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TMI Blog2024 (2) TMI 1017X X X X Extracts X X X X X X X X Extracts X X X X ..... by them having been affixed with 'retail sale price (RSP)', valuation for assessment to duty would have to be in accordance with section 4 of Central Excise Act, 1944 instead of resort to section 4A of Central Excise Act, 1944 on which levy had been discharged by them. 2. The appellant is in the business of manufacturing 'cake mixes' and 'bakery mixes' for supply to distributors as well as, and not infrequently, to bakeries directly. These products, statutorily required to comply with the prescription in Standards of Weights and Measures (Packaged Commodities) Rules, 1977, notified under the authority of The Standard Weights and Measurement Act, 1977 (and now of Legal Metrology (Packaged Commodities) Rules, 2011, notified under the authority of Legal Metrology Act, 2009) which, inter alia, included 'retail sale price (RSP)' on packages, were also covered by notification no. 49/2008-CE (NT) dated 24th December 2008 (at serial no. 9) issued under the authority of section 4A of Central Excise Act, 1944, for resort as alternative to transaction value. The central excise authorities, taking note that the contents of declaration on the package also incorporated 'not for retail sale', i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the jurisdictional High Court in their favour. It was pointed out that the amendment, effected by notification dated 14th May 2015, in '(bb) "industrial consumer" means the 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 shall have declaration 'not for retail sale';' in rule 2 of Legal Metrology (Packaged Commodity) Rules, 2011 could only have prospective effect and, impliedly, excluded 'distributors' from such category. Reliance was placed on the decision of the Tribunal in Top Victory Investments (P) Ltd v. Commissioner of Customs, Trichy [2016 (336) ELT 345 (T)]. It was also contended that declaration on package that goods were 'not for retail sale' did not, of itself, exclude it from coverage as 'retail package' in the absence of such presumption in law. It was submitted that allegation by the tax authorities could not be fastened onto such goods as had been sold directly to bakeries and, with duty liability thereon having been discharged, inclusion of Rs. 3,11,442 in the impugned order for recovery was incorrect. 5. On behalf of respondent-Commissioner, Learned Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach of 'retail sale price' conditions do not warrant remedy outside section 4A of Central Excise Act, 1944. We are required to resolve the dispute over the scope of an implied exception among goods notified for assessment under section 4A of Central Excise Act, 1944 for charging duty by the default valuation in the light of intent of appellant to forestall retail sale while, in circumstances of not seeking to appeal to preferences of the ultimate consumer, printing 'retail sale price' on the packages. The answer lies in the space between the empowerment by section 4A(1) of Central Excise Act, 1944 and the effect of the machinery provisions of section 4A(2) of Central Excise Act, 1944 with its limited role for the Central Government, i.e., to notify eligible abatement from 'retail sale price', for proximity with principle underlying levy on manufacture. 7. It is also on record that, during the course of the proceedings, the assessee was inclined to concede that 'direct sales' of theirs merited assessment urged by central excise authorities and offered to discharge the differential duty liability on these. In such context, we take note that, on the finding that the impugned goods ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon the- requirement of declaration of retail sale price under Packaged Commodities Rules, despite knowing the fact that the goods were intended for sale in bulk to bakeries for industrial purposes, and not to the ultimate consumer in retail. It is interesting to know that the product viz. Cake Mixes / Bakery Mixes in packaged form of 4x 5 Kgs. has not completed the entire journey of sale in packaged form, as it was packed originally (by the manufacturer M/s. GMIPL), in reaching to the ultimate consumer. The Bakeries have purchased this product in between, opened the package, and used it to make finished desserts like cakes and pastries, which were ultimately sold to the ultimate consumer. This fact is admitted by Shri Nasir Hussain Sayed, National Manager (Business Development) - M/s. GMIPL, in his statement dated 16.01.2013. So long as the packaged commodity is not sold as it is, without opening or breaking the package, 'to the ultimate consumer in retail sale, the sale cannot come forward for consideration under PC Rules, and likewise, the valuation will not come under Section 4A of the Central Excise Act, 1944.' in the impugned order. It is, therefore, necessary to scrutin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies in packaged form On and from the commencement of these rules, no person shall pre-pack, or cause of permit to be pre-packed any commodity for sale, distribution or delivery unless the package in which the commodity is pre-packed bears thereon, or on a label securely affixed thereto, such declarations as are required to be made under these rules.' mandating the 'other law' that is relevant to assessment under Central Excise Act, 1944, viz., The Standards of Weights and Measures (Packaged Commodities) Rules, 1977, as intended for '(3)........are, or are intended or likely to be - (i) sold, distributed or delivered or offered or