Hawkins Cookers Limited vs C.C.E. And S.T., Ludhiana

The appellant is in appeal against the impugned orders. As all the appeals are having common issue, therefore, all are disposed of by a common order.

The brief facts of the case are that the appellant is a manufacturer of pressure cookers and parts thereof. The pressure cookers are covered under Section 4A of the Central Excise Act, 1944, i.e. the appellant has to pay duty on MRP less abatement. Whereas the parts of the pressure cookers are subject to assess to duty on transaction value in terms of Section 4 of the Central Excise Act, 1944. The abatement to the extent of 25% of MRP has been notified vide Notification No. 49/2008-CE(NT) dt. 24.12.2008, however in respect of parts of the pressure cooker which were manufactured and cleared by the appellant, no such abatement on MRP has been notified as parts of the pressure cooker are not covered under Section 4A of the Central Excise Act, 1944. The appellant is also selling the parts to their sister units as well as outside parties through their depots. The assessable value adopted by the appellant for the parts of the pressure cooker is affixed MRP less abatement of 35% of MRP. The said assessment was originally approved by the Central Excise Department on provisional basis. Later on, finalization of the same was done and abatement was increased to 41.41% as claimed by the appellant. The dispute in the present appeals is relates to the value of parts which are being cleared by the appellant to their other sister units located at Thane (Maharashtra) and Jaunpur (U.P.) for further manufacture of pressure cookers. While clearing the parts, the appellant adopted the same assessable value at which were being cleared by them to their depots for further sale in the open market. The contention of the Revenue is that abatement of 35% claimed by the appellant is not available in respect of transfer of pressure cookers parts to their other sister units in as much as the same is not for retail sale. Hence, the proceedings were initiated against the appellant by way of issuance of various show cause notices, which were converted into the impugned demand as per the impugned orders along with interest and by imposing penalty on the appellant. Against the said orders, the appellant is before us.

The ld. Counsel Sh. Prakash Shah, advocate appearing on behalf of the appellant submits that the dispute is in relation to pressure cookers parts only. Pressure cookers parts are not notified items in terms of Section 4A of the Central Excise Act, 1944. Therefore, they are not required to affix MRP on the same but for the ease of doing business, they are putting MRP thereon and as per the provisional assessment, they claimed an abatement of 35% on MRP and paid duty. After finalization of the assessment, they were entitled to 41.41% as abatement on MRP as per their cost data. The same has been accepted by the department and at the said price, they are selling the goods in open market through their depots. Therefore, they are entitled for an abatement of 35% on MRP on pressure cookers parts cleared by them to their sister units and the valuation Rule 8 is not applicable to the facts of the case as they are selling the goods to their sister units as well as to the outside parties in open market. When comparable price is available, in these circumstances, they are entitled to abatement. It is a fact on record that the pressure cookers parts are not notified items, therefore, question of denial of abatement does not arise. Duty is payable only on transaction value, hence, impugned orders are liable to be set aside.

On the other hand, the ld. AR supports the impugned orders and submits that the appellant is required to pay duty on invoice value of goods cleared by them without any deduction as provided under Valuation Rules 2000 read with Section 4(1) of Act. She also submits that clearing the said goods under Section 4, they have adopted to assess the impugned goods in terms of Section 4A, value on their own which is not allowed under law. Initially, the deduction was allowed provisionally but after finalization these parts cleared to sister units are not for retail sale and are only for manufacture of final product i.e. pressure cooker which is entitled for abatement in terms of Section 4A of the Central Excise Act, 1944. She further submits that the Revenue neutrality is not applicable in this case as the decision in the case of Jay Yuhshin Ltd vs. Commissioner of CE, New Delhi - 2000 (119) ELT 718 (Tri. LB). She also submits that penalty is also imposable on the appellant.

Heard the parties, considered the submissions.

On careful consideration of the submissions made by both the sides, we find that facts are not in dispute that the parts of the pressure cookers have been cleared by the appellant from their depots in open market @ MRP less 41.41%. When comparable price is available, then the goods cleared to their sister units are to be assessed on the same value, but in this case, the appellant has cleared the goods to their sister units on higher value i.e. MRP less abatement @35% of the MRP. In these circumstances, we do not find any merit in the impugned orders and the arguments advanced by the ld. AR. Therefore, the impugned orders are set aside.

In result, the appeals are allowed with consequential relief, if any.

(Operative part of the order pronounced in the court)