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2015 (10) TMI 1570 - CESTAT KOLKATA

2015 (10) TMI 1570 - CESTAT KOLKATA - 2015 (326) E.L.T. 579 (Tri. - Kolkata) - Valuation - Section 4 or 4A - whether the Powder Hair Dye (PHD) be assessed to duty by determining its value under Section 4 or under Section 4A of CEA, 1944 - whether the appellant is required to print/affix MRP on sachets and/or on the mono pack containing 6/8 sachets - Held that:- both sachets and mono pack are capable of being sold in retail, a situation fairly accepted by the Appellant. But, the Appellant insiste .....

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gal Metrology Department of the State to the effect that whether the appellant would be required to affix the MRP on the sachets or on the multi piece packages or on both under the aforesaid Acts and the Rules made thereunder. - The method of valuation under Sec.4 of CEA,1944 and consequently computation of the demand adopted by the Ld.Commissioner, in the respective appeals, in our opinion is erroneous. It is an admitted fact that the appellant removed the goods from their factory to the Depot .....

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d with Rule 7 of the Central Excise Valuation Rules, 2000 are relevant for determination of the assessable value. - Impugned Orders are set aside - Matter remanded back - Decided in favour of assessee. - Excise Appeal Nos. E/179 to 182/12, E/70200/13 & E/76111/2014 - ORDER NO.FO/A/75408-75413/15 - Dated:- 30-7-2015 - D M Misra, Member (J) And I P Lal, Member (T) For the Petitioner : Sri Ravi Raghavan, Adv & Miss Satabdi Chatterjee, Advs For the Respondent : Sri S Sharma, Commissioner (AR) OR .....

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ether for disposal. 2. Briefly stated facts of the case are that the appellants are engaged in the manufacture of Powder Hair Dye (PHD) falling under Chapter Heading 3305 of CETA, 1985. During the relevant period, the said PHD was packed in sachets weighing 3 grams on which its MRP was declared. The sachets numbering 6/8 were then placed in one mono pack/carton on which the total MRP of all sachets was also declared/printed. The appellant discharged duty on the PHD by determining its value from .....

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was weighing 3 grams(i.e. less than 10 grams), even though cleared in 6/8 numbers in the mono pack/cartoon, on which no MRP was required to be affixed, hence, such PHD was liable to be assessed under Section 4 and not under Section 4A of CEA,1944. The first show cause cum demand notice was issued (Excise appeal No. 70200) on 15/12/2011 demanding duty for the period April, 2007 to March, 2011 and the second show cause notice was issued on 13/12/2012 demanding duty during the period April, 2011 t .....

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ds under Provision of Section 4A of CEA, 1944 and the refund claims were sanctioned to them till March, 2009. However, for the aforesaid period, even though the refunds were initially sanctioned, but the Revenue filed review application before the Ld. Commissioner (Appeals), who has decided the issue in favour of the Revenue, resulting into the present appeals by the Appellant. 5. Ld. Advocate Shri Ravi Raghavan for the Appellant assailing the impugned Order has submitted that the appellant had .....

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serving that in view of the deletion of definition of 'multi piece package' under PC Rules,1977, the mono packs/cartons comprising of 6/8 sachets cannot be considered as product for assessment. It is his submission that deletion of the definition of 'multi piece package' from the PC Rules,1977, in no manner be a ground for change in the method of assessment of the goods. In nutshell, it is his submission that since the mono cartons satisfies the definition of 'retail package& .....

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acks itself a retail package, there is no question of not treating the same as the products under assessment. 6. The Ld. Advocate further submitted that the mono carton/pack was retail package and intended for retail sale only was also evident from a scheme introduced by the appellant for a particular period. Under the said scheme it was informed to the consumers by printing the text on the mono pack indicating that a soap valued at ₹ 10/- was offered free with the purchase of the mono pac .....

