While quashing the demand for differential excise duty imposed against Wipro (appellant), the Chennai Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that when the laptops were purchased by the government undertaking for its free distribution among the school children in the respective State, no MRP was required to be declared, and only transaction value at Retail Sale Price (RSP) would sustain.
The Tribunal clarified that ‘service’ referred in the definition of “Institutional Consumer” under Section 4A of the central Excise Act, 1944, is the service industry like airlines, railways and other similar services and as such the activity of free distribution of laptops among weaker section of school children in the State, on behalf of the State, cannot be called service industry as it is not a commercial activity.
The Division Bench comprising P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member) observed that the appellant company had cleared the laptops in dispute to ELCOT, which is a government undertaking, and which was later to be issued to the school students free of cost.
The Bench therefore explained that the laptops purchased by ELCOT were not meant for use in their factories for production. Since ELCOT is neither an institutional consumer nor an industrial consumer, and the appellant had paid excise duty on this basis only, no further differential duty can be demanded. Reference was made to the decision in the case of PG Electroplast Ltd. vs. CCE & ST, Noida [2014 (307) ELT 787 (Del)].
Briefly, in this case, the appellant, a manufacturer of laptops falling under Chapter 84 of the Central Excise Tariff Act, had cleared about 4,661 laptops in bulk to Electronic Corporation of Tamil Nadu Ltd. (ELCOT) by adopting the transaction value under Section 4 of the Central Excise Act, 1944, which did not find favour with the Revenue Department.
The Department opined that the said laptops should have been assessed based on Retail Sale Price (RSP) in terms of Section 4A of the 1944 Act, and resultantly, issued a Show Cause Notice (SCN) proposing to demand the differential duty. After due process, the Adjudicating Authority confirmed all the demands proposed in the SCN.
Case Relied On:
PG Electroplast Ltd. vs. CCE & ST, Noida [2014 (307) ELT 787 (Del)]
Appearances:
Advocate M.N. Bharathi, for the Appellant/ Taxpayer
Selvakumar, for the Respondent/ Revenue
