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2016 (11) TMI 1084 - CESTAT MUMBAI

2016 (11) TMI 1084 - CESTAT MUMBAI - TMI - Valuation - bulk packs - secondary packages - multi-piece packing - declaration of RSP - content of packaged commodity less than ten grams and ten mililitres - Standards of Weights & Measures (Packaged Commodity) Rules, 1977 - Held that: - there is no finding that the secondary packing containing the ‘glue sticks’ and ‘correction pens’ had retail selling price declared on them. Nor is there any allegation that the said goods were displayed for sale to t .....

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ate consumer. - Having considered the argument of Revenue that the secondary packing containing individual packaged commodities are ‘multi-piece’ packing and found them to be not so but packing not intended for sale to the ultimate consumer and having accepted the claim for exemption from ambit of Standards of Weights and Measures (Packaged Commodities) Rules, 1977 owing to the individual packages being less than the prescribed threshold, we uphold the impugned order and dismiss the appeal o .....

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e authority to set aside the demand of tax from M/s Sony Polymers Pvt Ltd (Unit II). The dispute relates to demand of ₹ 2,87,485/- short-levied as duty on clearances of glue sticks and correction pens during June 2005. The assessee had discharged duty liability during that month by assessing the value of clearances under section 4 of Central Excise Act, 1944 which was considered to be incorrect as the said goods allegedly were required to conform to the Standards of Weights & Measures .....

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te, 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 sub-section (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, notwith .....

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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, as the case may be. Explanation 2. - Where on any excisable goods more than one retail sale price is declared, the maximum of such retail sale prices shall be .....

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ing the standards of measurement to be complied with by manufacturers and packers and its enforcement thereof. Section 83 of the said Act, however, enables the Central Government to frame rules and the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 have been notified for ensuring rights of consumers in relation to pre-packaged commodities. Central to the statutory instrument is the physical impossibility of ascertaining the contents and quantity of goods during the course o .....

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sold by weight or measure Provided that the declaration in respect of maximum retail price and net quantity shall be declared on packages containing 10grams to 20grams or 10 ml to 20 ml. 3. The contention of the assessee in support of resort to section 4 of Central Excise Act, 1944 was that the packaged commodities did not contain more than ten grams and ten mililitres respectively and that they were not required to declare the retail selling price on the package and, therefore, not covered by t .....

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es contained therein; (b) the retail sale price of the multi-piece package As to what constitutes the package which requires declaration of the above details, the definition in Rule 2 (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 ea .....

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the grounds of appeal. 4. Glue is cleared in packs of 20 comprising 8 gram cylinders and correction fluid in pens of 8 millilitres and 10 millilitres capacity in packs of 20 and 10 pieces each. The original authority found that the sticks of glue containing 10 grams each are not within the ambit of the exemption from declaration of retail selling price in Rule 34 of Standards of Weights and Measures (Packaged Commodities) Rules, 1977 and that the larger package of 20 pieces were also required t .....

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holesale packages and hence not required to carry retail selling price prescribed in Rule 17. The finding of the original authority that correction pens were sold by number was held to be untenable by the first appellate authority as the measurement unit referred to in the schedule to the Central Excise Tariff Act, 1985 is in kilograms. 5. Revenue has filed this appeal on the ground that, by issue of notification no. 13/2002-CE (NT) dated 1st March 2002, assessment of correction fluids and prepa .....

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ights of Measures Act, 1976, or rules framed thereunder, prescribe requirement to declare retail selling price on the packages. As we have pointed out supra, the Act itself does not address the matter of packaged commodities but left it to executive wisdom to create and notify. The primacy accorded to the said Rules, thereby, is not questionable except when uninfluenced by informed consideration. It is also settled law that the application of section 4A of Central Excise Act, 1944 rests on two l .....

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nabling power under section 4A(1) of Central Excise Act, 1944, it is conspicuously silent on the other law that influences recourse to mechanism embodied in section 4A(2) of Central Excise Rules, 1944 in relation to the commodities in this dispute. Without any pretensions to mastery over the language, we must also confess to being befuddled by the concatenation of words in the review order that, presumably, presents itself as the second ground of appeal, viz., The Notification in definite terms .....

