Custom, Excise & Service Tax Tribunal
M/S. Godrej Consumer Products Ltd vs Commr. Of Central Excise & Service Tax ... on 13 May, 2015
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EAST REGIONAL BENCH : KOLKATA
Excise Appeal Nos. E/179 to 182/12, E/70200/13 & E/76111/2014
(Arising out of the Order-in-Appeal No. 05-08/SLG/2012 dated-19/01/2012 (Appeal Nos. E/179-182/12) passed by the Commissioner (Appeal-IV), Central Excise, Kolkata, Order-in-Original No. 20/COM/CE/SLG/12-13 dated-21/12/2012 (Appeal No. 70200/13) passed by the Commissioner of Central Excise, Silliguri and Order-in-Original No.01/COM/CE/SLG/2014 dated-10/07/2014 (Appeal No. E/76111/14) passed by the Commr. of Customs, Central Excise & Service Tax, Siliguri)
For approval and signature of:
DR. D.M. MISRA, HONBLE JUDICIAL MEMBER
DR. I.P. LAL, HONBLE TECHNICAL MEMBER
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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 should 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 Departmental :
Authorities ?
M/s. Godrej Consumer Products Ltd.
APPELLANT(S)
VERSUS
Commr. of Central Excise & Service Tax ,Silliguri
RESPONDENT(S)
APPEARANCE
Sri Ravi Raghavan, Advocate &
Miss Satabdi Chatterjee, Advocate
FOR APPELLANTS
Sri S. Sharma, Commissioenr,(A.R.)
FOR THE RESPONDENTS
CORAM:
DR. D.M. MISRA, HONBLE JUDICIAL MEMBER
DR. I.P. LAL, HONBLE TECHNICAL MEMBER
DATE OF HEARING : 13/052015
Date of Pronouncement:
ORDER NO.FO/A/75408-75413/15
Per DR. D.M. MISRA:
The aforementioned appeals are directed against two Orders-in-Original bearing Nos. 20/COM/SLG/12-13 dated-21/12/2012 and 01/COM/CE/SLG/2014 dated 10/07/2014 passed by the Commissioner of Central Excise, Silliguri and Order-in-Appeal No. 05-08/SLG/2012 dated 19/01/2012 passed by the Commissioner of Central Excise (Appeals), Kolkata. Since the principal issue involved in all these Appeals is common, therefore, with the consent of both sides all appeals are heard and taken up together for disposal.
2. Briefly stated facts of the case are that the appellants are engaged in the manufacture of Powder Hair Dye (PHD) falling under Chapter Heading 3305 of CETA, 1985. During the relevant period, the said PHD was packed in sachets weighing 3 grams on which its MRP was declared. The sachets numbering 6/8 were then placed in one mono pack/carton on which the total MRP of all sachets was also declared/printed. The appellant discharged duty on the PHD by determining its value from the MRP declared on the mono pack under Section 4A of CEA, 1944 after claiming allowed abatement under the relevant Notification as was applicable to the said PHD during the relevant period.
3. The allegation of the Revenue is that in view of Rule 34(b) of The Standards of Weights & Measures(Packaged Commodities) Rules, 1977(herein after called as PC Rules,1977) or The Legal Metrology (Packaged Commodities) Rules,2011 (herein after called as PC Rules,2011), since each sachet printed with MRP was weighing 3 grams(i.e. less than 10 grams), even though cleared in 6/8 numbers in the mono pack/cartoon, on which no MRP was required to be affixed, hence, such PHD was liable to be assessed under Section 4 and not under Section 4A of CEA,1944. The first show cause cum demand notice was issued (Excise appeal No. 70200) on 15/12/2011 demanding duty for the period April, 2007 to March, 2011 and the second show cause notice was issued on 13/12/2012 demanding duty during the period April, 2011 to November, 2011. On adjudication the said demand notices were confirmed and penalties imposed. Hence, the present Appeals.
