TMI Blog2009 (8) TMI 489X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that- the impugned order confirming the demands on the appellant and imposing penalties and interest is unsustainable as the law has been squarely settled by Hon’ble Supreme Court in favour of the assessee. Thus, that the impugned order is liable to be set aside and appeal is allowed. - E/561/2008 - 1135/2009, - Dated:- 19-8-2009 - S/Shri M.V. Ravindran, Member (J) and P. Karthikeyan, Member (T) Shri G. Shivadass, Advocate, for the Appellant. Ms. Joy Kumari Chander, Jt. CDR, for the Respondent. [Order per: M.V. Ravindran, Member (J)]. - This appeal is directed against the Order-in-Original No. 03/2008-C.Ex., dated 27-3-2008. The relevant facts that arise for consideration are:- The subject goods i.e., "Razors and Razor Blades" are covered under the provisions of SW M Act and Rules made there under. Further, all goods failing under Tariff heading No. 8212 of the Central Excise Tariff Act, 1985 are notified under Notification No. 13/2002-C.E. (N.T.), dated 1-3-2002 and Notification No. 2/2006-C.E. (N.T.), dated 1-3-2006 issued under Section 4A of the Central Excise Act 1944, wherein an abatement of 40% is allowed on MRP, for the purpose of arriving at the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lower authority felt that the appellants have undervalued the goods cleared from their factory premises on the ground that "Razors and Razor Blades" (including the razor blade blank strips) are liable for discharge of duty under the provisions of Section 4A of the Central Excise Act, 1944 while the appellants have discharged the duty liability under Section 4 of the Central Excise Act, 1944. It is also concluded that the appellant had done so with the mala fide intention to evade payment of appropriate Central Excise duty. Coming to such conclusion, the appellants were issued two show cause notices to show as to why; I. (a)Duty on the Safety Razor blades and Razors cleared in bulk during the period April 2005 to January 2007 should not be assessed under Section 4A of the Central Excise Act, 1944 read with the provisions of SWMA. (b) The duty of Rs.3,80,59,351/- (Three Crores Eighty Lakhs Fifty Nine thousand three hundred and Fifty One only) which was short paid on the goods cleared during the period April 2005 to January 2007 should not be demanded from them under Section 11A of the Central Excise Act, 1944. (c) Penalty equal to the duty mentioned at Sl. No. (b) above should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad in fact evaded the Central Excise duty and should have discharged the duty liability under Section 4A of the Central Excise Act, 1944. Coming to such conclusion, the adjudicating authority passed the following:- (a) I confirm the demand of Rs.3,80,59,351/- (Rupees Three crore eighty lakh fifty nine thousand three hundred fifty one) including the education cess for the period April 2005 to January 2007 under proviso to Section 11A(1) of the Central Excise Act. (b) I impose a penalty of an amount equal to the amount of duty confirmed above in clause (a) i.e. Rs.3,80,59,351/- on M/s. Malhotra Shaving Products (Pvt.) Ltd., under Section 11AC of the Central Excise Act. (c) I confirm the demand of Rs.2,36,78,196/- (Rupees Two crore thirty six lakh seventy eight thousand one hundred and ninety six) including the Education Cess for the period February 2007 to January 2008 under Section 11A(1) of the Central Excise Act. (d) I further impose a penalty of Rs.1,50,00,000/- (Rupees One crore and fifty lakh only) on M/s. Malhotra Shaving Products (Pvt.) Ltd., under Rule 25 of the Central Excise Rules in relation to the duty short paid for the period February 2007 to January 2008 as we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er is that razor and razor blades are specified under Section 4A of the Central Excise Act and therefore irrespective of the fact that they were cleared in bulk/semi finished condition they have to be assessed under Section 4A. A6. The Supreme Court in the case of Jayanti Food Processing (P) Ltd. - 2007 (215) E.L.T. 327 held that unless there is a statutory obligation to declare MRP price under the SWM Act or Rules, the goods would not be covered under Section 4A of the Central Excise Act, 1944. (Paras 9, 13 14 of the judgment) A7. In view of the above decision of the Apex Court the basis adopted in the impugned order to hold that Section 4A is applicable to the present case is clearly unsustainable in law. A8. Reliance is also placed on the CBEC Circular No. 625/16/2002-C.X., dated 28-2-2002 wherein it was clarified that when there is no statutory requirement under the provisions of Weights and measures Act to declare the retail sale price on the packages, Sec. 4A will not apply. A9. Further reliance in this regard is placed on the following decisions wherein it has been held that when goods are sold in bulk the valuation has to be done in terms of Section 4 and not Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... modity) Rules, 