Viacom Electronics Pvt. Ltd., Vs. the Commissioner of Central - Court Judgment

Excerpt:
1. all the three stay petitions are being disposed off by a common order as they arise out of the same impugned order passed by the commissioner, central excise, vadodara, vide which he has confirmed demand of duty of rs. 16,47,74,592/- (rupees sixteen crores forty seven lakhs seventy four thousand five hundred and ninety two only) as differential duty against m/s. viacom electronics pvt ltd., along with imposition of personal penalty of identical amount under section 11ac of the central excise act, 1944. in addition, an amount of rs. 10,20,000/-(rupees ten lakhs twenty thousand only) stands confirmed against the said applicant by rejecting the modvat credit in terms of provisions of rule 571(5) of central excise rules, 1944 along with imposition of personal penalty of identical amount.....

Judgment:
1. All the three stay petitions are being disposed off by a common order as they arise out of the same impugned order passed by the Commissioner, Central Excise, Vadodara, vide which he has confirmed demand of duty of Rs. 16,47,74,592/- (Rupees sixteen crores forty seven lakhs seventy four thousand five hundred and ninety two only) as differential duty against M/s. Viacom Electronics Pvt Ltd., along with imposition of personal penalty of identical amount under Section 11AC of the Central Excise Act, 1944. In addition, an amount of Rs. 10,20,000/-(Rupees ten lakhs twenty thousand only) stands confirmed against the said applicant by rejecting the modvat credit in terms of provisions of Rule 571(5) of Central Excise Rules, 1944 along with imposition of personal penalty of identical amount under Rule 571(4) of Central Excise Rules, 1944. In addition, personal penalties of varying amounts ranging from Rs. 1 crore to Rs. 5 crores have been imposed upon the other applicants under the provisions of Rule 209A of Central Excise Rules, 1944.

2. As per facts on record, M/s. Viacom Electronics Pvt Ltd., were engaged in the manufacture of AKAI brand Colour Television sets and Audio/Hi-Fi systems falling under Chapter 85 of Central Excise Tariff Act. 1985. The said goods were being manufactured by the appellants for and on behalf of M/s. Baron International Ltd., and were being marketed by them. Inasmuch as during the period in question i.e. from 01/06/98 to 01/12/98, Television sets was one of the specified goods under the provisions of Section 4A was of Central Excise Act, the assessable value was to be determined with reference to the retail sale price declared on the goods in terms of the provisions of the Standard Weights & Measurements Act, 1976. The appellant was clearing their goods on payment of duty in terms of Serial No. 229 (i) of Notification No. 5/98-CE dated 02/06/98, on the basis of the maximum retail price (MRP) declared on the Colour Televisions.

3. The revenue's case is that as a result of investigation conducted and the evidences collected, it was found that the Colour Television Sets were being sold by M/s. Baron International Ltd., at a price more than the declared MRP. It was also found that M/s. Baron International, who were marketing the Colour Television Sets have collected additional amount, over and above the declared MRP from their dealers. Statements of various persons recorded during the course of investigation strengthened the revenue's stand.

4 Based upon the above, proceedings were initiated against the manufacturer M/s. Viacom Electronics Pvt. Ltd., raising demand of duty in terms of Serial No. 229 (ii) of Notification No. 5/98-CE instead of Serial No. 229 (i). It may be mentioned here that Serial No. (ii) of 229 of the Notification in question prescribes specific rates of duty on Colour Television Sets, where the same are not affixed with maximum retail price. The revenue stand is that inasmuch as the retail sale price affixed on the said Colour Television Sets have been found to be incorrect and as such, definition of the same as appearing in explanation to the said Notification is not applicable, the duty liability is required to be discharged by the said manufacturer in terms of the Serial No. (ii) of Serial No. 229 of the Notification.

5. On the other hand, the appellants have contended that the duty was correctly discharged by them on the basis of MRP declared by M/s. Baron International and they had no source to find out or to check the correctness of the same. They cannot be held responsible for collection of some extra amount by the dealers at the behest of M/s. Baron International. Reference has also been made to the Tribunal's decision in the case of ITC Ltd., v. CCE, reported in 1998 (28) RLT 323 (T) and subsequent upholding of the same by the Hon'ble Supreme Court as .

6. While rejecting the above contention of the appellants, the Commissioner has observed that inasmuch as maximum retail price declared by the manufacturer was not true and correct, the provisions of Serial No. 229 (i) of Notification No. 5/98 will not apply and it is Serial No. 229 (ii) of the Notification, which prescribes specific rate of duty depended upon the screen size for "other cases" would be applicable. For arriving at the above conclusion, he has drawn support from the Circular No. 432/65/98.-CX3 dated 23/11/98. In terms of para 4 of the said Circular it has been clarified that once it was established that the said Television Sets are sold to the ultimate consumer at a price higher than the declared on the package, the price declared on the package cannot be said to the RSP as envisaged under explanation to Serial No. 229 of Notification No. 5/98-CE, and in such case, duty has to be worked out at the specific rates prescribed under which Clause (ii) of Serial No. 229 of the said Notification.

7. Ld. Advocate has also argued that once the goods are specified under Section 4A and are affixed with maximum retail price, they have to be assessed in terms of the said declaration made. However, on being asked that in an identical sets of facts and circumstances, the appellant has accepted enhancement of maximum retail sale price declared on the Television Sets manufactured by M/s. Viacom Electronics Pvt Ltd., Ld.

Advocate fairly agrees that vide order No. 1040-42/05-Ex dated 12/12/2005, passed by the Tribunal in their own case, appellants stands to enhance the MRP declared by the and to assess the Colour Television Sets accordingly has been accepted. On being questioned as to how much would be the quantum of duty if the MRP is enhanced and the goods assessed accordingly, instead of assessing the same in terms of the Clause (ii) of the Serial No. 229 of the Notification, Ld. Advocate submits that the duty would come down to around 65 lakhs.

8. After giving our careful consideration to the contention raised by both sides, we are of the view that the issue are arguable and contentious It cannot be said at this stage that the appellant has been able to make out a prima facie case in his favour so as to allow the stay petition unconditionally. Though the applicants have pleaded financial hardship, we have to safe guard the revenue's interest also.

However, we agree that in view of the financial difficulties being faced by the appellants it would be difficult for them to deposit the entire amount of duty and penalty. As such by taking into account the overall facts and circumstances of the case as discussed above, we direct M/s. Viacom Electronics Pvt Ltd., to deposit an amount of Rs. 1.00 crore (Rupees one crore only) within a period of eight weeks from the date of receipt of the present order. Subject to deposit of the above amount of duty, the pre-deposit of balance amount of duty and the full amount of penalties imposed upon him and on other applicants stands waived and its recovery stayed during the pendency of the appeal. Mattel to come up for ascertaining compliance on 22/05/2006.