displayed for sale, distribution or delivery, or (ii) stored for sale, distribution or delivery....' in 'pre-packed' form as per rule 1 therein without reference to any particular commodities which is of essence in levy of duties of central excise. Moreover, 'goods' does not find acknowledgement in Central Excise Act, 1944 rendering such exercise contemplated by section 4A(1) of Central Excise Act, 1944 to be purposeless without section 4A(2) of Central Excise Act, 1944. It is not for us to dilate further on this conundrum. Suffice it to say that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ckage quantity beyond stipulated threshold and the two categories of markets were enumerated as not amenable to the stipulations with intent of retail sale erased out of existence. The question to be answered, therefore, is the extent to which the notification under section 4A of Central Excise Act, 1944 could circumscribe application to clearance of commodities in 'pre-packaged' form. 12. The empowerment to notify 'goods' to which the machinery provision of section 4A(2) of Central Excise Act, 1944 is circumscribed by qualification of having to be required to declare 'retail sale price' - which, though undoubtedly, not specified by description of the commodity - are, nonetheless, by operation of restriction assigned by rule 3 of Standards of Weights and Measures (Packaged Commodities) Rules, 1977 limited to such packages as are intended for retail sale. The construing of 'package' appearing anywhere in chapter II of Standards of Weights and Measures (Packaged Commodities) Rules, 1977 as being saddled thus restricts the empowerment of the Central Government in section 4A(1) of Central Excise Act, 1944 to such 'intent' only. Consequently, it can be posited that 'goods' in section 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the exclusion specified in Legal Metrology (Packaged Commodities) Rules, 2011 by releasing goods sold to 'industrial consumer' from obligation to be in compliance with rule 6 thereof. The Standards of Weights and Measures Act, 1976 was initially enacted to afford assurance to consumers that contents of 'packaged goods' were as displayed on the packing and to fasten responsibility on manufacturers/producers for such conformity through prescriptions and stipulated exceptions in Standards of Weights and Measures (Packaged Commodities) Rules, 1977. Though intended, originally, for consumer protection in the course of inter-state trade or commerce, legislating of Standards of Weights and Measures (Enforcement) Act, 1985 rendered it equally applicable to 'commodities in packaged form' traded within states too. While pre-packaging at factory of manufacture did contribute enormously in enhancing distribution, utility any buyer was, and by being precluded from tactile and visual acquaintance, for quality and quantity, concurrently susceptible to being short-changed in the commercial transaction. The Standards of Weights and Measures Act, 1976 and Legal Metrology Act, 2009 were legislated to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1977, replicated in rule 2(k) of The Legal Metrology (Packaged Commodities) Rules, 2011, that such expression is found. The latter, however, is not germane to 'retail sale price' assessment and the lack of such expression in the former renders such usage to be beyond the scope of adjudication under Central Excise Act, 1944. In any case, 'retail package', as an expression, mere serves to complement 'wholesale package' in rule 2(x) of The Standard Weights and Measures (Packaged Commodities) Rules, 1977 and rule 2(r) of The Legal Metrology (Packaged Commodities) Rules, 2011 which are not germane to the dispute before us. The distinguishment of 'ultimate consumer' as the criteria for applicability of section 4A of Central Excise Act, 1944 to the impugned transactions has no basis in law. It is worth noting that even in relationship to 'industrial' usage or 'institutional' deployment, the buyer yet remains consumer. There is no reason to suppose, as the adjudicating authority has, from the tax statute or the consumer protection laws that 'bakeries' are not intended recipients of such protection. The adjudicating authority has stretched logic to conclude that the transformation on a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment under Central Excise Act, 1944 in which the nature of the goods was held to be the basis for seeking cover under the exceptions in the consumer protection laws which was resisted on facts of delivery through dealer network that was found acceptable by the Tribunal. The decisions of the Tribunal, pertaining to 'restricted distribution' which were held to be irrelevant to assessment under section 4A of Central Excise Act, 1944, did not have cause to examine the limitation in the enablement of Central Government to notify goods under section 4A(1) of Central Excise Act, 1944. We have held supra that the limitation, couched in narrow meaning assigned to 'packages' for the purpose of declaration under rule 3 of Standards of Weights and Measures (Packaged Commodity) Rules, 1977, on powers to direct assessment under section 4A(1) of Central Excise Act, 1944 is not susceptible to expansion by another provision therein. 19. The demand of differential duty for the period prior to 1st April 2011 is upheld while setting aside the demand for the period thereafter. The intention of the appellant not to clear for retail sale during the former period is evident despite which they resorted to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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