Custom, Excise & Service Tax Tribunal
M/S R.C.C. (Sales) Pvt Ltd vs The Commissioner Of Central Excise, ... on 1 July, 2010
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Date of Hearing: 01.07.2010
Date of decision: 01.07.2010
Appeal No. E/610/2008
(Arising out of Order-in-Original No. 02/2008-(C.Ex)dt 26.03.2008 passed by the Commissioner of Customs & Central Excise, Hyderabad)
For approval and signature:
Honble Mr.M.V.Ravindran, Member (Judicial)
Honble Mr. P. Karthikeyan, 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?
Yes
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3. Whether their Lordship wish to see the fair copy of the Order?
Seen
4. Whether Order is to be circulated to the Departmental authorities? Yes
M/s R.C.C. (Sales) Pvt Ltd., .Appellants
Vs.
The Commissioner of Central Excise, Hyderabad Respondents
Appearance Mr M Vivekananda, SDR for the appellant Mr K.S. Naveen Kumar, Adv for the Respondents Coram: Honble Mr.M.V.Ravindran, Member (Judicial) Honble Mr. P. Karthikeyan, Member (Technical) FINAL ORDER No.___________________ 2010 Per P. Karthikeyan The impugned order confirmed demand Rs 7,34,87,830/- towards differential duty on unwrapped blades cleared in bulk by M/s RCC Sales Pvt Ltd., Hyderabad during the period August 2005 to December 2006. The impugned order also confirmed another demand of Rs 2,35,34,048/- towards the same liability for the period January 2007 to November 2007 against the assessee. The Commissioner also demanded interest due for the delay in payment of differential duty on the impugned clearances. Equal amount of penalty as the duty demand for the period August 2005 to December 2006 has been imposed on the assessee under Section 11 AC of the Central Excise Act (the Act) there is yet another penalty of Rs 2,33,00,000/- imposed under Rule 25 of Central Excise Rules, 2002 for various contraventions involved in clearances of the impugned goods in bulk during the period January 2007 to November 2007. The demand is on the basis that clearances of unwrapped blades in bulk attracts duty liability under Section 4 A of the Act, since safety razor blades are goods specified for assessment under Section 4A of the Act. During the period of dispute, the appellants had cleared blades without any packing in parcels containing 45,000 pieces to another job worker based in Shogi, Himachal Pradesh. The consignee completed the packing of razor blades and returned to the principal manufacturer, M/s Vidyuth Metallic Pvt Ltd., Thane. The appellant had adopted the transaction value for assessment of the impugned clearances. It had determined the assessable value of the subject goods in terms of Rule 8 of the Central Excise Valuation Rules 2000 based on the cost of production as per the principles of accounting CAS-4.
2. The case of the revenue as per the impugned order is that safety razor blades being goods specially specified in Section 4 A have to be necessarily subjected to MRP based assessment. As per the decision of the Tribunal in M/s ITEL Industries Pvt Ltd., Vs CCE [2004(163)ELT 219 (Tribunal-Bang)] unless the packages in question were not excluded under Rule 34 of Standards of Weights & Measures (Packaged Commodities) Rules 1977, the goods maybe liable to assessment under Section 4A of the Act. It was immaterial that goods were cleared in bulk under an agreement. The impugned demand is the differential duty compared to the duty payable on MRP based assessment of the impugned clearances and duty paid in terms of Section 4 of the Act.