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y the Department that the mono packs/cartons is a wholesale package and not a retail package, the assessment cannot be done under Section 4 of CEA,1944. It is his submission that Rule 29 of PC Rules, 1977 or Rule 24 of the PC Rules, 2011 exempts wholesale packages from printing MRP and other declaration prescribed under these Rules. He has further submitted that the intention to sell the mono cartons/packs in retail to ultimate consumer is evident/manifest from the declaration made on the mono c .....

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MRP on the mono cartons/pack under the provisions of PC Rules,1977 or PC Rules,2011 would result in penal action. It is his submission that at the time of clearance from the factory, the mono carton contains 6/8 sachets of PHD weighing 03 grams each, hence the total weight of PHD in the mono cartoon/packs was 18 grams/ 24 grams respectively. Since the total weight of PHD in the mono pack was more than 10 grams, hence, it would fall outside the exclusion clause contained under Rule 26(a) or 34(b) .....

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The Ld. Advocate advancing an alternative plea submitted that in the event their contention for determination of assessable value of PHD under Section 4A is not acceptable and it is held that the value is to be determined under Section 4 of CEA 1944, then the duty confirmed is also not sustainable being resulted out of an erroneous determination of assessable value under Sec.4. He submits that in Appeal No. (E-70200/13), the SCN dt. 15.12.2011 adopting the average selling price the total assess .....

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red, which was inclusive of entry tax @ 1% and the excise duty. It is his contention that the valuation has to be carried out in accordance with Section 4(1)(b) read with Rule 7 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules 2000. It is his submission that if the correct value is determined, in accordance with the aforesaid provisions, the demand of duty would drastically be reduced from ₹ 3,18,82,387/- to ₹ 52,72,446/-. 10. In relation to appeal No. (E .....

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t come would be that the Appellant had paid excess duty of ₹ 9.33 lakhs. Further, he has submitted on re-computation of the demand during the course of hearing of their Stay application, the department has arrived at the liability at ₹ 2,55,869/- by including the secondary freight i.e. freight charges from the depots to the customer's premises. It is his submission that secondary freight from the depots to the customer's premises cannot be included in the assessable value as .....

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ases ought to have been arrived at in terms of Section 4 of CEA,1944 and it is to be re-worked and cannot be carried out on ad hoc basis. The Department did not issue any notice to reassess the goods under Section 4 and the manner of working out the differential duty is not ascertainable. Hence, the value under Section 4 read with Rule 7 of Central Excise Valuation Rules,2000 needs to be re-worked for the said period also. 12. Ld. Advocate further, submitted that the in Appeal No. (E-700200/13), .....

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e to time and upto March, 2009, refund has been sanctioned to them. Further, he has submitted that the two demand notices were issued in December, 2011 and December, 2012 after passing the Orders sanctioning refunds and reviewed by the Department; it indicates that the relevant facts are within the knowledge of the Departmental authorities, hence, the demand is barred by limitation. 13. Rebutting the allegation of the Revenue that the information sought for by the department was not furnished, t .....

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contra, the Ld. A.R. (Commissioner) for the Revenue has submitted that the goods in question viz. PHD is sold in a multiple piece package and MRPs affixed on the mono pack as well as on the individual sachets. Each sachet weighed 3 grams and there was no marking on the mono packs to the effect that the sachets packed thereunder would be sold together and not individually. Also, the mono pack was not sold or packed in a manner by which it would preclude the possibility of selling individual sach .....

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s and Measures(Packaged Commodities)Rules,1977 the definition of 'multiple piece packing' under Rule 2(j) has been deleted. This has resulted in removing multiple piece packing from the purview of PC Rules,1977 w.e.f. 17/07/2006 and there was no requirement of affixing MRP on multiple piece packages. The said Notification also amended Rule 34(b) of PC Rules,1977 and Rule 26(a) of PC Rules,2011. Thus, the package weighing less than 10 grams had been exempted from the provisions of the sai .....

