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The appellants submission in this regard, as we had briefly summarized earlier, is that the notification had to be understood in the light of the provisions of the SWM Act, 1976 and the Packaged Commodities Rules, 1977 and that the retailer could not legally sell the cigarettes at a price which was not in accordance with the price declared on the package. It was submitted that on a reading of the plain language of the notification it was clear that the sale price was the printed price i.e. the price at which "packages may be sold in accordance with the declaration". It was submitted that this interpretation followed from the language of the notification and that no other interpretation could not be given. According to the appellant both the Adjudicating Authority and the Tribunal had erred in interpreting the notification differently and in effect recasting it by holding that the exemption was to be granted only if the MRP was the price at which the cigarettes were in fact or should have been sold by the retailers. Reference has also been made to the legislative history and the context in which the Notification was issued to buttress the submission. Without prejudice to this contention, the appellant's counsel took us through volumes of material to prove that the MRP fixed and printed on the cigarette packets was on the basis of a reasonable and an honest exercise.

Rule 23(6) provides as :

"23(6) No retail dealer or other person shall obliterate, smudge or alter the sale price or the retail sale price, indicated by the manufacturer or the packer, as the case may be, on the package or on the label affixed thereto.
If the retailer or manufacturer violates these provisions, he is liable to be proceeded against and may be fined up to an extent of Rs. 2000 per package under Rule 39 of the Packaged Commodities Rules and Section 67 of the SWM Act.
The SWM Act as well as the Packaged Commodities Rules nave been enacted the consumers who are entitled to pay only such price as has been printed thereon. The purpose of printing the MRP on cigarette packages is to achieve a standardization of prices throughout the country and to inform consumers of the appropriate price of the product. There is no scope for "under declaration" because the consumer can insist on the retailer abiding by the printed MRP. Provisions for penalties under the Act on the retailer ensures this. It is not open to the retailer who may be proceeded against for selling above the printed MRP to contend that it was incorrect or false, nor can the retailer defend any violation of the printed MRP by asking for an enquiry into its reasonableness. If adhering to the MRP unreasonably narrows the retailer's margins, the retailer can demand a reduction in the price from the wholesaler or desist from selling the product. This applies similarly to the wholesaler, whose feedback to the manufacturer will either force the manufacturer to raise the MRP or lose distributors. Given these serious economic consequences, the manufacturers cannot print a whimsical or fanciful figure as the MRP. The result is a system of incentives and enforcement that begins with the consumer. When this system is properly enforced, levying tax on MRP according to the notification clearly does not lead to absurd consequences. Incidentally, the Public Accounts Committee (1984-85) noted in their report :

The submission is unacceptable. As we have already said the notification speaks of a permitted sale according to the MRP. The notification does not itself provide for any sanction or prohibition against the retail sale of cigarettes at any rate other than the printed MRP. All that it does is to accept that printed MRP according to which the cigarettes are permitted to be sold by the retailer, as the sale price for the purpose of grant of concessions under the notification. Besides the notification was an exemption notification. If the cigarettes being manufactured in the State of Sikkim did not fall within the terms of the exemption, the manufacturers in Sikkim would be denied the benefit of the notification, and the Tariff rate fixed under the statute would apply. It would not mean that the notification must be construed in a manner so as to extend the exemption to those cigarettes not expressly covered by the exemption. The second submission is entirely hypothetical. One cannot foretell whether the notification would have continued to operate on the same terms even if the SWM Act or Packaged Commodity Rules were repealed or made inapplicable to cigarettes. Indeed during the operation of the Notifications in question viz. 1983 to 1987, the SWM Act and Packaged Commodities Rules remained on the statute book. They still do. Regarding the third submission, the second proviso to Section 4(l)(a) of the Act as it then stood read :

The Tribunal itself noted that the intention underlying the Notification was to get over "hassles arising on the question of determination of assessable value under Section 4(l)(a) of the Act and the admissible deductions". But then it held that the switch over was made from "assessable value to 'quasi-specific duty'. Duty is either specific or not. Since it is not specific according to the Tribunal, it would be open to the Department to go behind the printed prices and find out the "effective prices" at which the retailers may sell the packages to consumers and treat such prices as the printed prices for the purpose of determining the rate of duty applicable. The consequences of this interpretation by the Tribunal would be starting. There is no dispute that the Notification envisages a single retail price in respect of certain brands of cigarettes. It is this single retail price which has to be printed on the package. If one were to accept the High Court's prima facie view, the printed MRP should reflect the actual price at which the particular kind of cigarette is sold throughout the country. The patent impossibility of this was acknowledged by the Tribunal which held that the actual price at which the cigarettes were sold could not "lawfully or logically" be the printed MRP because "the manufacturer has limited or little control over the actions of the retailers" who are, in the case of the appellant, "about a million in number"; that the appellant could not be held responsible for "the tendency of the retailers to charge higher than the printed price so as to secure larger margin" and that different prices may be actually charged for the same brand all over the country. Therefore, the Tribunal held that the printed MRP should have been the "reasonable price" at which the cigarettes could be sold. This led the Tribunal and the adjudicating authority to go into an elaborate exercise to determine what should be that single reasonable price for the entire country which should have been declared and printed by the appellant on the packages.