Customs, Excise and Gold Tribunal - Calcutta
Loknath Prasad Gupta vs Commissioner Of C. Ex. on 24 August, 2006
ORDER S.S. Sekhon, Member (T)
1. The appellant is engaged in the manufacture of branded chewing tobacco (Raja Chap Khaini) falling under subheading No 2404.41 of the CETA 1985. The goods are packed in 5 gms and 9 gms pouches (in strip form with perforation in between each strip). These unit pouches of 5 gms and 9 gms are the retail pouches and that maximum retail price (MRP) (inclusive of all taxes) is indicated in addition to other details as regards the appellants name and address, brand name, month and year of packing and statutory warning.
2. 26 such unit pouches in case of 9 gms and 48 unit pouches of 5 gms unit in strip form are then packed in polyethylene packets, which are marked "Wholesale Package (to be opened and sold loose)". There is no indication on this polythene packages as regards MRP or any other price. These polythene packs are thereafter packed in gunny bags each comprising of 104 wholesale packages, which are sold to wholesale dealers/distributors/stockists on principal to principal basis, who in turn sell the goods in polythene packages to various retailers who will sell individual pouches to consumer. The goods falling under Heading 2414.41 are notified by the Central Government under Section 4A of the Central Excise Act, 1944 by amending Notification 10/2003-C.E.(N.T.).
3. The period involved in the present appeal is 1-9-2004 to 31-7-2004. During this period, there was no provision for declaration of MRP under the provisions of Standards of Weights & Measures Act, 1976 (in short 1976 Act) or under the Standards of Weights & Measures (Packaged Commodities) Rules, 1977 (in short 1977 Rules). In these circumstances, duty was discharged on the goods cleared during this period by arriving at the assessable value under Section 4 of the Central Excise Act, 1944 on the basis of actual price charged from wholesale buyers.
4. The Commissioner of Central Excise has in the present proceedings confirmed the demand and levied penalties by holding that duty on the said goods was payable by the assessee under Section 4A on the basis of MRP. Hence this appeal.
5. After considering the submissions made by both sides on the issues including the provisions of Section 4A of the Central Excise Act, 1944 and the Act of 1976 and the 1977 Rules made thereunder, especially Rule 34 thereof which exempts the provisions of the Rules as regards marking prices etc., it is found that the provisions of 1977 Rules will not apply in respect of the packages in question, as Rule 34 (b) of the 1977 Rules specifically provides that nothing contained in these rules shall apply to any packs containing the commodity if the net weight or measure of the commodity is 20 gms or 20 ml or less as in this case.
The second proviso to this Rule 34(b) as it stood up top 30-11-03 provided that the declaration in respect of MRP and net quantity shall be declared on packages containing 100 gms to 20 gms or 10 ml to 20 ml. In the present case, since the detailed pouches are 5 or 9 gms net weight of the commodity is less than 10 gm in the circumstances and in view of the provisions of Rule 34 (b) of 1977 Rules, the markings was not required of a MRP on the retailed packages.
6. The polythene bags containing 26 units pouches of 9 gms and 48 unit pouches of 5 gms were wholesale packages under the meaning of Rule 2(x) of the 1977 Rules, when the definition of the wholesale package as prescribed therein is that and since these polythene packages did not satisfied the definition of multi piece packages under Rule 2(j) of the 1977 Rules has to be covered under the multi piece packages or labelled pieces of the same quantity or identical quantity must be intended for retail. The present pouches are not intended for retail sale when packed in polythene packages. This provision when read with Rule 17 of the 1977 Rules would indicate that non marking of MRP on the packages would not be violation of the provisions of the 1977 Rules or the Act under which the Rule was framed.
7. The appellants have obtained a certificate from the Controller, Legal Metrology who have confirmed that the said packages in declarations were required under 1976 Act or 1977 Rules, and this was as provided in Board's Circular to 625/16/2002-CX dated 28-2-2002. In this view of the matter, we find no reason to arrive at any provision of law applicable to declare the MRP on the said packages, which were wholesale packages as defined. Therefore, the plea that the Commissioner has arbitrarily and illegally ignored the clarification given by the appropriate authority as prescribed by the Board's circular has to be upheld. Any order passed in such fashion is required to be set aside.
8. (a) The issue is also well settled by the decision of the Larger Bench of this Tribunal in the case of Swan Sweets Pvt. Ltd. v CCE, Rajkot -2006 (198) E.L.T. 565 (Tri-Mum) wherein individual toffees/chocolates without packages and MRP not on the individual packs, weighing 4 gms, the rates for wholesale was 500 gms, the Tribunal held as under if the package contains 10 or more than ten retail packages irrespective of value of such repack that would be covered under the definition of wholesale pack. It was further held that the wholesale pack were not covered under the definition of multi piece package. It is found the facts in the case of Swan Sweets Pvt. Ltd. v. CCE 2006 (198) E.L.T. 565 are similar to the facts of the present case and the said decision is therefore to be followed and this appeal is to be allowed.
(b) The issue is also well covered by the decision of the Larger Bench in the case of CCE v. Urison and being bound by that no merits are found in the order of the lower authority. The same is set aside and this appeal is to be allowed.
9. In view of our findings hereinabove, the orders are set aside and the appeal allowed.
(Pronounced in Court on 24-8-2006)