4. In the second set of appeals filed against the order-in-Appeal passed by the Ld. Commissioner (Appeals), the facts relate to sanctioning of the refund by the jurisdictional authorities for the period 2009-10 and July 2010 to September, 2010. The appellant filed refund claims on month to month basis in terms of Notification No. 71/03-CE dated 09/9/2003 assessing their goods under Provision of Section 4A of CEA, 1944 and the refund claims were sanctioned to them till March, 2009. However, for the aforesaid period, even though the refunds were initially sanctioned, but the Revenue filed review application before the Ld. Commissioner (Appeals), who has decided the issue in favour of the Revenue, resulting into the present appeals by the Appellant.
5. Ld. Advocate Shri Ravi Raghavan for the Appellant assailing the impugned Order has submitted that the appellant had cleared Powdered Hair Dye(PHD) from the factory in mono cartons duly affixed with the applicable MRP which was intended for retail sale to the consumers in such packing. It is his contention that the condition in which the goods were packed and cleared from the factory and intended to be sold as retail pack, ought to be assessed in that form and not in the form of small sachets weighing 3 grams each, contained in the mono pack. He has contended that the Ld. Commissioner has erred in observing that in view of the deletion of definition of multi piece package under PC Rules,1977, the mono packs/cartons comprising of 6/8 sachets cannot be considered as product for assessment. It is his submission that deletion of the definition of multi piece package from the PC Rules,1977, in no manner be a ground for change in the method of assessment of the goods. In nutshell, it is his submission that since the mono cartons satisfies the definition of retail package and there is a statutory requirement for the appellant to comply with the PC Rules,1977 to affix MRP on it, therefore, the Mono cartons/packs which were sold through retail sale for consumption, accordingly to be assessed under section 4A of CEA, 1944. It is his submission that the Department has not produced any evidence to prove that the individual sachets were retail packs and intended to be sold in retail. It is his contention that when the Department does not dispute the mono cartons/packs itself a retail package, there is no question of not treating the same as the products under assessment.
6. The Ld. Advocate further submitted that the mono carton/pack was retail package and intended for retail sale only was also evident from a scheme introduced by the appellant for a particular period. Under the said scheme it was informed to the consumers by printing the text on the mono pack indicating that a soap valued at Rs.10/- was offered free with the purchase of the mono pack. This clearly indicates that the appellants intention was to sell the mono cartoons/pack in retail and consequently the assessment of the goods ought to be under Section 4A of CEA, 1944.
7. Further, referring to the definition of wholesale package under the PC Rules,1977 or PC Rules,2011 the Ld. Advocate submitted that the packages which are not intended for sale direct to a single consumer would be qualified as a wholesale package. It is his submission that unless it is shown by the Department that the mono packs/cartons is a wholesale package and not a retail package, the assessment cannot be done under Section 4 of CEA,1944. It is his submission that Rule 29 of PC Rules, 1977 or Rule 24 of the PC Rules, 2011 exempts wholesale packages from printing MRP and other declaration prescribed under these Rules. He has further submitted that the intention to sell the mono cartons/packs in retail to ultimate consumer is evident/manifest from the declaration made on the mono cartons/packages and the manner in which the carton is prepared, hence, the provisions of PC Rules,1977 or PC Rules,2011 are applicable to the mono Carton/packs containing the sachets. In support he has referred to the decision of Larger Bench of the Tribunal in the case of Roys Industries Ltd. Vs. CCE, Hyderanbad-2010 (259) ELT 387 (T-LB) and CCE, Vapi Vs. Kraftech Products-2008 (224) ELT 504 (S.C.).
8. He has further submitted that non-compliance of the mandatory requirements of declaration of MRP on the mono cartons/pack under the provisions of PC Rules,1977 or PC Rules,2011 would result in penal action. It is his submission that at the time of clearance from the factory, the mono carton contains 6/8 sachets of PHD weighing 03 grams each, hence the total weight of PHD in the mono cartoon/packs was 18 grams/ 24 grams respectively. Since the total weight of PHD in the mono pack was more than 10 grams, hence, it would fall outside the exclusion clause contained under Rule 26(a) or 34(b) of PC Rules,2011 or PC Rules,1977, respectively and consequently they were required to declare the MRP on the mono packs. Further, he has submitted that the goods manufactured and cleared from the factory are to be assessed to duty in the form and condition in which they leave the factory, hence, the mono cartoons/packs of PHD are relevant for assessment. In support, he has referred to the decision of this Tribunal in the case of Arora Product Vs. CCE, Jaipur-ii-2012 (276) ELT 77 (Tri.Del.).
