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2006 (6) TMI 236 - AT - Central ExciseMethod of Valuation - Section 4 or Section 4A of the Central Excise Act - Pet Jars/Poly Bags containing individual pieces of Eclairs weighing less than 5.5 gms. each - wholesale package or not - whole thrust of the appellants case is that the Pet Jars/Poly Bags containing individual pieces constitute a wholesale package - exemption under Rule 34(b) of Standards of Weights Measures (Packaged Commodities) Rules 1977 - difference of opinion - HELD THAT - Since there is a difference of opinion between the two Benches on identical issue the matter is referred to the Hon ble President for constituting a Larger Bench to answer the following questions - (i) Whether the Pet Jars/Poly Bags containing individual pieces of Eclairs weighing less than 5.5 gms. each should be considered as a wholesale package as contended by the appellants and agreed by the Mumbai Bench or Whether they should be considered as multi-piece package as per the views of this bench? (ii) Whether the exemption under Rule 34(b) of Standards of Weights Measures (Packaged Commodities) Rules 1977 available for individual pieces is relevant for deciding if the assessment has to be done under Section 4 or 4A of the Central Excise Act? (iii) Whether the assessment of the impugned products should be done under Section 4 or Section 4A of the Central Excise Act?
Issues Involved:
1. Classification of product packaging as 'wholesale package' or 'multi-piece package'. 2. Applicability of Rule 34(b) of the Standards of Weights & Measures (Packaged Commodities) Rules, 1977. 3. Determination of assessment under Section 4 or Section 4A of the Central Excise Act, 1944. Issue-wise Detailed Analysis: 1. Classification of Product Packaging: The appellants manufacture Caram Eclairs and Choco Eclairs, each weighing approximately 5.5 grams, and contend that these are packed in wholesale packages (Pet Jars and Poly Bags) meant for wholesale dealers. They argue that these packages are not intended for retail sale, thus exempting them from affixing Maximum Retail Price (MRP) as per Rule 34(b) of the Standards of Weights & Measures (Packaged Commodities) Rules, 1977. The Revenue, however, disagrees, asserting that the packages fall under Rule 6(1) of the SWM (PC) Rules, necessitating MRP declaration, thus invoking Section 4A of the Central Excise Act. The Tribunal examined the classification and concluded that Pet Jars and Poly Bags, containing multiple individually wrapped Eclairs, do not qualify as wholesale packages. The Tribunal highlighted that these packages are available for purchase by retailers and consumers in departmental stores, indicating retail sale. The Tribunal defined 'multi-piece package' as per Rule 2Q) of the SWM (PC) Rules, which applies to packages intended for retail sale, containing two or more individually packaged pieces. 2. Applicability of Rule 34(b) of SWM (PC) Rules: The appellants argued that individual Eclairs, weighing less than 5.5 grams, fall under the exemption provided by Rule 34(b) of the SWM (PC) Rules, which exempts commodities weighing less than 20 grams from MRP declaration. The Tribunal acknowledged this exemption for individual pieces but clarified that the exemption does not extend to the Pet Jars or Poly Bags, which are considered multi-piece packages. Therefore, these packages must have MRP printed as per Rule 6 of the SWM (PC) Rules. 3. Determination of Assessment under Section 4 or Section 4A: The appellants contended that since there is no requirement to print MRP on the packages, the assessment should be done under Section 4 of the Central Excise Act, relying on various circulars and case laws. However, the Tribunal disagreed, stating that the form in which goods are cleared by the manufacturer is irrelevant for deciding the assessment method. The Tribunal emphasized that if MRP is required to be printed on the packages, the assessment must be done under Section 4A, as held by the lower authorities. The Tribunal referred to the case of BPL Telecom (P) Ltd. v. CCE, Cochin, which supported the view that goods covered by Packaged Commodities Rules and specified under Section 4A should be valued under Section 4A, regardless of whether they are sold wholesale or retail. Conclusion and Referral to Larger Bench: The Tribunal, noting a difference of opinion with the Mumbai Bench on identical issues, referred the matter to the Hon'ble President for constituting a Larger Bench to answer the following questions: 1. Whether the Pet Jars/Poly Bags containing individual pieces of Eclairs should be considered as 'wholesale package' or 'multi-piece package'. 2. Whether the exemption under Rule 34(b) for individual pieces is relevant for deciding the assessment under Section 4 or 4A. 3. Whether the assessment of the impugned products should be done under Section 4 or Section 4A of the Central Excise Act. Pronouncement: The judgment was pronounced in open court on 5-6-2006.
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