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Amul Processed Cheese containing 10 cheese cubes, M.R.P. is marked/affixed on the multi piece pack and not on the individual cheese cubes, which makes the intention of the manufacturer clear that the multi piece pack would be sold as such and each cube not to be sold separately. Further, he has submitted that in case the intention of the appellant was to sale the multi piece package i.e. mono pack/cartoon as the retail package and individual sachets were not to be sold separately, then they wou .....

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acking and further, the individual cakes of soap do not bear any MRP as the intention was not to sale the individual pieces of soap separately. It is clearly marked on the mono pack of dove soaps that the mono pack is to be sold as such. It is his submission that in the present case none of the above mentioned features have been used for selling mono pack of PHD. Further, the mono pack does not advance any price discount for buying 6 to 8 sachets Powder Hair Die (PHD) as such discount is normal .....

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facturer is legally obliged to print the MRP on the packages of the goods under the Provisions of The Standards and Measures Act, 1976 or The Legal Metrology Act,2009 and the Rules made there under. It is his submission that if there is no statutory requirement under the said provisions to declare the retail sale price on the Mono packs, then assessment under Section 4A of CEA, 1944 will not be attracted. Further, he has referred to a letter F. No. 341/64/97-TRU dated 11/08/1997 issued by the Bo .....

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subjected to assessment under Section 4A of CEA, 1944. In support, he has referred to the following case laws: (i) Central Arecanut and Coco Marketing and Processing Co-Op. Ltd. Vs. CCE, Bangalore 2008 (226) ELT (364) (Tri-Chennai); (ii) Swan Sweets Pvt. Ltd. Vs. CCE-2006 (198) ELT 565 (Tri) (iii) CCE Rajkot, Gujarat Vs. Makson Confectionery Pvt. Ltd.-2010 (259) ELT (S.C.) (iv) RDGs Industries Ltd. Vs. CCE, Hyderabad (v) Arora Product Vs. CCE-2012 (276) ELT 77 (Tri.), and (vi) Roys Industries L .....

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ed in sachets weighing 3 grams; 6/8 such sachets are placed in a secondary packing called as mono pack. Each Sachet is affixed with MRP and also the total MRP of 6/8 sachets is printed on the mono pack. The said PHD has been notified under The Standards of Weights and Measures Act,1976 or The Legal Metrology Act, 2009 and the Rules made thereunder and also specified under Sec. 4A of CEA,1944. The core issue for determination is: whether the PHD be assessed to duty by determining its value under .....

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f "retail package", as the mono pack was intended to be sold in retail to the ultimate consumer. Consequently, the same are liable to assessment under Sec.4A of CEA, 1944. 23. On the other hand, the contention of the Revenue is that the mono pack is a multi piece package. Consequently, on deletion or absence of such definition under the relevant Rules, there is no requirement of affixing MRP on the mono pack. Also, the intention of the Appellant was to sale the sachets in retail to the .....

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arguments, it is necessary to refer to the relevant provision of Section 4A of CEA,1944 which reads as: 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 [Legal Metrology Act, 2009 (1 of 2010)] or the rules made thereunder or under any other law for the time being in force, to declare on the package thereof the .....

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(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 on such goods. [(4) Where any goods specified under sub-section (1) are excisable goods and the manufacturer - (a) removes such goods from the place of manufacture, without declaring the retail sale price of such goods on the packages or declares a retail sale price which is not the retail sale price as requir .....

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.- For the purposes of this section, "retail sale price" means the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer and includes all taxes, local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like and the price is the sole consideration for such sale: Provided that in case the provisions of the Act, rules or other law as referred to in .....

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rance from the place of manufacture, is altered to increase the retail sale price, such altered retail sale price shall be deemed to be the retail sale price; (c) where different retail sale prices are declared on different packages for the sale of any excisable goods in packaged form in different areas, each such retail sale price shall be the retail sale price for the purposes of valuation of the excisable goods intended to be sold in the area to which the retail sale price relates.] 25. The d .....

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e containing "5 toilet soap cakes net weight 20g. each, total net weight 100g" is a multi-piece package. 2(p)"retail package" means a package containing any commodity which is produced, distributed, displayed, delivered or stored for sale through retail sales, agencies or other instrumentalities for consumption by an individual or a group of individuals. 2(x)" Wholesale Package" means a package containing- i) a number of retail packages, where such first mentioned p .....