9. The Ld. Advocate advancing an alternative plea submitted that in the event their contention for determination of assessable value of PHD under Section 4A is not acceptable and it is held that the value is to be determined under Section 4 of CEA 1944, then the duty confirmed is also not sustainable being resulted out of an erroneous determination of assessable value under Sec.4. He submits that in Appeal No. (E-70200/13), the SCN dt. 15.12.2011 adopting the average selling price the total assessable value under Sec. 4A was arrived as Rs.124 crore and the assessable value under Sec. 4 as Rs.155 crore. consequently, the differential duty of Rs.3,18,82,387/- was demanded on the differential assessable value of Rs.31Crore(approx.). It is contention in computing the demand two major errors have occurred viz. value was determined by assuming MRP as the assessable value under Section 4 of CEA,1944 for certain period and for the remaining period, the sale price was considered, which was inclusive of entry tax @ 1% and the excise duty. It is his contention that the valuation has to be carried out in accordance with Section 4(1)(b) read with Rule 7 of Central Excise Valuation(Determination of Price of Excisable Goods) Rules 2000. It is his submission that if the correct value is determined, in accordance with the aforesaid provisions, the demand of duty would drastically be reduced from Rs.3,18,82,387/- to Rs.52,72,446/-.
10. In relation to appeal No. (E-76111/14), the Ld. Advocate submitted that the depot sale price, which was cum duty price, disclosed to the authorities by the Appellant, ought to have been adopted for the purpose of determination of assessable value. However, the Department has wrongly multiplied the MRP by a factor (100/65) to arrive at the assessable value under Sec.4.. He submits that such computation of is wrong and arbitrary. If the value is computed as per Se.4(1)(b) read with Central Excise Valuation Rules, 2000, the out come would be that the Appellant had paid excess duty of Rs.9.33 lakhs. Further, he has submitted on re-computation of the demand during the course of hearing of their Stay application, the department has arrived at the liability at Rs.2,55,869/- by including the secondary freight i.e. freight charges from the depots to the customers premises. It is his submission that secondary freight from the depots to the customers premises cannot be included in the assessable value as the place of removal was the depot not at the customers premises. In support, he has referred to the judgment of the Honble Supreme Court in the case of Escorts JCB Ltd. Vs. CCE, Delhi-II reported in 2002 (146) ELT 31 (SC) and Prabhat Zarda Factory Ltd. Vs. CCE reported in 2002 (146) ELT 497 (SC) and CCE, Aurangabad Vs. M/s. Roofit Industries Ltd. reported in 2015 (319) ELT 221 (SC).
11. In relation to Appeal No. (E/179182/2012), the Ld. Advocate has submitted that the value in those cases ought to have been arrived at in terms of Section 4 of CEA,1944 and it is to be re-worked and cannot be carried out on ad hoc basis. The Department did not issue any notice to reassess the goods under Section 4 and the manner of working out the differential duty is not ascertainable. Hence, the value under Section 4 read with Rule 7 of Central Excise Valuation Rules,2000 needs to be re-worked for the said period also.
12. Ld. Advocate further, submitted that the in Appeal No. (E-700200/13), the show cause notice was issued on 15/02/2011 for the period April, 2007 to March, 2011, hence the demand is barred by limitation for the period till November, 2010. Similarly, in appeal No. (E/76111/2014) the show cause notice issued on 13/12/2012 for the period from April,2011 to September, 2012 and accordingly barred by limitation till November, 2011. It is his submission that extended period of limitation cannot be invoked in the present case as they have been filing refund claims from time to time and upto March, 2009, refund has been sanctioned to them. Further, he has submitted that the two demand notices were issued in December, 2011 and December, 2012 after passing the Orders sanctioning refunds and reviewed by the Department; it indicates that the relevant facts are within the knowledge of the Departmental authorities, hence, the demand is barred by limitation.
