1998 respectively wherein price of various models were declared as under:-

Customer Price as per circular of M/s. Urbashi Sales Pvt. Ltd.

Model	W.E.F. 24-10-1997	W.E.F. 1-8-1998
14L3	12700	11490
20L3	16900	15490
21E2	18700	17990
20S70	17600	17490
21L10C	20700	19990
21V50	20500	19990
21V50CV	21900
21S90	22100	22990
21S100	23600	23990
25L10C	27700	27990
21E1	17600	15990
29S100	41600	42990
25S100	30990

The above referred price circular issued by M/s. Urvashi Sales Pvt. Ltd. and M/s. NPIL revealed that sale price declared in those circulars was higher than the MRP declared by the appellant at time of removal of the goods from their factory.

The department being of the view that MTAIL misdeclared the MRP with a view to evade excise duty issued show cause notice calling upon MTAIL to show cause as to eight CTVs valued Rs. 1,46,100/- should not be confiscated under Rule 9(2) read with Rule 173Q of the relevant rules and why penalty may not be imposed upon them.

The Assistant Commissioner of central excise, Noida vide order-in-original dated 28-2-2002 adjudicated the show cause notice and directed the confiscation of eight CTVs valued at 1,46,100/- and imposed redemption fine of Rs. 40000/- for redeeming those CTVs. He further imposed penalty of Rs.1 lakh on M/s. MTAIL and penalty of Rs. 50,000/- each on NPIL and M/s. Swagat, Fraser Road ,Patna under Rule 209A.The Appellant M/s. MTAIL preferred appeal against the order in original. The Commissioner (Appeals) vide order-in-original set aside the confiscation order in respect of one TV receiver and confirmed in respect of other seven receiver set and reduced redemption fine to Rs. 35000/- He also reduced penalty imposed on M/s. MTAIL to Rs. 50,000/-

Appellant Contentions:-The learned Counsel for the appellant has contended that impugned order is based upon incorrect appreciation of law and facts. In support of his contention, learned Counsel for appellant took us through Section 4A of Central Excise Act, 1944 and submitted that Section 4A empowers the Central Government to specify any goods by notification in the Official Gazette on which manufacturer would be required to declare maximum retail sale price and in such cases, the valuation of those specified goods for the purpose of excise duty would be deemed to be MRP declared on the said goods less such amount of abatement, if any, allowed any notification in Official Gazette. Learned Counsel submitted that in the instant case, the allegation of the departments are the appellant’s MRP printed on the carton of CTVs was higher than the MRP declared by appellant at the time of clearing the goods on payment of excise duty from the factory of the appellant. The onus of proving these allegations was squarely on the department which he has failed to discharge by producing confiscated CTVs or their cartons having MRP printed. In the absence of such evidence there is no justification for the conclusion that the MRP printed on the cartons of CTVs was higher than the MRP declared at the time of clearance of the goods. Learned Counsel for the appellant submitted that the appellant has placed on records photographs of relevant portion of cartons of confiscated CTVs that contained printed MRP and at least three of those photographs, MRP printed is legible and it is the same as was declared to the department at the time of clearing the goods from the factory. Thus, it is contended that there is no justification for imposing penalty on the appellant for misdeclaring MRP of CTVs and the impugned order is liable to be set aside.

Respondent Contentions:- The Respondent has argued in support of the impugned order. He referred to the price circulars issued by M\s. Urvashi Sales Pvt. Ltd. and NPIL wherein price of CTVs is shown higher than the declared MRP and submitted that in view of those price circulars, the adjudicating authority as well as the Commissioner (Appeals) have rightly concluded that the appellant has misdeclared MRP at time of clearance of the goods and the penalty has been rightly imposed on the appellant MTAIL, the predecessor of the appellant-company

Reasoning of Judgment:- We have considered the rival submission and perused the records, Section 4A of Central Excise Act, 1944 which was introduced by way of amendment with effect from 14-5-1997 read thus:

“Section 4A. Valuation of Excisable goods with reference to retail sale price.-(1) The Central Government may, by notification in Official Gazette, specify any goods, in relation to which it is required, under the provision of the Standard of Weights and Measures Act, 1976(60 of 1976) or the rules made thereunder or under any other law for the time being in force, to declare on the package thereof the retail sale price of such goods , to which the provisions of sub-section(2) shall apply. (2) Where the goods specified under sub-section (1) are excisable goods and are chargeable to duty of excise with reference to the value, then, notwithstanding anything contained in section 4, such value shall be deemed to be the retail sale price declared on such goods less such amount of abatement, if any, from such retail price as Central Government may allow by notification in the official gazette. (3) The Central Government may, for the purpose of allowing any abatement under Sub-section (2), take into account the amount of duty of excise, sales tax and other taxes, if any, payable on such goods. (4) If any manufacturer removes from the place of manufacture any excisable goods specified under sub-section (1) without declaring the retail sale price of such goods on the packages, or declares a retail sale price which does not constitute the sole consideration of such sale, or tampers with, obliterates or alters any such declaration made on the packages after removal, such goods shall be liable to confiscation.”

On the reading of the above, it is evident that Section 4A confers power on the Central Government to require by way of notification in the official gazette, the manufacturer of notified goods to declare maximum retail sale price on the goods or on its package and in that case the valuation of the specified goods for purpose of payment of excise duty would be maximum retail price declared on the goods or on the carton. It is not disputed that MRP was actually printed on the carton of seized CTVs. The case of the department show-cause notice is that the CTVs were seized on 10-12-1998 as MRP printed on the CTVs was found to be more than the declared to department. This allegation could be provided by producing carton of seized CTVs. The department however has failed to produce aforesaid best evidence during adjudication proceedings. Cartons of seized CTVs have not been produced before Tribunal. Therefore, this is a case of withholding of best evidence by department. As such, we are inclined to draw an adverse presumption against the Revenue. On the contrary, the appellant had placed before the adjudicating authority the photograph of portion of cartons where MRP was printed. Most of these photographs are illegible. However, on three of the photographs, MRP printed is legible. Other ground on which the appellant authority has concluded that misdeclaration of MRP is the price circulars seized during the investigation wherein retail price of CTVs is more than price declared at time of clearance of the goods from the factory. We find it difficult to agree with the aforesaid conclusion arrived at merely on the basis of price list, particularly, when there is no evidence on record to show that during the relevant period any CTV was sold to the ultimate customers at a price higher than the price declared by the assessee to the department or that any change or modification on printed MRP was done by dealer/ distributor in terms of those price list. In view of the discussion above, we are of the view that the impugned order imposing penalty on the appellant on the ground of misdeclaration of MRP is not sustainable.

Decision:-The appeal is accepted and impugned order imposing penalty of Rs. 50,000/- on the appellant is set aside.

Comment:- The essence of this case is that withholding of best evidence by department lead to drawing adverse opinion against the department and benefit of doubt was extended to the assessee by setting aside the penalty imposed on account of misdeclaration of goods.

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PJ/Case Laws/2012-13/1508

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