TMI Blog2020 (12) TMI 504X X X X Extracts X X X X X X X X Extracts X X X X ..... ular dated February 28, 2002, has also clarified that section 4A of the Excise Act will not be attracted when there is no statutory requirement of affixing MRP on the goods in question, even though an assessee may have voluntarily affixed the MRP on such goods. As the appellant had cleared wall putty in packages of 40 kg, the provisions of rule 6 contained in Chapter II of the Rules will not apply and if this be so, the provisions of section 4A of the Excise Act under which the value of goods is deemed to be the retail sale price declared on such goods, would not be applicable. The appellant was, therefore, justified in determining the value of the goods under section 4 of the Excise Act. In H R JOHNSON (INDIA) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIGAD [ 2014 (6) TMI 453 - CESTAT MUMBAI] the assessee cleared tiles in retail packages to real estate developers after affixing MRP and paid duty on MRP basis under section 4A of the Excise Act. The Department contended that since the sales were made to institutional/industrial consumers, the Rules would have no application and duty must be paid under section 4. The Tribunal held that there is no difference in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration for the sale, be the transaction value; (b) in any other case, including the case where the goods are not sold, be the value determined in such manner as may be prescribed. 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 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, 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 Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voking the extended period of limitation. The appellant was required to pay duty under section 4A of the Excise Act in respect of packages of 40kg instead of under section 4 of the Excise Act. 10. The appellant submitted a detailed reply contending that wall putty was cleared in packages of 40kg and so in view of the provisions of rule 3 of the Rules, section 4A of the Excise Act would not be applicable since there is no statuary requirement of mentioning the MRP on the packages. The appellant also contended that the extended period of limitation, in the facts and circumstances of the case, would not be applicable. 11. The Principal Commissioner, however, by order dated July 26, 2019 confirmed the demand proposed in the show cause notice with interest and penalty. The findings are as follows: The above provisions stipulate that only those packages of commodities which are containing quantity of more than 25 kgs. or 25 Ltrs., (except cement, fertilizer and agricultural farm produce sold in bags above 50 kgs.) and which are meant for industrial consumers or institutional consumers are outside the scope of the provisions of this Chapter. In ordinary sense, it indica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gad [ 2015 (315) E.L.T. 53 (Tri.- Mumbai) ] . This decision of the Tribunal was subsequently followed by the Tribunal in ACC Ltd. vs. Commissioner of C.Ex., Coimbatore [ 2018 (359) E.L.T. 572 (Tri.-Chennai) ] and C.C.E. S.T.- Jaipur-I vs. Ultra Tech Cement Ltd. (Unit Kotputli Cement) [ Appeal No. E/51506/2018-DB decided on 2.1.2019 ] ; (v) This position is also clear from the clarification given by the Legal Metrology Department by the letter dated June 29, 2019 and it is the Legal Metrology Department which is the best judge to decide whether a product is required to be affixed with MRP; (vi) Voluntary affixation of MRP does not attract section 4A of the Customs Act, in the absence of any statutory requirement; and (vii) Penalty could not have been imposed upon the appellant nor interest could have been recovered. 13. Shri R. K. Mishra learned Authorized Representative of the Department has, however, supported the impugned order and has made the following submissions: (i) A combined reading of rule 2 (k) and 2 (l) of the Rules leaves no manner of doubt that for availing exemption from the provisions of the Rules, both the conditions st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set out in (a) and (b) of rule 3 have to be complied with, otherwise the package has to necessarily mention the MRP. 18. The terms industrial consumer and institutional consumer have been defined in rule 2 (bb) and 2 (bc) of the Rules. Industrial consumer , has been defined to mean a consumer who buys packaged commodities directly from the manufacturer or from an importer or from wholesale dealer for use by that industry and the package should have a declaration not for retail sale . Institutional consumer has been defined to mean a institution who hires or avails of the facilities or services in connection with transport, hotel, hospital or other organization which buy packaged commodities directly from the manufacturer or from an importer or from wholesale dealer for use by that institution, and the package shall have a declaration not for retail sale . 19. Rule 3 provides that the provisions of Chapter II shall not apply to, - (a); and (b) and what needs to be noticed is that (a) and (b) are separated by a semicolon that is followed by and. 20. Before examining the matter any further, it would be pertinent to note that the Supreme Court in State of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be satisfied for the provisions of Chapter II not to apply. And is clearly used disjunctively and not conjunctively. If what has been contended by the learned Authorized Representative of the Department is taken to be the true intention behind enacting rule 3, than in that case all that would have been stated in rule 3 would be that the provisions of Chapter II shall not apply to packaged commodities of more than 25 kg or 25 litres (excluding cement and fertilizer sold in bags up to 50 kg) meant for industrial consumers or institutional consumers. 24. The way rule 3 of the Rules is set out, makes it clear is that the provisions of the Chapter II shall not apply either to packages of commodities containing quantity of more than 25kg or packaged commodities meant for industrial consumers or institutional consumers. 25. A Division Bench of this Tribunal in Heidelberg Cement (India) Ltd., examined this precise issue and held that the word and between the two clauses (a) and (b) of rule 3 of the Rules has to be read disjunctively and not conjunctively. The relevant portion of the decision in Heidelberg Cement (India) Ltd. is reproduced below: 5.2 From the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ts (stock-in-transit closing stock at warehouse), the remaining portion of the disputed clearances totalling to 29415.25 MTs were sold either to manufacturers, users, asbestos and cement/pipe manufacturers, ready-mix concrete manufactures or otherwise to builders, as infrastructure/buildings/ government projects construction, educational institutions, hospitals and societies. From a combined reading of the above reproduced provisions of Rule 2A of the Rules, these genre of buyers would fall under the category of Institutional Consumer or Industrial Consumer, in our opinion. On this score itself, we find that the provisions applicable to packages intended for retail sale in Chapter II of the said rules, will not apply to the clearances of cement by the appellant to its Industrial or Institutional consumers. 4.6 It can be argued that for exemption from retail sale price will apply only where the conditionalities of both (a) and (b) of Rule 2A ibid are satisfied and that since packs contain only 50kgs, and not more than 50 kgs., they would still be considered as packages intended for retail sale. However, we find that in the case of Heidelberg Cement (India) Ltd. Vs CCE Nagpur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s issued by the Legal Metrology Department, cannot be disregarded. The decision would have no application in the present case since there is no requirement to examine whether the 40 kg packages are capable of being sold in retail since such packages are outrightly excluded from the purview of the Rules. Further, this decision supports the case of the appellant that reliance should be placed on the clarifications issued by the Legal Metrology Department. 31. Thus, as the appellant had cleared wall putty in packages of 40 kg, the provisions of rule 6 contained in Chapter II of the Rules will not apply and if this be so, the provisions of section 4A of the Excise Act under which the value of goods is deemed to be the retail sale price declared on such goods, would not be applicable. The appellant was, therefore, justified in determining the value of the goods under section 4 of the Excise Act. 32. Thus, for all the reason stated above, the Principal Commissioner was not justified in concluding that the valuation of wall putty in packages of 40 kg was required to be determined under section 4A of the Excise Act. 33. The order dated July 26, 2019 passed by the Principal Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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