13. Rebutting the allegation of the Revenue that the information sought for by the department was not furnished, the Ld. Adv. submitted that it is ex-facie erroneous and contrary to facts on record. It is his argument that once the refund claims and also ER-1 Returns are filed on monthly basis with the proper officer, hence no other information required to be furnished to the Department to arrive at the conclusion, whether the valuation has to be carried out under Section 4 or Section 4A of CEA, 1944. He submits that on the aforesaid grounds also the penalty under Section 11AC is also not imposable.
14. Per contra, the Ld. A.R. (Commissioner) for the Revenue has submitted that the goods in question viz. PHD is sold in a multiple piece package and MRPs affixed on the mono pack as well as on the individual sachets. Each sachet weighed 3 grams and there was no marking on the mono packs to the effect that the sachets packed thereunder would be sold together and not individually. Also, the mono pack was not sold or packed in a manner by which it would preclude the possibility of selling individual sachets in retail to the consumer. Therefore, the contention of the appellant that their intention was to sell the mono pack only and not the individual sachets, is not borne out from the mode/style of packing of the sachets; and also in absence of any such warning on the pack to the effect that the said sachets are not to be sold in retail, the said argument is not acceptable.
15. Further, he has submitted that by virtue of Notification No. 425E dated 17/07/2006 issued under The Standards of Weights and Measures(Packaged Commodities)Rules,1977 the definition of multiple piece packing under Rule 2(j) has been deleted. This has resulted in removing multiple piece packing from the purview of PC Rules,1977 w.e.f. 17/07/2006 and there was no requirement of affixing MRP on multiple piece packages. The said Notification also amended Rule 34(b) of PC Rules,1977 and Rule 26(a) of PC Rules,2011. Thus, the package weighing less than 10 grams had been exempted from the provisions of the said Rules. In view of the said exemption, there is no legal requirement of affixing the MRP on individual sachet of PHD as each sachet weighed 3 grams i.e. less than 10 grams. The appellants has affixed MRP on individual sachets despite there being no legal requirement to do so with the sole purpose of intention of selling individual pieces and not the multiple piece pack i.e mono pack/cartoons as such.
16. In support of his contention, the Ld. A.R. citing an illustration submitted that in case of Amul Processed Cheese containing 10 cheese cubes, M.R.P. is marked/affixed on the multi piece pack and not on the individual cheese cubes, which makes the intention of the manufacturer clear that the multi piece pack would be sold as such and each cube not to be sold separately. Further, he has submitted that in case the intention of the appellant was to sale the multi piece package i.e. mono pack/cartoon as the retail package and individual sachets were not to be sold separately, then they would have clearly marked on the mono pack that the individual sachets were not meant to be sold separately; but there is no such marking on the mono pack.
17. He has further, submitted that there was no need of affixing MRP on the individual sachets for example, a mono pack containing three packs of dove soap which is to be sold at a lesser price than the price of each cake of soap multiplied by three are packed in such a manner that the individual soap cannot be taken out without destroying the packing and further, the individual cakes of soap do not bear any MRP as the intention was not to sale the individual pieces of soap separately. It is clearly marked on the mono pack of dove soaps that the mono pack is to be sold as such. It is his submission that in the present case none of the above mentioned features have been used for selling mono pack of PHD. Further, the mono pack does not advance any price discount for buying 6 to 8 sachets Powder Hair Die (PHD) as such discount is normal practice in the trade while selling multi piece packages.
18. Similarly, the appellants also affixed MRP on multiple piece packages although there was no legal requirement to do so which has been done with the sole intention and purpose to come within the purview of Section 4A of CEA, 1944.
