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1.2 The manner of packing/selling the sugar confectionary (e.g. Toffy Max Caramel/Chocolate) is described as under:

a) Individual Toffy Max Caramel/Chocolate is wrapped in a printed plastic film. The weight of the individual Toffy Max Caramel/ Chocolate is about 4 gms., including the weight of the wrapper.
b) The Toffy Max Caramel/Chocolate are thereafter packed in wholesale pack. The wholesale packs either in the form of plastic jar or plastic bag.
c) The weight of the wholesale package is around 500 gms. in the case of Poly Bag and around 1 kg. in case of jar.
d) The MRP printed on the individual Toffy Max Caramel/ Chocolate is 0.50 Paise.
e) The whole sale pack in which the individual Toffy Max Caramel/Chocolate are packed carries, inter alia, the following declaration on it:
Wholesale Package MRP 50 paise per piece (inclusive of all taxes) Net Weight 500 g (125 Units) Mfg. .... 
Batch No.         ....
Without affecting the Net Weight, occasionally, there could be
variation in the number of units.
1.3 The valuation and assessment of sugar confectionary falling under Heading 17.04 and 18.04 was brought under the MRP based assessment under Section 4A of the Central Excise Act, 1944 by Union Budget 2002. There has been an ongoing dispute between the appellants and the Department about the valuation of the confectionary. According to the appellants, there is no statutory requirement under the Standards of Weights and Measures Act, 1976 and the Rules made thereunder, to declare the MRP on the wholesale package. It was also the contention of the appellants that there is no requirement under the law to declare MRP on the individual sugar confectionary, since the weight of the individual confectionary is less than 10 gms. as provided in Rule 34 of the 1977 Rules made under the 1976 Act. However, according to the Department, the valuation of sugar confectionary has to be done in terms of Section 4A of the Act.

Explanation 1 - A fact relevant as showing the existence of a relevant state of mind must show that the state of mind exists, not generally', but in reference to the particular matter in question.

Clearances are to be thus regulated. Taking the case of Toffy Max Caramel/Chocolate manufactured on behalf of NIL, it is found that the individual Toffy Max Caramel/Chocolate weighs about 4 gms, which is meant for retail sale in trade. The retail packs of Toffy Max Caramel/Chocolates are packed in wholesale package and each wholesale package weight would vary from 500 gms. to 520 gms. Such wholesale packages are cleared by the appellants to wholesale traders who in turn sell the packs to retailers. The retail traders break open such wholesale pack for retail sale. Therefore, the packs in which the appellants clear the Toffy Max Carmel/Chocolates are wholesale packages which are meant for the convenience of distribution in the trade and are not intended for retail sale to the ultimate consumer. Since per capita consumption of confectionary in India is 300 gms. per annum as submitted by the appellants and nothing contrary is shown. Therefore, it is not normal intent and feasible for a consumer to consume about 500 gms. of confectionary of the same flavor on one consuming occasion. Rule 2(p) of the Packaged Commodities Rules defines retail packages to mean -

The above requirement is duly complied, by the appellants for the 'wholesale pack' and is not in contrary. As a matter of absolute precaution in such cases even the maximum price worked out is also declared, which was not a statutory requirement. The appellants have also declared on the wholesale pack that number of units would vary occasionally without affecting the net weight declared on the wholesale pack. In this view of the matter, the finding of the Commissioner (Appeals) that the term 'intended for retail sale' appearing in the MRP Rules applies to the product itself cannot be accepted as the provisions of MRP Act and Rules applies to a person who intends sale of a commodity notified only in retail. The Commissioner held that just by writing on the 500 gms. package 'wholesale pack', it will not render such a pack as a wholesale pack, since such packs would be available in retail and would be purchased by the ultimate consumer. There is no basis to uphold this finding as arrived at by the Commissioner (Appeals). The Commissioner (Appeals) refers to a purchase of 500 gms. pack by a parent to distribute the Toffy Max Caramel/Chocolate to children at School or in neighbourhood to celebrate the birthday of a son. Such occasional purchase, if they shall take place, would not be a normal intended sale of Toffy Max Caramel/Chocolate. Therefore, 500 gms. pack of individual toffees in jar, box or pouch would not be a normal sale and will not cause for assessments for Central Excise purposes under Section 4A.