1977 are applicable to packages intended for retail sale. B.2. Rule 60(f) of Chapter II of the Standards of Weights and Measures (Packaged Commodity) Rules, 1977 requires declaration of maximum retail sale price. B.3. In terms of Rule 3, the chapter II of the aforesaid Rules would apply only to packages intended for retail sale. The packages of the goods in question when cleared from Balanagar factory to the other factories in bulk and/or unassembled condition are undisputedly not intended for retail sale. Therefore, the provisions of entire chapter II are not applicable to such packages. Therefore the requirement under Rule 60)(f) of Chapter II that every package shall have a declaration as to retail sale price of the package, is not applicable to such packages. B.4. CBEC Circular No. 625/16/2002-CX., dated 28-2-2002 lists out six instances where retail sale price is not required to be affixed under Packaged Commodity Rules. The first instance cited in the above circular is "bulk supplies for personal as well as industrial use". B.5. The above instance referred to in the Circular applies to the present case on all fours in as much as undisputedly the goods i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded period of limitation alleges that even though the monthly ER-i Return showed that the goods were cleared in unpacked condition or in bulk by adopting the value under Section 4 of the Central Excise Act read with Rule 8 of the Central Excise Valuation Rules, 2000, the appellants had failed to intimate the details of job work operations or mode of packing for these bulk clearances and therefore the appellants have suppressed the facts. D.3. It is submitted that the aforesaid allegation is wholly without any legal basis. The fact as to how the goods, cleared in bulk, were packed is wholly irrelevant for the purpose of determination of assessable value of such goods cleared in bulk. The question as to whether Section 4A or Section 4, is applicable to the excisable goods cleared by assessee would depend upon the nature of packing of the goods at the time of clearances and the intention of the assessee to sell the said package in retail or not, and the requirement under Standard Weights and Measurement Act or under any other law to declare MRP on the packages. The fact regarding the nature of packing or mode of packing ultimately going to be used by the factories in Himachal Prades ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o supported by the Circular dated 28-2-2002 issued by Central Board of Excise Customs as well as the judgments of the Tribunal on this issue. In such a situation, it is submitted that the allegation of contravention of Central Excise Rules is clearly unsustainable in law. F.3. Rule 6 of the Central Excise Rules, 2002 deals with the assessment of the goods, and stipulates that the assessee shall himself assess the duty payable. In the present case, as has been explained in the preceding paragraphs, the appellants had correctly assessed the duty liability on the goods in question and hence the appellants had not contravened the provisions of Rule 6 of the Central Excise Rules, 2002. Hence, the proposal made in the show cause notice to impose penalty and confirmed in the impugned order is incorrect and unsustainable in law. G. For the reasons submitted above on merits no differential duty is payable by the appellants. Hence, interest under Section 11AB is also not payable. 4. Ld. Counsel would also rely upon recent decision of this Tribunal in the cases of Zodiac Clothing Co. Ltd. v. CCE [2009 (235) E.L.T. 723 (Tri.-Bang.)], Crystal Paints v. CCE [2009 (235) E.L.T. (371) (Tri. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while the Revenue was of the view that the products would fall under Section 4A as the product "Razors and Razor Blades". 8. We find that there is no dispute as to the fact that when the products are cleared from the factory premises of the appellant, are not in a retail sale package. It is also undisputed that the activity of packing the said "Razors and Razor Blades" and delivering it to the market for the purpose of retail sale is undertaken at Himachal Pradesh. It is also undisputed that as regards the products covered under III Schedule of the Central Excise Tariff Act, 1985, (the products on which the Section 4A is applicable), activity of packing would amount to manufacture. On this factual matrix, we find that the exercise of the ld. adjudicating authority in confirming the demand by placing reliance on the various provisions of Standards of Weights and Measures Act and Rules made there under seems to be totally misplaced and misdirected. We find that the Hon'ble Supreme Court in the case of Jayanti Food Processing (P) Ltd. [2007 (215) E.L.T. 327 (S.C.)] has laid down the law on the very same issue i.e. as regards applicability of Section 4A to the products notified under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 14-5-1997. Section 