19. The Ld. A.R. further submitted that under Boards Circular No. 625/16/2002-CX dated 28/02/2002, it is clarified that Section 4A of CEA, 1944 is applicable in respect of those cases only where the manufacturer is legally obliged to print the MRP on the packages of the goods under the Provisions of The Standards and Measures Act, 1976 or The Legal Metrology Act,2009 and the Rules made there under. It is his submission that if there is no statutory requirement under the said provisions to declare the retail sale price on the Mono packs, then assessment under Section 4A of CEA, 1944 will not be attracted. Further, he has referred to a letter F. No. 341/64/97-TRU dated 11/08/1997 issued by the Board issued in the context of certain cases, where the printing of MRP on packages were made even when there was no statutory requirement to do so under the SWMR , 1976. It was clarified that in such cases, duty would be assessed under Section 4 of CEA, 1944 and not under Section 4A. He has submitted that in view of the aforesaid circulars, it is clear that by affixing MRP of individual sachets and on multiple packages on their own, when there is no legal requirement to do so, the goods cannot be subjected to assessment under Section 4A of CEA, 1944. In support, he has referred to the following case laws: (i)Central Arecanut and Cocoa Marketing and Processing Co-Op. Ltd. Vs. CCE, Bangalore 2008 (226) ELT (364) (Tri-Chennai); (ii)Swan Sweets Pvt. Ltd. Vs. CCE-2006 (198) ELT 565 (Tri) (iii) CCE Rajkot, Gujarat Vs. Makson Confectionery Pvt. Ltd.-2010 (259) ELT (S.C.) (iv)RDGs Industries Ltd. Vs. CCE, Hyderabad (v)Arora Product Vs. CCE-2012 (276) ELT 77 (Tri.), and (vi) Roys Industries Ltd. 2010 (254) ELT (387) (TRI-LB)
20. The Ld. A.R. further, submitted that during the course of hearing the appellant had informed that they had commenced determining duty on the PHD adopting valuation under Section 4 of CEA, 1944 w.e.f. 2015 which fact was ascertained from the respective Commissionerate and found to be correct.
21. Heard both sides and perused the records. Undisputed facts are that the appellant are engaged in the manufacture of Powdered Hair Dye(PHD) which are initially packed in sachets weighing 3 grams; 6/8 such sachets are placed in a secondary packing called as mono pack. Each Sachet is affixed with MRP and also the total MRP of 6/8 sachets is printed on the mono pack. The said PHD has been notified under The Standards of Weights and Measures Act,1976 or The Legal Metrology Act, 2009 and the Rules made thereunder and also specified under Sec. 4A of CEA,1944. The core issue for determination is: whether the PHD be assessed to duty by determining its value under Section 4 or under Section 4A of CEA, 1944.
22. The arguments advanced on behalf of the appellant indicates that since the manufactured PHD( 6/8 sachets weighing 3 gms. each) in mono pack, exceeds 10 gms, accordingly, fall outside the provisions of Rule 34(b) of PC Rules, 1977 & Rule 26(a) PC Rules, 2011. Besides, after deletion of the definition of multi piece package from the PC Rules, 1977 and in absence of such definition under the PC Rules, 2011, the mono pack satisfies the definition of retail package, as the mono pack was intended to be sold in retail to the ultimate consumer. Consequently, the same are liable to assessment under Sec.4A of CEA,1944.
23. On the other hand, the contention of the Revenue is that the mono pack is a multi piece package. Consequently, on deletion or absence of such definition under the relevant Rules, there is no requirement of affixing MRP on the mono pack. Also, the intention of the Appellant was to sale the sachets in retail to the consumers affixed with MRP and not the mono pack; thus, the sachets satisfies the definition of retail package, Further, since each sachet, in the mono pack, is weighing less than ten grams, hence, fall under the exempted category under Rule 34(b) of PC Rules,1977 or under Rule 26(a) of PC Rules, 2011, and accordingly, no MRP is required to be affixed on the same. Therefore, the PHD cleared from the factory is liable for assessment under Section 4 of CEA, 1944.
24. Before considering the rival arguments, it is necessary to refer to the relevant provision of Section 4A of CEA,1944 which reads as:
SECTION [4A. Valuation of excisable goods with reference to retail sale price. (1)?The Central Government may, by notification in the Official Gazette, specify any goods, in relation to which it is required, under the provisions of the [Legal Metrology Act, 2009 (1 of 2010)] or the rules made thereunder or under any other law for the time being in force, to declare on the package thereof the retail sale price of such goods, to which the provisions of sub-section (2) shall apply.