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ail Sale price with specified percentage of abatement from such Retail Sale price. 6. Learned Authorised Representative was as clueless as we are in deciphering the two sentences that the review authority considered to be of sufficient import. We may be forgiven for our lack of perspicacity which precludes us from a clearer interpretation than that any notification issued under section 4A(1) of Central Excise Act, 1944 does not need to garner support from a law other than the Central Excise Act, .....

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thority labours under the impression that Rule 34 of Standard of Weights and Measures (Packaged Commodities) Rules, 1977 exempts certain products from the prescription in the principal act , i.e., Standards of Weights and Measures Act, 1976. That no provision of the said Act prescribes declaration on packaged commodities is apparently not within the knowledge of the reviewing authority which has made such an authoritative assertion. It would appear that the reviewing authority has convinced itse .....

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position that exemption from a prescription intended to protect rights of consumers cannot be invoked without provision for such exemption in Central Excise Act, 1944. We are not certain if such peremptory dismissal of legislative jurisdiction has any basis in law. We, with our restricted status, knowledge and exposure, would not like to be presumptuous enough to elaborate on the propriety thereof; suffice it to say, that we do not find it tenable. 8. To cap this erudite enumeration of the flaws .....

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ge the generality of provision if eligible for the specificity of exclusion. 9. We find that none of the grounds of appeal are legally tenable or logically appealing. Review under section 35B of Central Excise Act, 1944 is a power conferred upon high authorities to call for, scrutinize and direct appeal against orders that do not appear to be legal and proper. Impliedly, all orders are to be subject to such ascertainment but, in practice, appeals are filed only against orders that have been deci .....

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nd maturity is gross contravention of the responsibility that accompanies conferment of power. For Revenue, such appeals do not cause incremental burden but they do impose additional costs on the assessee even when the matter has been decided in their favour. This power to appeal is, therefore, to be exercised with appropriate sagacity and consideration. Hectoring by us may not be visited with appropriate course correction. That consummation can be achieved only by the supervisory authorities. W .....

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to remain unresolved. We, therefore, examine the statutory provisions and the binding precedents rendered on the subject. 11. Learned Authorised Representative places reliance on Varnica Herbs v. C.B.E & C, New Delhi [2004 (163) ELT 160 (Mad.)], Arora Products v. Commissioner of Central Excise [2012 (276) ELT 0077 (Tri-Del.), and Whirlpool of India Ltd v. Union of India & Ors [2007 (218) 0167 (SC)]. Learned Counsel for respondent has cited Commissioner of Central Excise v. Urison Cosmet .....

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L-580-CESTAT-MUM] and Venkateswara Cans Pvt Ltd v. Commissioner of Central Excise, Mumbai [2015 (320) ELT 651 (Tri-Mumbai)] 12. The statutory position is unambiguous. Glue sticks and correction pens are covered by a notification issued under section 4A of Central Excise Act, 1944 if subject to prescriptions under Standards of Weights and Measures (Packaged Commodities) Rules, 1977 which is the instrument governing declaration of retail sale price . Rule 34 of the said Rules exempts packages that .....

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evertheless, the dovetailing notwithstanding, it must be conceded that the expressions may not have the same contextual meaning as assigned or interpreted in tax legislation because the objects and reasons are not, necessarily, congruent. 14. Manufacturers, in the natural order of activities, undertake production and utilise channels for distribution of the products. A proprietorial interest is implicit in packaged products and manufacturers, generally, tend to clear goods that are intended for .....

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escription of retail sale price ensures that the retailer cannot take advantage of local demand-supply gap to boost prices. Considering the nature and intent of the Standards of Weights and Measures (Packaged Commodity) Rules, 1977, the lack the specificity that a taxation statute is required to possess is not surprising. The definitions that distinguish the packaging to which the prescriptions apply should be viewed in that context. The objective being the protection of consumer interests, the .....

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the circumstances in which penalties can be visited upon the handlers if the prescriptions are flouted on packages displayed for sale by retailers. Likewise, Central Excise Act, 1944 has, since 1999, provided for penal consequence in the event of non-compliance and, since 2003, provided for re-assessment. The State cannot, except under health and safety laws, dictate the manner in which goods are to be delivered or received by the customer but it has prescribed the information content to be decl .....