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1.2007 reads as: "retail package" means the packages which are intended for retail sale to the ultimate consumer for the purpose of consumption of the commodity contained therein and includes the imported packages:- provided that for the purposes of this clause, the expression "ultimate consumer" shall not include industrial or institutional consumers. The said meaning of 'retail package' has been adopted in the Legal Metrology (Packaged Commodities) Rules, 2011. 27. .....

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eof, the retail sale price of such goods. 28. In other words, the specified goods must be subjected to the provisions of The Standards of Weights and Measures Act or The Legal Metrology Act, and the Rules made thereunder so as to be assessed under Sec.4A of CEA,1944. The CBEC in its Circular No. 625/16/2002-CX dated 28.02.2002 clarified as: "5. A somewhat similar issue was examined by the Board earlier vide letter F.No. 341/64/97-TRU, dt. 11/08/1997 (1997 (95) E.L.T. T3). This clarification .....

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respect of all goods (whether notified u/s. 4A or not) which are not statutorily required to print/declare the retail sale price on the packages under the provisions of the Standards of Weight & Measures Act, 1976, or the rules made thereunder or any other law for the time being in force, valuation will be done u/s. 4 of the C.E. Act, 1944 [or under Section 3(2) of the Central Excise Act, 1944, if tariff values have been fixed for the commodity]. Thus, there could be instances where the same .....

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served: "Once the goods are specified items under Section 4A(1) and are excisable goods chargeable duty (sic) with reference value, then such value shall be deemed to be the retail sale price declared on such goods, less amounts of abatements etc. As we have already observed that Weights & Measures Act requires chocolate manufactured by the appellant to be printed with MRP on the same, we are of the view that the duty of excise on such goods is required to be assessed in terms of the MR .....

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pecifically provided that there would be instances where the same notified commodity would be partly assessed on the basis of MRP under Section 4A and partly on the basis of normal price prior to 1-7-2000 or transaction value from 1-7-2000. Again merely because the goods are specified items under Section 4A(1), that by itself will not be a be all and end all of the matter as before such goods are brought in the arena of Section 4A(1), there would have to be the satisfaction of a particular condi .....

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r it is required to affix the MRP on the sachets or mono pack or on both. The contention of the appellant is that in absence of definition of multi piece package, the amended definition of 'retail package' covers the appellant's case. It is their submission that the mono pack, in which the PHD contained in 6/8 sachets, were intended for retail sale to the ultimate consumer for the purpose of consumption. Rebutting the said argument of the Appellant, the Revenue pleaded that their int .....

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ack is meant for retail sale. He has contended that the claim of the Appellant to sell mono pack in retail in the circumstances, is unacceptable. 31. At the cost of repetition, it is to mention that the entire dispute rests on the question whether the appellant is required to print/affix MRP on sachets and/or on the mono pack containing 6/8 sachets. It cannot be ruled out that both sachets and mono pack are capable of being sold in retail, a situation fairly accepted by the Appellant. But, the A .....

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n retail sale and not the mono pack. It is further held that since sachets weighting 3 grams fall outside the purview of Standards, Weights and Measures Act, 1976 and the rules made thereunder, the PHD was directed to be assessed under Sec.4 of CEA, 1944. 32. We find that neither the appellant nor the Revenue collected any information/opinion on the said issue from the appropriate authority i.e. Legal Metrology Department of the State to the effect that whether the appellant would be required to .....

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on, the assesse is exempted from declaring the retail price or not. In case of such doubt a clarification may be obtained from the concerned Deptt. (generally the Metrology Deptt.) of the State Government." 33. The Revenue argued that other manufacturers similarly situated do not affix the MRP on the contents but on the mono pack. The plea of the Appellant is that on the issue of printing MRP on the Sachets and also on the mono packs no objection was raised by the Legal Metrology Department .....

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