(2) Where the goods specified under sub-section (1) are excisable goods and are chargeable to duty of excise with reference to value, then, notwithstanding anything contained in section 4, such value shall be deemed to be the retail sale price declared on such goods less such amount of abatement, if any, from such retail sale price as the Central Government may allow by notification in the Official Gazette.
(3) The Central Government may, for the purpose of allowing any abatement under sub-section (2), take into account the amount of duty of excise, sales tax and other taxes, if any, payable on such goods.
[(4) Where any goods specified under sub-section (1) are excisable goods and the manufacturer -
(a) removes such goods from the place of manufacture, without declaring the retail sale price of such goods on the packages or declares a retail sale price which is not the retail sale price as required to be declared under the provisions of the Act, rules or other law as referred to in sub-section (1); or
(b) tampers with, obliterates or alters the retail sale price declared on the package of such goods after their removal from the place of manufacture, then, such goods shall be liable to confiscation and the retail sale price of such goods shall be ascertained in the prescribed manner and such price shall be deemed to be the retail sale price for the purposes of this section.
Explanation1. For the purposes of this section, retail sale price means the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer and includes all taxes, local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like and the price is the sole consideration for such sale :
Provided that in case the provisions of the Act, rules or other law as referred to in sub-section (1) require to declare on the package, the retail sale price excluding any taxes, local or otherwise, the retail sale price shall be construed accordingly.
Explanation2. For the purposes of this section, -
(a) where on the package of any excisable goods more than one retail sale price is declared, the maximum of such retail sale prices shall be deemed to be the retail sale price;
(b) where the retail sale price, declared on the package of any excisable goods at the time of its clearance from the place of manufacture, is altered to increase the retail sale price, such altered retail sale price shall be deemed to be the retail sale price;
(c) where different retail sale prices are declared on different packages for the sale of any excisable goods in packaged form in different areas, each such retail sale price shall be the retail sale price for the purposes of valuation of the excisable goods intended to be sold in the area to which the retail sale price relates.]
25. The definition of retail package, multi piece package, wholesale package defined under The Standards of Weights and Measures (Packaged Commodities) Rules,1977, relevant for the present purpose reads as below:
-2(j) multi-piece package means a package containing two or more individual packaged or labelled pieces of the same commodities of identical quantity, intended for retail sale, either in individual pieces or the package as a whole;
illustration : A package containing 5 toilet soap cakes net weight 20g. each, total net weight 100g is a multi-piece package.
2(p)retail package means a package containing any commodity which is produced, distributed, displayed, delivered or stored for sale through retail sales, agencies or other instrumentalities for consumption by an individual or a group of individuals.
2(x) Wholesale Package means a package containing-
i) a number of retail packages, where such first mentioned package is intended for sale, distribution or delivery to an intermediary and is not intended for sale direct to a single consumer; or
ii) a commodity sold to an intermediary in bulk to enable such intermediary to sell, distribute or deliver such commodity to the consumer in smaller quantities; or
iii) packages containing ten or more than ten retail packages provided that the retail packages are labelled as required under the rules.
26. The amended definition of retail package w.e.f14.01.2007 reads as:
retail package means the packages which are intended for retail sale to the ultimate consumer for the purpose of consumption of the commodity contained therein and includes the imported packages:-
provided that for the purposes of this clause, the expression ultimate consumer shall not include industrial or institutional consumers.
The said meaning of retail package has been adopted in the Legal Metrology (Packaged Commodities) Rules,2011.
27. There is no need to emphasize that provisions of Section 4A would be applicable only to those manufactured goods which are chargeable to ad valorem rate of duty. The other principal condition necessary to be fulfilled is that the specified goods, in relation to which it is required, under the provisions of The Standards of Weights and Measures Act, 1976 or the Legal Metrology Act, 2009 or the rules made thereunder or under any other law for the time being in force, to declare on the package thereof, the retail sale price of such goods.
