Custom, Excise & Service Tax Tribunal
Cce, Delhi Ii vs M/S Shakti Zarda Factory (India) Pvt. ... on 19 February, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. III DATE OF HEARING : 19/02/2016. DATE OF DECISION : 19/02/2016. Excise Appeal Nos. 59089 of 2013 and 1840 of 2007 with C.O. No. 61731 of 2013 [Arising out of the Order-in-Appeal No. 101/CE/D-II/2013 dated 03/05/2013 passed by The Commissioner (Appeals), Central Excise Commissionerate, New Delhi and No. 48-CE/DLH/2007 dated 30/03/2007 passed by Commissioner (Appeals), Central Excise, Delhi II.] For Approval and signature : Honble Shri S.K. Mohanty, Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) 1. Whether Press Reporters may be allowed to see : the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of : the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair : copy of the order? 4. Whether order is to be circulated to the : Department Authorities? CCE, Delhi II Appellant Versus M/s Shakti Zarda Factory (India) Pvt. Ltd. Respondent
Appearance Ms. Neha Garg, Authorized Representative (DR) for the appellant.
Shri K.S. Gupta, Consultant for the Respondent.
CORAM: Honble Shri S.K. Mohanty, Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) Final Order No. 50895-50896/2016 Dated : 19/02/2016 Per. B. Ravichandran :-
These are two appeals filed by the Revenue are involving interconnected matters and hence, taken up for disposal together. Appeal No. E/1840 of 2007 deals with valuation of chewing tobacco manufactured and cleared by the respondent/ assessee. Appeal No. E/59089/2013 deals with consequential refund allowed by the learned Commissioner (Appeals) in view of earlier order in favour of assessee to value the chewing tobacco in terms of Section 4 and not in terms of Section 4 A.
2. The brief facts of the case are that the appellants are engaged in the manufacture of chewing tobacco in pouches of 6 gms. and 7 gms. under their brand name. These are then packed in multiples of 52/42/40/32 pouches in a plastic bag and are cleared on sale. It is the case of the Revenue that since the small pouches containing 6 gms. and 7 gms. are together put in a bigger pouches, the entire product should be considered as multi-piece packages covered by the MRP Regulations in terms of Standards of Weights & Measures (Packaged Commodity) Rules, 1977. Accordingly, proceedings were initiated against the respondent resulting in the order-in-original dated 26/12/2005 by the Original Authority. The Original Authority held that the respondent/assessee is liable to pay central excise duty in terms of Section 4A of the Central Excise Act and accordingly, confirmed a demand for Rs. 12,02,410/- and imposed equal penalty on the respondent. On appeal, the learned Commissioner (Appeals) vide his order dated 16/04/2007 set aside the order and allowed the appeal. He held that the products sold by the respondent is not a multi-piece package. The individual pouches containing 6 gms. and 7 gms. of chewing tobacco are not governed by the SWM Rules in view of the exemption under Rule 34 of the said Rules. Aggrieved by this, the Revenue filed appeal before us.
3. Based on the above favourable order of the learned Commissioner (Appeals), the respondent filed a refund claim for Rs. 73,97,158/-. The claim was rejected by the Original Authority. On appeal, the learned Commissioner (Appeals) vide his order dated 3/5/2013 allowed the appeal with consequential relief. He observed that the Original Authority had denied the claim on two grounds First, that the documents are not legible and secondly that the appellants could not produce any evidence to prove that the incidence of duty was borne by them and the same has not been passed on to their buyers. On examination of the documents submitted by the respondent, he recorded that the respondents have satisfied both the requirements and, hence, he allowed their appeal with consequential benefits. Aggrieved by this order, the Revenue filed appeal before us.
4. In the grounds of appeal in respect of both the appeals the Revenue mainly contended
(a) chewing tobacco manufactured and cleared by the respondent are correctly assessable in terms of Section 4A of the Central Excise Act with reference to the retail sale price. The exemption contained in Rule 34 of SWM Rules not applicable to the impugned goods as they are neither sold by weight nor by measure. They are sold in numbers.
(b) Reliance was placed on the definition of multi piece package. The impugned goods cleared are to be considered as multi piece package and MRP Valuation should be made applicable. The investigation conducted revealed that the goods are sold in number of packs at every stage and not by weight or measure.
(c) The Commissioner (Appeals) erred in allowing the respondents plea that the impugned goods are liable to be assessed under Section 4.
