Commissioner of CE And ST Vs Western India Ceramics Pvt Ltd (Supreme Court of India)
Western India Ceramics Pvt. Ltd. manufactured vitrified polished tiles during the period from March 2005 to March 2009. The goods were assessed to Central Excise duty under Section 4A of the Central Excise Act, 1944 on the basis of the Retail Sale Price (RSP) declared on the packages after the prescribed abatement. In March 2008, the DGCEI initiated an investigation into the authenticity of the declared RSP. A show cause notice dated 27.03.2010 alleged that the goods had been sold at prices higher than the declared RSP based on statements of employees, the director, dealers, builders and computer printouts of e-mails allegedly showing cash transactions. The notice proposed rejection of the declared RSP, re-determination of the RSP by adopting the MRP contained in a dealer’s price list dated 23.02.2005, and demanded differential Central Excise duty of ₹9,19,34,781 under the proviso to Section 11A of the Central Excise Act, 1944 together with interest under Section 11AB and penalties. A separate show cause notice dated 17.07.2009 proposed confiscation of 202 boxes of tiles valued at ₹1,71,700 seized at the Kolkata depot for alleged non-declaration of RSP.
Read CESTAT Ahmedabad Order in this case: CESTAT Allows Appeal Against Differential Excise Duty on Re-Determined RSP
The appellants contested both notices, submitting that the department had not established that the goods were sold above the declared RSP, that different consignments and grades could bear different RSPs, that there was no evidence of any flow-back of cash or collection of consideration above the declared RSP, and that cross-examination of the witnesses relied upon in the show cause notice should be granted. The Commissioner of Central Excise, by Order-in-Original dated 31.03.2011, confirmed the differential duty demand of ₹9,19,34,781, imposed an equivalent penalty on the company under Section 11AC, imposed a penalty of ₹50,00,000 on the director under Rule 26, ordered confiscation of the seized goods with redemption fine of ₹1,00,000, and imposed penalties of ₹4,000 each on the company and another appellant under Rule 26.
Before the CESTAT, the appellants relied upon the Larger Bench decision in Ocean Ceramics Ltd. v. CCE, contending that, prior to 01.03.2008, Section 4A(4) could not be invoked for re-determination of RSP because no rules prescribing the manner of such determination existed before the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 came into force. They also submitted that the statements of dealers and builders did not establish sale above the declared RSP, that the computer printouts were inadmissible as the requirements of Section 36B had not been satisfied, and that the method adopted for determining the RSP was contrary to the 2008 Rules. The Revenue submitted that excess consideration could be inferred from the statements and documentary evidence and stated that it had no objection if the matter was remanded for cross-examination of the witnesses.
The CESTAT considered whether the materials relied upon established that the goods were sold above the declared RSP and whether the re-determination of the RSP complied with the 2008 Rules. It found that the statements of dealers only referred to payments made partly by cheque and partly by cash and did not state that the total consideration exceeded the declared RSP. It also observed that no statements of buyers had been recorded to establish payment above the declared RSP and that there was no allegation that the dealers altered the printed RSP. The Tribunal held that none of the conditions specified in Section 4A(4) of the Central Excise Act, 1944 had been established. It further observed that the statements of builders alleging receipt of lesser quantities than invoiced did not inspire confidence, that the statements of the company’s officials were exculpatory, that denial of cross-examination was contrary to the legal position referred to by the appellants, and that the computer printouts were inadmissible in the absence of compliance with Section 36B. The Tribunal also held that the proposed re-determination of the RSP by relying on a dealer’s price list dated 23.02.2005 did not conform to Rule 4 of the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008. Referring to the Larger Bench decision in Ocean Ceramics Ltd. v. CCE, it held that no prescribed mechanism existed for ascertainment of RSP under Section 4A(4) prior to 01.03.2008 and that the 2008 Rules could not be applied retrospectively. Accordingly, the Tribunal set aside the Order-in-Original and allowed the appeals with consequential relief, if any, as per law.
The Revenue challenged the CESTAT order before the Supreme Court. The appeal was reported to be delayed by 291 days. The Supreme Court considered the application for condonation of delay and held that it did not find a satisfactory explanation for the delay. It rejected the application for condonation of delay and, consequently, dismissed the appeal as barred by limitation. Pending applications, if any, were also disposed of. As a result, the CESTAT order setting aside the Order-in-Original and allowing the appeals remained undisturbed, the Supreme Court having dismissed the Revenue’s appeal on the ground of delay.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. This appeal is reported to be beyond time by 291 days.
2. We have perused the application seeking condonation of delay. We do not find satisfactory explanation for the delay.
3. Accordingly, the delay condonation application is rejected. Consequently, the appeal is dismissed as barred by time.
Pending application(s), if any, shall stand disposed of.
1. The delay condonation application is rejected.
Consequently, the appeal is dismissed as barred by time in terms of the signed order which is placed on the file.
2. Pending application(s), if any, shall stand disposed of.
