TMI Blog2009 (4) TMI 698X X X X Extracts X X X X X X X X Extracts X X X X ..... eir various depots. From depots, paints are sold to various dealers as per the Dealer Price List. The present dispute on valuation relates to base paint. 2. For long, paints used to be manufactured in limited colours and sold for use as such. With the advancement of technology, base paints of a few basic colours came to be manufactured and a few thousand shades obtained by tinting them with the aid of Computer Controlled Mixer Machine at the dealer s premises. At the dealer s shop, once the consumer decides the colour and quantity, the retail dealer does the job of tinting the base paint with the colourant and sells the tinted paint to the consumer. Thus the consumer can buy the paint of his choice colour from a large spectrum of thousands of shades with the aid of the computer. This saves the dealer from having to carry a huge inventory to achieve the same facility of choice with the base paints and colourants. 3. Appellants manufacture base paints and affix the MRP on the container with the indication that colourant cost is extra. The colourants are bought-out and supplied to dealers by Berger. As the Standards of Weights and Measures Act (SW M Act) stipulated packing in stan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing paint necessarily requires pre-packing. All paints are subject to the provisions of SW M Act and PC Rules made thereunder with stipulation for standard packing. The permission of Government given under order dated 24-7-2004 and amendment to Schedule III to Rule 5 of the PC Rules to include base paint with specified sizes of package proved that the base paints have been pre-packed commodity all along under the PC Rules, even before the paints were notified by the Government for valuation under Section 4A of the Act. When base paints are covered under PC Rules and paints are a notified commodity under Section 4A, the impugned order valuing the product under Section 4 is incorrect. The practice of the appellants as regards packing, marking, sale etc., of base paints underwent no change in the wake of notification of paints under Section 4A. The base paint is opened only after the consumer decides to purchase it. The consumer decides the exact shade and the quantity. In order to get the shade he has to purchase the base paint of required quantity and the necessary quantity of colourant. On purchase, at the behest of the consumer, the dealer opens the tin of the base paint, places i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rade discount from MRP which is not in conformity with Section 4. When base paints are to be assessed under Section 4, MRP is irrelevant. The calculation of the differential duty by the Department is fundamentally incorrect. Department has demanded duty on all the paints manufactured by the Appellants. Besides, when the value is ascertained under Section 4, abatements towards duty, discount and freight are eligible. The appellants were giving cash discount @ 6% to dealers who made the payment at the time of purchase. The scheme of discount is printed in the Dealer Price list itself. It is settled law that such cash discount is available as deduction across the board for all clearances to dealers. The Appellants relied on the decision of Hon ble Tribunal in the case of CCE, Ahmedabad v. Aravind Mills Ltd. [2006 (204) E.L.T. 570 (T-LB)]. 9. The fact that the appellants have been manufacturing base paints was known to the Department as early as in 2000. The Appellants had written to the jurisdictional Commissioner, intimating the fact that they were manufacturing base paints and dealers were using the automatic dispensing machine to add tints to the paints. The Department was also a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmodities in such quantities as it may specify : On 23-1-2007, the rule was amended requiring the manufacturer to declare the change if the packing was not as per prescribed standard. In response to a representation filed by M/s. Berger Paints, the concerned administrative ministry namely the Ministry of Consumer Affairs, Food and Public Distribution in the Govt. of India issued the following order :- Government of India Ministry of Consumer Affairs, Food and Public Distribution Department of Consumer Affairs Order New Delhi, dated the 24 July 2002 S.O.: Whereas the Central Government, after considering the technical data and information furnished by M/s. Berger Paints India Limited, Berger House, 129 Park Street, Calcutta - 700 017 is satisfied that for technical reasons it is not possible for the said company to pre-pack paints for delivery through their fully automatic computerized dispensing machine for paints in the standard quantities as specified in the Third Schedule to the Standard of Weights and Measures (Packaged Commodity) Rule 1977; Whereas, the computerized automatic dispensing machine is designed to mix one or more colourants, to prepare the selecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) Base paint: 450 ml, 500 ml, 900 ml, 925 ml, 950 ml, 975 ml, 1 litre, 3.6 litre, 3.7 litre, 3.8 litre, 3.9 litre and 4 litre and no restriction above 4 litre . 12. On a perusal of the order dated 24-7-2002 of the Ministry of Consumer Affairs, Food and Public Distribution, Govt. of India it is clear that tins containing base paint of 450 ml, 900 ml and 3.6 litres as specified in that order and further extended vide the Entry at Sl. No. 22 of Schedule III of Standard of Weights and Measures (Packaged Commodities) Rules 1977 continued to be pre-packed commodity subject to the restrictions and privileges extended to such class of commodities under Standard of Weights and Measures (Packaged Commodities) Rules 1977. All varieties of paint including Base paint are notified for MRP-based assessment under Section 4A of the Act during the material period. By issuing the order dated 24-7-02, the appropriate authority in the Government of India clarified that its status as pre-packed commodity of Schedule III to Rule 5 of PC Rules was not disturbed by packing in non-standard quantities. From 15-9-04 base paints and standard quantities in which it was to be pre-packed was notified by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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