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ration is confined to packaging that carry the declaration and it is an offence if that intent is suppressed by non-declaration on the package. Multi-packages, too, are identifiable by the intent manifested in declaration on the package. Tax authorities are not empowered to dictate or presume intention for retail sale. Nor can the prescription in Rules be insisted upon as a strategy to levy a higher amount of tax. 16. The definitions also make it clear that the manner in which the consumer choos .....

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ity) Rules, 1977 and Chapter IV of the Rules distinguish the intent of the manufacturer by the exclusion of retail sale price on the package. This confirms our view that packages containing more than one piece or package may be for retail or whole-sale distribution and the intent for retail distribution in the secondary packing is made apparent by declaring the retail sale price thereon. 17. The Rules supra were not notified with taxation as an objective. It predates the incorporation of section .....

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e that there is no finding that the secondary packing containing the glue sticks and correction pens had retail selling price declared on them. Nor is there any allegation that the said goods were displayed for sale to the ultimate consumer in the secondary packing. Consequently, the packages are not multi-piece packages as it was, apparently, not the intent of the manufacturer to sell the goods to the ultimate consumer in the secondary packing. And as retail selling price is not declared on the .....

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of Standards of Weights and Measures (Packaged Commodities) Rules, 1977 and declaration on the piece is merely voluntary. The original authority had proceeded on the ground that correction pens are never bought by weight by a customer but is always perceived as purchasable only in numbers. That may be so from the point of view of the consumer but, in accordance with our discussion of this aspect supra, that viewpoint is not relevant to the Standards of Weights and Measures (Packaged Commodities .....

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nt. If it were irrelevant, there would no reason for such elaborate prescription of data, including weight, on the packaging in the Rules and Rule 34 also would be otiose. The original authority appears to have confused the outer packing in the shape of a pen , which is merely the container, with the material inside. Therefore, the sticks and pens containing commodities that are below the threshold prescribed for compliance with the Standards of Weights and Measures (Packaged Commodities) Rules, .....

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2/58/99-CX dated 2nd November 2009 which directed that 5. In view of the above statutory requirement for declaration of retail sale price under the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 for multi-piece packages, it is clarified that in respect of a commodity intended for retail sale and which are notified under Section 4A, they shall be assessed to excise under the provisions of Section 4A of Central Excise Act, 1944 Taking note of the definition of retail package .....

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that exemption under Rule 34 would be applicable is not acceptable. Even though the net weight is less than 10 grams, it is evident that article is not intended to be sold either by weight or measure as contemplated under Rule 34 (b). The contention that the clarification issued by the respondent No.1 has the effect of whittling down the exemption granted under Section 34 is not all acceptable. Further reliance was placed on the decision of the Tribunal in Arora Product v. Commissioner of Centr .....

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a Product, the Tribunal had come to the conclusion of taxability of the secondary packing by distinguishing the facts from the prevailing decision of the Hon ble Supreme Court which had discountenanced the argument that packaged goods were sold by numbers and from the decision of the Larger Bench of the Tribunal that secondary packing was not intended for retail sale. 21. The reliance on the decision of the Tribunal in re Arora Product would not find sustenance in the present case as that was sp .....

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ca Herbs does not advance the cause of Revenue owing to the judgment of the Hon ble Supreme Court in Commissioner of Central Excise v. Kraftech Products Inc [2008 (224) ELT 504 (SC)] (extracted in re Arora Product) holding that: 15…. …. .... 23.... The illustration appended to Rule 2(j) bring out clearer picture. It states that the combined net weight shall be taken into consideration for the purposes mentioned therein. After combined net weight is taken into consideration for the .....

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he Customs, Excise and Service Tax Appellate Tribunal. We agree with the said opinion of the Tribunal. 22. The decision of the Tribunal in re Hindustan Unilever Ltd., relating to import of lipsticks which were presented for assessment by the importer as pieces for clearance, will not find application in the present dispute where weight is specifically declared on the individual packages contained in the secondary packing. This order had also been set aside by the Hon ble High Court of Bombay. Re .....

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