TMI Blog2008 (3) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... manufactures hair dye. It is packed in pouches each containing 3 gms.. 3 pouches (sachets) are sold in one packet. The net weight of each pouch, as also the net weight of the commodity in 3 pouches and the maximum rate is printed on the pouches. 4. Valuation of exciseable goods for purposes of charging the duty of excise is laid down in Section 4 of the Central Excise Act, 1944 in the following terms: "4. Valuation of excisable goods for purposes of charging of duty of excise: (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to value, such value shall, subject to the other provisions of this section, be deemed to be - (a) the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer if not a related person and the price is the sole consideration for the sale." 5. Section 4A of the Act provides for mode of valuation envisaged under Section 4. It reads as under :- "4A. Valuation of excisable goods with reference to retail sale price: (1) The Central Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the retail sale price relates." 6. Indisputably, the commodity in question is governed under the Standards of Weights and Measures (Packaged Commodity) Act, 1976. Indisputably again the Central Government in exercise of the powers conferred upon it by Section 83 of the Act framed Rules known as the Standards of Weights and Measures (Packaged Commodity) Rules, 1977 (the Rules). 7. Rule 2 contains the interpretation section. A distinction is made in regard to "combination package", "group package" and "multi-piece package". Multi-piece package is defined in Rule 2(j) to mean :- (j) "multi-piece package means a package containing two or more individually packaged or labeled pieces of the same commodities of identical quantity, intended for retail sale, either in individual pieces or the package as a whole; Illustration.- A package containing "5 toilet soap cake, net weight 20 g each, total net weight 100 g" is a multi-piece package." 8. Rule 6 provides for declarations to be made on every package, which reads as under :- "6. Declaration to be made on every package.- (1) Every package shall bear thereon or on a label securely affixed thereto a de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... smetics including creams, Weight or measure shampoo, lotions and perfumes."Rule 17 of the Rules mandates additional declarations to be made on multi-piece packages. 9. Admittedly the valuation of the commodity for the purpose of payment of excise duty was carried out in terms of Section 4 of the Act. Respondent, however, was served with eight show cause notices dated 29 th August, 2001, 26 th March, 2001, 4 th July, 2001, 3 rd September, 2001, 30 th October, 2001, 8 th January, 2002, 27 th March, 2002 and 16 th May, 2002 in terms of Section 11A of the Act asking it as to why :- (i) Differential Central Excise duty should not be demanded and recovered under the provisions of Section 11A(1) of the Central Excise Act, 1944. (ii) Penalty should not be imposed under Rule 173Q of Central Excise Rules 1944/now Rule 25 of the Central Excise (No.2) Rules, 2001. (iii) Interest due under Section 11AA/11AB of the Act, should not be charged/recovered from them." Cause was shown to the said notices. 10. The Deputy Commissioner, Central Excise, Division-II, Vapi by two separate orders dated 25 th October, 2001 and 12 th July, 2002 rejected the contention of the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so intended to be done as the weight of each sachet has been notified on the packet. It was submitted that the decision of the Madras High Court in Varnica Herbs (supra) was rendered per incuriam as has been held by a larger Bench of the Tribunal in Commissioner of Central Excise, Mumbai vs. Uirson Cosmetics Ltd. : 2006 (198) E.L.T. 508 (Tri.-LB). It was furthermore submitted that the notices under Section 11A of the Act having been issued beyond the period of six months, the same were barred by limitation. 14. The commodity is in powder form. It is sold in a multi piece package. Admittedly the product is packed in small packets each containing three sachets. Each sachet discloses the weight of its contents. The packet containing the three sachets also disclose the total weight and the number of sachets. The weight of the product in each sachet is admittedly below 3 gms. 15. It is beyond any doubt or dispute that the commodity in question is being sold in 'multi piece package'. Identical quantity of commodity is packed in each sachet. Yet again admittedly three sachets are packed in one packet. The weight of three sachets is 9 gms, that is, less than the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of multi-piece packages such as sale price of the multi-piece package and the number of individual pieces of the commodity contained in such packages. However under rule 34, exemption in respect of certain packages have been provided. In particular sub rule (b) to rule 34 provides that the MRP provisions do not apply to a package containing a commodity if the net weight or measure of a Commodity is 10 grams or 10ml or less, if sold by weight or measure. Some manufacturers have claimed that the multi-piece package containing individual pieces of less than 10 grams or 10ml or less, even though the net quantity of such multi-piece package exceeds 10 grams or 10ml would be covered by the above exemption. Hence they would not required to be assessed to excise duty on the MRP prices under section 4A of Central Excise Act, 1994 3. The matter has been examined in consultation with the Law Ministry. The Law Ministry has given the opinion that the exemption under rule 34(b) is applicable to a package containing a commodity and this exemption does not appear to be applicable to multi piece packages. 4. Based on the above opinion of the Law Ministry, it is clarified that the declarat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ackage. 'Retail sale price' is defined under Rule 2(r) and it suggests that the 'retail sale price' means the maximum price at which the commodity in packaged form may be sold to the ultimate consumer. The Rule further suggests the manner in which the 'retail sale price' shall be mentioned on the package. It is the case of the appellant that the four litres pack was not meant to be sold as the package to the ultimate consumer and the sale was only to the intermediary or as the case may be, to the hotel. If that was so, then there is no necessity much less under Rule 6(1)(f) to mention the 'retail sale price' on the package." In Varnica Herbs (supra) whereupon reliance has been placed by the learned counsel for the appellant, the Madras High Court opined :- "13. The next contention of the learned counsel for the petitioner is that the effect of the circular is to whittle down the exemption contemplated under Rule 34(1)(b)of the Rules. Relying upon the said rule, it is the contention of the petitioner that since the weight of the individual package is 8 grams, which is less than 10 grams, the petitioner is not expected to declare MRP or the net weight of the individual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned judgment does not warrant any interference. The Civil Appeal Nos. 2597, 2575, 2703-2704 of 2005, 325-326 of 2006 fail and are dismissed with costs. Counsel's fees assessed at Rs. 25,000/- in each case.Civil Appeal Nos. 1029, 5069-5073 of 2007 [Re: M/s. Aero Pharma (Silvassa) Inc. 25. The assessee manufactures Lip Smoother. Each unit contains 4.3 ml. They make a package of 72 pieces of lip smoother. The Revenue proceeded on the basis that a package containing 72 pieces of lip smoother would be a multi-piece package.Civil Appeal No. 1174 of 2007 [Re: M/s. Alfa Packaging 26. The assessee manufactures Shampoo which is packed in sachets. Each sachet contains shampoo below 10 ml. It is packed in a carton containing more than 500 pieces. Such carton, according to the Revenue, is a multi-piece package. When a lip smoother or a shampoo is packed in a carton keeping in view the quantity contained therein, the same cannot be said to be for retail sale. No person would ordinarily purchase for one's own use 72 lip smoothers or 500 pieces of shampoo. Thus, it is not a case where the goods are being sold in multi-piece package. Each sachet or each lip smoother must be sold ..... X X X X Extracts X X X X X X X X Extracts X X X X
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