28. In other words, the specified goods must be subjected to the provisions of The Standards of Weights and Measures Act or The Legal Metrology Act, and the Rules made thereunder so as to be assessed under Sec.4A of CEA,1944. The CBEC in its Circular No. 625/16/2002-CX dated28.02.2002 clarified as:
5. A somewhat similar issue was examined by the Board earlier vide letter F.No. 341/64/97-TRU, dt. 11/08/1997 (1997 (95) E.L.T. T3). This clarification was issued in the context of certain assesses printing MRP on packages even where there was no statutory requirement to do so under the Standards of Weights & Measures Act, 1976. It was clarified that in such cases duty will be charged u/s. 4 of C.E. Act, 1944 and not u/s. 4A (the clarification dt. 11/08/1997 did not, however, specifically mention whether the disputed goods were notified u/s. 4A or not and whether it covered only non-notified goods).
6.?It is, therefore, clarified that, in respect of all goods (whether notified u/s. 4A or not) which are not statutorily required to print/declare the retail sale price on the packages under the provisions of the Standards of Weight & Measures Act, 1976, or the rules made thereunder or any other law for the time being in force, valuation will be done u/s. 4 of the C.E. Act, 1944 [or under Section 3(2) of the Central Excise Act, 1944, if tariff values have been fixed for the commodity]. Thus, there could be instances where the same notified commodity would be partly assessed on the basis of MRP u/s. 4A and partly on the basis of normal price (prior to 1-7-2000) or transaction value (from 1-7-2000), u/s. 4 of the C.E. Act, 1944.
29. The aforesaid clarification has been endorsed by the Honble Supreme Court in the case of Jayanti Food Processor Pvt. Ltd. Vs. Commissioner of Central Excise,Rajastan 2007 (215) ELT 327(SC), where in their Lordships observed as:
27.?The Tribunal in Para 8 of its judgment has observed :
Once the goods are specified items under Section 4A(1) and are excisable goods chargeable duty (sic) with reference value, then such value shall be deemed to be the retail sale price declared on such goods, less amounts of abatements etc. As we have already observed that Weights & Measures Act requires chocolate manufactured by the appellant to be printed with MRP on the same, we are of the view that the duty of excise on such goods is required to be assessed in terms of the MRP. The only exception where a manufacturer can deviate from the general rule of printing of MRP on the package is Rule 34 of Standards of Weights & Measures (Packaged Commodity) Rules, 1977. We are afraid the law is too broadly stated here. It may be that chocolates manufactured by the appellant are required to bear the declaration of MRP but that cannot be true of all the chocolates. In this the Tribunal has ignored Para 6 of the aforementioned circular dated 28-2-2002 wherein it is specifically provided that there would be instances where the same notified commodity would be partly assessed on the basis of MRP under Section 4A and partly on the basis of normal price prior to 1-7-2000 or transaction value from 1-7-2000. Again merely because the goods are specified items under Section 4A(1), that by itself will not be a be all and end all of the matter as before such goods are brought in the arena of Section 4A(1), there would have to be the satisfaction of a particular condition that the packages of such goods are required under the SWM Act and the Rules made thereunder to declare the MRP. The Tribunal has even erred in holding that the circular dated 28-2-2002 is not applicable to the present case. A cursory glance at the circular would suggest that it is applicable to the present case where two commodities have been sold as a market strategy.
30. In the above background the arguments advanced by both sides need be to examined to ascertain whether it is required to affix the MRP on the sachets or mono pack or on both. The contention of the appellant is that in absence of definition of multi piece package, the amended definition of retail package covers the appellants case. It is their submission that the mono pack, in which the PHD contained in 6/8 sachets, were intended for retail sale to the ultimate consumer for the purpose of consumption. Rebutting the said argument of the Appellant, the Revenue pleaded that their intention was to sell the sachets of 3 grams and not the mono pack containing 6/8 sachets of 03 grams each as there is no warning of any sort printed on the mono pack prohibiting the retail sale of the sachets. Further, taking shelter of an example, the Revenue pleaded that Amul Cheese cubes are sold in mono pack consisting of ten/fifteen cubes which are simply packed with wrappers but no MRP is printed on the wrapper-packing of said cheese cube, but on the mono pack; this indicates that the mono pack is meant for retail sale. He has contended that the claim of the Appellant to sell mono pack in retail in the circumstances, is unacceptable.
