Custom, Excise & Service Tax Tribunal
C.C.E. Chandigarh vs Wrigley India Pvt Ltd on 26 February, 2020
Excise Appeal No. 3873 of 2010
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHANDIGARH
REGIONAL BENCH - COURT NO. I
Excise Appeal No. 3873 of 2010
(Arising out of Order-in-Original No. 90/CE/CHD-1/2010 dated 24.08.2010 passed by
the Commissioner of Chandigarh)
,
C.C.E. Chandigarh ......Appellant
(C.R. Building Plot No. 19, Sector 17-C, Chandigarh
160017)
VERSUS
Wrigley India Pvt Ltd ......Respondent
(Baddi, Distt- Silan (HP)) APPEARANCE:
Shri A.K. Saini, Authorised Representative for the Appellant None for the Respondent CORAM: HON'BLE MR. ASHOK JINDAL, MEMBER (JUDICIAL) HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) FINAL ORDER NO. 60320 of 2020 DATE OF HEARING: 26.02.2020 DATE OF DECISION: 26.02.2020 PER SANJIV SRIVASTAVA:
This appeal filed by the revenue is against order in original No. 90/CE/CHD-1/24.08.2010 of the Commissioner of Central Excise, Chandigarh-I. By the impugned order Commissioner has held as follows: Excise Appeal No. 3873 of 2010
"I drop the proceeding initiated vide show cause notice issued under C No V(17)15/CE/Adj/49/6058-60 dated 14.12.2009 against M/s Wrigley India Pvt Limited, Village Katha, P O Baddi, Distt Solan (HP)"
2.1 Respondents herein are engaged in the manufacture of Chewing Gum, Bubble Gum, Solano Candy and other confectionary items classifiable under Chapter 17 of First Schedule to Central Excise Tariff Act, 1985.
2.2 During course of Audit, it was noticed that they were packing and clearing their finished products in following manner on payment of duty as applicable after determination of the value as per Section 4A of the Central Excise Act, 1944:
o The Bubble Gums are cleared in a jr containing 150 Bubble Gums; o Each Bubble Gum is marked with the Maximum Retail Price of Re.
1.00 and the jar also bear the MRP of Rs 150/- which is equivalent to aggregate of MRP of Rs 150 Bubble Gums contained in the jar.
o In addition to 150 Bubble Gums these jars also contained 20 Solano Toffees packed in a poly bag kept in the jar. No MRP is declared on the Solano Toffees.
o The packing label on the jar also contains an inscription "20 Solano Toffees free"
o These Solano Toffees when cleared otherwise bear the MRP of Rs 0.50 on each such toffee.
2.3 Alleging that respondents were clearing 20 Solano Toffees in each jar containing 150 Bubble Gums, respondents have short paid the Central Excise Duty by not including the MRP of these toffees in the MRP of the jar cleared by them containing 150 Bubble Gums and 20 Solano Toffees, Excise Appeal No. 3873 of 2010 revenue issued show cause notice dated 14.12.2009 to the respondent asking them to show cause as to why:
i. Central Excise Duty amounting to Rs 59,02,249/- should not be recovered from them under Section 11A of the Act by invoking extended period of limitation;
ii. Interest under Section 11AB of the Central Excise Act, 1944 should not be charged from them on the amount of duty being demanded;
iii. Penalty should not be imposed upon them under Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of Central Excise Act, 1944.
2.4 This show cause notice was adjudicated by the Commissioner as per the impugned order referred to in para 1, supra. 2.5 Committee of Chief Commissioners reviewed the impugned order and directed for filing this appeal. Hence, this appeal by Revenue. 3.1 In their appeal, Revenue has assailed the order of Commissioner stating as follows:
Adjudicating Authority has held that contention of respondent's that the jars being cleared by the respondents are retail packs is not correct as the phrase "Wholesale Pack" has been inscribed on the jar. The adjudicating authority has himself in para 4.5.3 observed "Thus the pet jars weighing 675 gm (150 Bubble Gums) plus 60 gms (20 Solano toffee) is neither a "Multi-piece package" nor a "retail sale packages" as they are not purchased by retail customers/ ultimate consumers. In the present case, the noticee have themselves mentioned/ printed the words "whole sale pack"
on the jar".Excise Appeal No. 3873 of 2010
After concluding that the pack was not a retail pack, adjudicating authority could not have proceeded to determine the value of the jar as per Section 4A of the Central Excise Act, 1944. The reliance placed by the adjudicating authority on the decision in case of Cocoa Marketing and Processing Co-op Ltd [2008 (226) ELT 369 (T-Chennai)] {affirmed at [2008 (232) ELT A 107 (SC)]} and Swan Sweets Pvt Ltd [2006 (198) ELT 565 (T-Mum)] is not correct as these decisions are sub silent on the issue that the commodities even though having weight less than 10 gms but are not intended to be sold either by weight or measure as contemplated under Rule 34(b) are not exempted under rule 34(b). Such sub silent decisions are not binding precedents.
Madras High Court has in case of Vernica Herbs [2004 (163) ELT 160 (Mad)] held that "That the contention of the petitioner that exemption under Rule 34 would be applicable is not acceptable. Even though the net weight is less than 10 grams, it is evident that the article is not intended to be sold either by weight or by measure as contemplated under Rule 34(b)".
In this case also both individual bubble gums as well as toffees are for retail sale, and are sold to ultimate consumer in retail by numbers and not by weight or measure. Moreover these commodities are not listed in Schedule V of the SWM rules, thus not requiring it to be particularly sold by any unit. Thus these commodities individually don't enjoy exemption from SWM rules under Rule 34 of SWM Rules.