3. In the appeal before the Tribunal, assessee has challenged the demand on various grounds. The goods involved were semi-finished blades cleared in unwrapped and bulk condition without any MRP being printed on the consignments. Such goods had to be assessed under Section 4 and not under Section 4A. The Commissioner did not appreciate the contention of the appellant that the goods cleared were not fully finished safety razor blades but were only semi-finished blades, in naked form cleared in bulk which required operations such as packing and printing of MRP to make them fully finished goods. Safety razor blades were notified in the third schedule of the Central Excise Tariff Act 1985. As per Sub-clause (iii) of Section 2(f) of the Act, manufacture includes any process, which in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labeling or re-labeling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer. Semi-finished blades did not require MRP to be printed on them. Only in the wake of Notification 1/08 dated 18.01.08, mere packing and labeling/relabeling or printing of MRP came to be deemed as manufacture for allowing the benefit of Notification No 49/2003 Cus and 50/2003 Cus Prior to issue of these Notifications, the safety razor blades, packed and labeled, cleared by the job worker in Himachal Pradesh were exempt from payment of duty. MRP based assessment applied to finished goods namely blades packed with wrapper and retail price printed. The goods cleared by the appellant did not attract provisions of Standards of Weights & Measures Act 1976 and Rules made there under. As these provisions did not require MRP declaration in respect of impugned goods, the method of assessment followed by the appellant was perfectly in accordance with law. The observation of the Commissioner that the assessee had removed safety blades in unwrapped condition was a modus operandi to avoid payment of duty was without substance. It is submitted that the goods cleared by the appellant were not covered by the Standards of Weights & Measures (Packaged Commodity) Rules 1977. MRP based assessment was therefore not attracted. The decision of the Tribunal relied on by the Commissioner in the case of Jayanthi Food Processing Pvt Ltd., to pass the impugned order was set aside by the Apex court. As per the said decision, Tribunal had held that unless the packages were excluded under Rule 34, the goods would be liable to valuation in terms of Section 4A of the Act read with Standards of Weights & Measures Act 1976. The Apex Court had held that for the application of Section 4A, there has to be a requirement under the Standards of Weights & Measures Act 1976 or the Rules made there-under or any other law to declare the MRP on the packages. If there was no such requirement under the Act and the Rules, there would be no question of application of Section 4A. The nature of sale was not important. What was important was the requirement of printing MRP on the packages. As per Circular No 625/16/2002-CX dated 28.2.2002, in case of doubt as to the method of assessment in respect of specified goods, a clarification had to be obtained from the concerned department (generally the Metrology department of the State Govt.) The appellant had requested the Commissioner to keep the matter in abeyance till the clarification was obtained from the metrology department. The Commissioner had not rendered any finding in this regard in the impugned order. It is submitted that the impugned demand of differential duty, applicable interest and penalty imposed were not sustainable.
4. We have heard both sides. Learned counsel for the appellant submitted that an identical dispute was decided by this Bench vide Final Order No 1135/09 dated 19.08.2009 in favour of the assessee. Learned JCDR submits that the said case was different on facts. In that case the assessee had cleared the packing material also along with consignment of unwrapped blades in bulk.
5. We have carefully perused the case records and the submissions by both sides. The final order cited dealt with clearances of razor blades in bulk from the factory premises to units in Himachal Pradesh. The assessee therein had paid duty in terms of Section 4 of the Act. The common case of the parties was that the production cleared from the factory premises were not in retail sale packages and that the activity of packing the goods cleared by the assessee therein and delivering it to the market for the purpose of retail sale was undertaken at HP. The goods involved were covered under 3rd schedule of the Central Excise Act 1985 and the activity of packing of such goods amounted to manufacture. The Tribunal relied on the judgment of the Apex Court in the case of Jayanthi Food Processing Pvt Ltd., [2008(215)ELT327(SC)] wherein the Apex Court had identified the following factors as mandatory to include any goods in Section 4 A(1) & (2) of the Act:
(i) The goods should be excisable goods;
(ii) They should be such as are sold in the package
(iii) There should be requirement in the SWM Act or the Rules made there under or any other law to declare the price of such goods relating to their retail price on the package;
(iv)The Central Government must have specified such goods by notification in the official Gazette;
(v) The valuation of such goods would be as per the declared retail sale price on the packages less the amount of abatement.
If all those factors were applicable to any goods, then alone the valuation of goods and the assessment of duty would be under Section 4 A of the Act. Tribunal decided that impugned blades cleared in bulk were not covered u/s 4 of the Act.
6. The Tribunal found that the goods cleared by the appellant had no requirement of fixation of retail price as the goods were not offered for retail sale from the factory premises of the appellant. The ratio of the judgment of the Apex Court in the case of Jayanthi Food Processing (Pvt) Ltd.,(supra) squarely covered the issue in favour of the appellant. The said Final order vacated the differential duty confirmed against the appellant therein upholding the assessment of the impugned goods under Section 4 of the Act.
7. The case at hand is identical on material facts to the one decided by the Tribunal. Following the ratio of the above decision of the Tribunal, we vacate the impugned order and allow the appeal filed by M/s RCC Sales Pvt Ltd., (Operative portion of the order already pronounced in open Court on conclusion of the hearing) (P.KARTHIKEYAN) Member (Technical) (M.V. RAVINDRAN) Member (Judicial)