31. At the cost of repetition, it is to mention that the entire dispute rests on the question whether the appellant is required to print/affix MRP on sachets and/or on the mono pack containing 6/8 sachets. It cannot be ruled out that both sachets and mono pack are capable of being sold in retail, a situation fairly accepted by the Appellant. But, the Appellant insisted on their plea that it was not their intention to sale the sachets in retail but the mono pack. Needless to mention that the provisions of Section 4A would be applicable only when there is a legal requirement of printing/affixing the MRP on the package of the notified goods under the Standards of Weights and Measures Act, 1976 or Legal Metrology Act, 2009. In the present case, the Commissioner has recorded a finding that it is the intention of the appellant to sale the sachets in retail sale and not the mono pack. It is further held that since sachets weighting 3 grams fall outside the purview of Standards, Weights and Measures Act, 1976 and the rules made thereunder, the PHD was directed to be assessed under Sec.4 of CEA,1944.
32. We find that neither the appellant nor the Revenue collected any information/opinion on the said issue from the appropriate authority i.e. Legal Metrology Department of the State to the effect that whether the appellant would be required to affix the MRP on the sachets or on the multi piece packages or on both under the aforesaid Acts and the Rules made thereunder. In this connection , it is relevant to refer the guidelines of the Board in the said circular dt. 28.02.2002:
7. The Standards of Weights & Measures Act, 1976, and the rules made thereunder, are administered by the State Governments. Instances of dispute could arise between the deptt. and the assesse as to whether, in respect of a particular commodity/transaction, the assesse is exempted from declaring the retail price or not. In case of such doubt a clarification may be obtained from the concerned Deptt. (generally the Metrology Deptt.) of the State Government.
33. The Revenue argued that other manufacturers similarly situated do not affix the MRP on the contents but on the mon pack. The plea of the Appellant is that on the issue of printing MRP on the Sachets and also on the mono packs no objection was raised by the Legal Metrology Department. In these premises, to determine whether the appellant is required to affix MRP after deletion of the definition of multi piece packages from the PC Rules, 1977 and in absence of any such definition under the present PC Rules, 2011 on the mono pack and/or on the sachets , the issue needs to be referred to the Metrology Department of the respective State for their opinion with reference to applicability of The Standards of Weights and Measures Act,1976 or The Legal Metrology Act,2009 and the respective Rules made thereunder.
34. We are of the view that as per the opinion of the Legal Metrology Department on the requirement of affixing the MRP on the sachets and/or on the mono packs containing the manufactured goods viz. PHD, the same would be subjected to assessment either under Section 4 or Sec. 4A of CEA,1944, accordingly.
35. However, we find force in the alternative submission advanced by the Ld. Adv. for the Appellant. The method of valuation under Sec.4 of CEA,1944 and consequently computation of the demand adopted by the Ld.Commissioner, in the respective appeals, in our opinion is erroneous. It is an admitted fact that the appellant removed the goods from their factory to the Depot from where the same were sold. We find in Appeal No.( E/70200/13), the adjudicating authority has adopted average selling price whereas in appeal No. (E/76111/14), the adjudicating authority has adopted the abated value i.e. after deducting 35% from the declared MRP as the basis for determination of value under Section 4 of CEA, 1944. In our opinion, both the methods are incorrect in as much as since the goods were not sold from the factory but sold from the depots, therefore, Section 4(1)(b)read with Rule 7 of the Central Excise Valuation Rules, 2000 are relevant for determination of the assessable value.
36. At this stage, the other issues involved are kept open as the same could not be decided without adjudication of the core issue, that is, whether the goods are liable to be assessed under Section 4 or Section 4A of CEA, 1944. After deciding the main issue the Ld. Adjudicating authority may decide other issues raised by the Appellant in the instant Appeals. In result, the impugned Orders are set aside and the Appeals are remanded to the adjudicating authority for deciding the issues afresh in the light aforesaid observations. Appeals are disposed off on above terms.
(Pronounced in the Court on 30/07/2015)
Sd/- 30/07/2015 Sd/- 30/07/2015
(I.P. LAL) (D.M. MISRA)
TECHNICAL MEMBER JUDICIAL MEMBER
K.b/-
Excise Appeal Nos. E/179 to 182/12, E/70200/13 & E/76111/2014
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