5. The respondent/assessee filed Cross Objection in respect of both the appeals. It was submitted that in respect of appeal relating to refund, the grounds of appeal by the Revenue is totally misplaced and not on the facts of the case. The appeal is not valid on this ground alone. On merit, regarding valuation of the impugned goods, the respondents submissions are as follows:-
(a) The Chewing Tobacco manufactured by the respondent are put in pouches of below 10 gms. And many such pouches are put in wholesale package and cleared for sale. The package containing many small pouches are not intended for retail sale but are only wholesale packages;
(b) Section 4A can be made applicable only in respect of those goods in relation to which they are required to declare on the packages retail sale price under the provisions of Standard Weights and Measures Act, 1976 or the Rules made thereunder. The impugned goods are packed in retail packages of 6 gms. and 7 gms. and as such goods with net weight below 10 gms. were exempt from declaring net weight and MRP on the packages. This is clear from the provisions of Rule 34 (b) of SWM Rules;
(c) The allegation of Revenue that many small pouches are put together to form a multi piece package intended for retail sale is not factually correct. Apart from not producing any evidence to support the allegation, the Department has not considered the clarifications given by various State Legal Metrology Departments who are the administrators of SWM Act under the Rules. The CBEC vide Circular dated 28/2/2002 has specifically laid down that in case of doubt the clarification from the said Department should be obtained. While the Revenue did not obtain any such clarification, the All India Tobacco Manufacturers Association, Maharashtra Zarda Manufacturer Association and M/s Govind Tobacco Manufacturing Company, Panipat have obtained clarification from the concerned legal Metrology Departments of various States to the effect that all packages below 10 gms. are totally exempt from the purview of the Rules. Further, in accordance with Rule 2 (x) and Rule 29 the package containing 10 or more retail packages, being wholesale package need not carry retail sale price declaration thereon.
(d) Reliance was placed on various decided cases by the Tribunal and the Honble Supreme Court in support of their contention.
6. We have heard both the sides and examined appeal records. The point for decision is the correct provision applicable for valuation of chewing tobacco manufactured and cleared by the respondent/assessee whether to be assessed in terms of Section 4 or Section 4A. The admitted facts are that the appellants are manufacturing and clearing chewing tobacco in pouches of 6/7 gms. under their brand name. Many such pouches (32/40/42/52) are put together in a polythene package and cleared to the dealers and stockist and thereafter to their retail sellers. It is the Revenues case that such package is to be considered as multi piece package and covered by regulations for MRP based assessment in terms of Section 4A readwith Notification 10/2003-CE (NT) dated 01/3/2003. We find that in the impugned order, the Commissioner (Appeals) examined this issue and held that these are not multi piece packages but are wholesale packages. He examined the question on both the ground that (a) whether the small pouches are retail packages, (b) when more than 10 retail packages are in a larger pouch are they wholesale packages. Relying on the interpretation and clarification given by the Metrology Authorities of the State Government he held that the impugned goods cleared by the respondent cannot be considered to be in multi piece package. On the question of the type of sale transaction either by weight or by numbers, the learned Commissioner (Appeals) found that chewing tobacco is sold by weight by the respondent and hence assessment of small pouches of 6 gms. and 7 gms. cannot be done under Section 4A. On careful examination of the grounds of appeal by the Revenue and the detailed finding of the Commissioner (Appeals), we find no merit in the grounds now being agitated before us and we find no reason to interfere with the above findings of the learned Commissioner (Appeals).
7. We find that the Tribunal in CCE, Rohtak vs. Gupta Tobacco Co. reported in 2010 (252) E.L.T. 271 (Tri. Del.), while examining similar set of facts held that the goods packed in pouches and put in bulk packs are only weighing less than 10 gms. and hence are not governed by SWM Act and the Rules. They are outside the purview of Section 4A. The Honble Supreme Court affirmed the said decision of the Tribunal in 2014 (301) E.L.T. A70 (S.C.). In Milap Zarda Udyog vs. CCE, Jaipur I reported in 2012 TIOL 1073 CESTAT DEL., the Tribunal held that the chewing tobacco packed in pouches of less than 10 gms. and further packed in larger packs are not liable to RSP based assessment. Similarly, in Loknath Prasad Gupta vs. CCE, Kolkata III reported in 2006 (204) E.L.T. 412 (Tri. Kolkata), the Tribunal held that goods packed in 5 gms. and 9 gms. pouches and further 26 or 48 of such pouches then packed in polythene packets are not liable for RSP based assessment. These polythene packages do not satisfy the definition of multi piece packages. The Honble Supreme Court in CCE, Vapi vs. Kraftech Products reported in 2008 (224) E.L.T. 504 (S.C.) held that if the net weight of the commodity marketed and sold by the assessee is 10 gms. or less, they are not governed the RSP based assessment. The stipulation of multi piece package will not apply in such situation. We find that the CBEC vide their Circular dated 28/2/2002 (para 7) clarified that in case of doubt in situation like this, the matter should be got clarified by the concerned Department of State Government. We find as pointed out by the respondent/assessee the State Government Authorities (Haryana and Maharashtra) and also legal Metrology Unit of Government of India, New Delhi have clarified that packages below 10 gms. are totally exempt from purview of SWM Rules. Packages containing 10 or more retail packages are considered as wholesale packages and need not carry retail sale price declaration.
8. Considering the above discussion and analysis we find no merit in these appeals filed by the Revenue. Accordingly, these appeals are dismissed. The Cross Objections filed are also disposed of.
(Operative part of the order pronounced in the open court.) (S.K. Mohanty) Member (Judicial) (B. Ravichandran) Member (Technical) PK ??
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