4A, as it originally stood, and relevant for our purposes, is as under: "Section 4A. Valuation of excisable goods with reference to retail sale price. - (1) The Central Government may, by notification in the Official Gazette, specify any goods, in relation to which it is required, under the provisions of the Standards of Weights and Measures Act, 1976 (60 of 1976) or the Rules made thereunder or under any other law for the time being in force, to declare on the package thereof the retail sale price of such goods, to which the provisions of subsection (2) shall apply. (2) Where the goods specified under sub-section (1) are excisable goods and are chargeable to duty of excise with reference to value, then, notwithstanding anything contained in Section 4, such value shall be deemed to be the retail sale price declared on such goods less such amount of abatement, if any, from such retail sale price as the Central Government may allow by notification in the Official Gazette. (3) The Central Government may, for the purpose of allowing any abatement under sub-section (2) take into account the amount of duty of excise, sales tax and other taxes, if any, payable o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e thereunder or any law for the time being in force. In short sub-section (1) was linked with the packages of the goods in respect of which the retail sale price was required to be printed under SWM Act and the Rules' made thereunder or any other law. Sub-section (2) then provides that such specified goods where they are excisable goods would be valued not on any other basis but on the basis of the retail sale price declared on such packages. The Section also provides that the assessee would be entitled to the deduction from such valuation the amount of abatement provided by the Central Government by a notification in the Official Gazette. In short after introduction of Section 4A, the nature of sale lost its relevancy in the sense that the valuation did not depend upon the factor whether it was a wholesale or sale in bulk or a retail sale. The whole section covered the goods which were packaged and sold as such with the rider that such package had to have a retail price thereupon under the provisions of SWM Act, Rules made there under or under any other law. Thus, viewed from the plain language of the Section, where the goods are excisable goods and are packaged and further such p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the SWM Act or the Rules made thereunder for declaration of MRP on the package, then there would be no question of applicability of Section 4A(1) (2) of the Act. Even if the assessee voluntarily displays on the pack the MRP, that would be of no use if otherwise there is no requirement under the SWM Act and the Rules made thereunder to declare such a price. 13, 14 15 omitted.... 16. There is one more substantial reason supporting the appellant. Shri Ravinder Narain invited our attention to Rule 34 in Chapter V of SWM (PC) Rules which provides for exemptions. We have quoted Rule 34 earlier. The Rule has now been amended. However, under the unamended Rule there is a specific declaration that the SWM (PC) Rules shall not apply to any "package" containing a commodity if the marking on the package unambiguously indicates that it has been specially packed for the exclusive use of any industry as a raw material or for the purpose of "servicing any industry, mine or quarry". Learned Counsel points out that the "package" which is sold by the assessee mentions that it is specially packed for the exclusive use of the catering industry. Learned Counsel further argues that such "package" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avinder Narain that the "package" sold by the assessee to the hotel was, apart from being for the exclusive use of the hotel was, also "for the purpose of servicing that industry". If that is so, then' the SWM (PC) Rules would not apply at all. 17. The Tribunal has given very narrow meaning to Rule 34 by firstly holding that ice-cream is not a "raw material". There the Tribunal was right but the Tribunal was not right by holding that the words "servicing any industry" were not applicable to such "package". We, therefore, accept the arguments of the learned Counsel and reject the contention raised by Shri Subba Rao. If that is so, the appeal would have to be allowed and it would have to be held that Section 4A will not apply to the ice-cream sold by the assessee. 18. This takes us to the last argument regarding the applicability of the Circular dated 28-2-2002. However, it is not necessary for us to delve on that issue in view of the findings which we have recorded earlier holding that the assessment would have to be under Section 4 of the Act and not under Section 4A. In fact the tenor of the notification is to the same effect. However, considering the fact that the notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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