Respondents have determined the assessable value of the jar by treating the MRP of Rs 150 printed on the jar as MRP for the purpose of Section 4A of the Central Excise Act, 1944. Excise Appeal No. 3873 of 2010 The value of the said jar containing 150 Bubble Gums and 20 Solano Toffees was to be determined under Section 4 in the manner as explained in para 6, 7, 8, 9 & 10 of the Show Cause Notice by application of Rule 4 and 11 of Central Excise Valuation Rules, 2000. This manner of valuation as per the Board Circular No 813/2005 dated 25.04.2005 and the decisions as follows:
o Indian Drugs Manufacturer's Association [2008 (222) ELT 22 (Bom)] o Cadila Pharmaceuticals Ltd [2008 (232) ELT 245 (T-LB)] By application of the above the Show Cause Notice has determined the assessable value of 222233360 pieces of Solano Toffees supplied free in the jars of Bubble Gum as Rs 7,22,25,842/- after allowing the abatement of 35% on the MRP of Solano Toffees cleared as such.
The extended period of limitation has been proposed to be invoked in the show cause notice. Respondents have nowhere in their ER-1 returns declared that they are not discharging duty on 20 free Solano Toffees cleared in the jar of Bubble Gums. The benefit of allowed by the adjudicating authority by stating that these 20 Solano Toffees was in nature of quantity discount, relying on the decision of tribunal in case of Himalaya Drugs Company [2009 (243) ELT 101 (T-Bang)] is not correct as these are not supplied as quantity discount but as free samples. 4.1 We have heard Shri A. K. Saini Authorized Representative for the Revenue. None appeared on the behalf of respondents despite notice. 4.2 Arguing for the Revenue, learned Authorized Representative reiterated the submissions made in appeal and placed on record the following decisions :
Excise Appeal No. 3873 of 2010
o Swan Sweets [2006 (198) ELT 565 (T)] o Makson Confectionary [2010 (259) ELT 5 (SC)] o Perpetti Van Melle India [2015 (330) ELT 684 (T)] o Central Arecanut & Cocoa [2008 (226) ELT 369 (T)] o Himalaya Drugs [2015 (324) ELT 9 (SC)]
5.1 We have considered the impugned order along with the submissions made in appeal and during the course of arguments of appeal.
5.2 We find that the issue involved in the matter is squarely covered by the decision of the Tribunal in case of Himalaya Drugs [2009 (243) ELT 101 (Tri-Bang)]. In that decision tribunal has held as follows:
"5.1 It can be seen from the reproduced portion of the Order-in- Appeal (in paragraph 2 above) that the learned Commissioner (A) has categorically stated that in our Final Order No. 1774/2005 dated 7-10-2005 [2006 (195) E.L.T. 109 (Tribunal)], on the same issue and in respect of the same respondent for the earlier period, we allowed the appeal of the respondent and held that the process of combining anti-dandruff shampoo and the face wash gel would amount to manufacture as per Chapter Note 5 to Chapter 33. Since it is undisputed that the face wash gel is supplied free by the respondent and the product anti-dandruff shampoo is covered under Section 4A of the Central Excise Act, the provisions of Standards of Weights and Measures Act will be applicable and there will not be any duty liability on the face wash gel which is supplied free, as the respondent had combined these two and cleared the same under one retail sale price. In view of this, we do not find any merits in the appeal filed by the revenue. The appeal is rejected."
5.3 This order of Tribunal has been upheld by the Hon'ble Supreme Court in its decision reported at [2015 (324) ELT 9 (SC)]. 5.4 Now coming to the facts of case in hand it is not the case of the revenue that the jar containing 150 bubble gums and 20 Solano Toffees Excise Appeal No. 3873 of 2010 were to be valued as per the Section 4A of the Central Excise Act, 1944. On the contrary the finding of the Adjudicating authority that the said pack is an whole sale pack and not the retail sale pack has been admitted by the Committee of the Chief Commissioners while directing to file this appeal. After having done so, revenue has proposed to determine the value of whole sale pack by applying the provisions of Section 4A in respect of the Bubble Gums cleared by the appellant and the value of remaining Solano Toffees by treating them as free samples by application of Section 4 of the Central Excise Act, 1944. We are not in agreement with such approach as by doing so revenue has proposed to disintegrate the wholesale package and determine the value of individual components under separate provisions of the same act. In our vie having held that Section 4A is not applicable to the whole sale pack in the form in which the jar containing 150 Bubble Gums and 20 Solano Toffees was cleared the value of entire jar was to be determined by application of Section 4 as it existed at that time. Revenue has in the show cause proposed not to determine the value of the whole sale pack but only a component of the said pack under Section 4. In our view Section 4 should have been applied to the entire pack in the form in which it is cleared, and liability to duty determined. This view is in accordance with the decision of the Apex Court in case of Makson Confectionary [2010 (259) ELT 5 (SC)]. Since there is no proposal either in the show cause notice to determine the value of jar under Section 4 of the Central Excise Act, 1944 we are not in position to determine the same as of now. 5.4 In view of discussions as above since the show cause notice or the appeal filed by Revenue does not propose to determine the assessable value of wholesale pack in the form in which it is offered for clearance we do not find any merits in the appeal filed by the Revenue. Excise Appeal No. 3873 of 2010 6.1 We do not find any merits in the appeal filed by the Revenue and dismiss the same.
(Dictated and pronounced in the open court) (ASHOK JINDAL) MEMBER (JUDICIAL) (SANJIV SRIVASTAVA) MEMBER (TECHNICAL) kailash