2006 (2) TMI 19 - AT - Central Excise

Central Excise Hair dye in sachets (1) Valuation of multi-piece packages (2) Impugned goods (3) Retail sale price under Standards of Weights and Measures Act (4) Exemption

Summary

Issues:
Method of valuation under Section 4A of CEA for 'Godrej' brand hair dye in 3 sachets, legal requirement to declare retail sale price, exemption under Rule 34 of SWMR for goods less than 10 gms, applicability of Varnica judgment, interpretation of SWMA and SWMR provisions.

Analysis:
The Appellate Tribunal was constituted to reconsider a previous decision in light of a High Court ruling. The dispute centered on the valuation method for 'Godrej' hair dye packs - Revenue argued for MRP under Section 4A of CEA, while respondents claimed correct valuation under Section 4 as Section 4A did not apply. Section 4A mandates valuation with reference to MRP for specified goods requiring price declaration on the package. The crux was whether the legal requirement existed for price declaration on the hair dye packs. The respondents argued exemption under Rule 34 of SWMR for goods less than 10 gms, citing past Tribunal decisions supporting this view.

The Tribunal analyzed past decisions and the Varnica judgment, which discussed the competency of CBE&C to issue circulars on SWMA matters. The Tribunal rejected the contention that Varnica's observation on goods not intended to be sold by weight was casual, emphasizing Varnica's consideration of exemption under Rule 34. The Tribunal also addressed the weight distinction argument, highlighting Varnica's specific reference to weight below 10gms in denying exemption. Notably, Varnica's reasoning for denying exemption was the goods not intended to be sold by weight, lacking detailed explanation.

Further, the respondents argued that hair dyes were the commodity, not sachets, under SWMA and SWMR provisions requiring declaration by weight or volume. They referenced the Fifth Schedule listing cosmetics like hair dyes to be sold by weight, supporting exemption under Rule 34 for hair dye sachets below 10gms. The Tribunal dismissed Varnica's observation as unsupported and rendered per incuriam, not considering legal requirements for cosmetics sales by weight or volume. Citing legal principles, the Tribunal concluded that hair dye sachets below 10gms, sold by weight, were exempt under Rule 34, thus Section 4A did not apply.

In conclusion, the Tribunal returned the appeal with its views, emphasizing the legal requirements for cosmetics sales by weight or volume and rejecting Varnica's observation as a binding precedent due to lack of consideration for relevant legal provisions.

Judgment: The appeal was returned to the referring Bench with the Tribunal's views, clarifying the exemption under Rule 34 of SWMR for hair dye sachets below 10gms sold by weight, thus negating the application of Section 4A of CEA.