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TMI Blog2025 (4) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... ion "Specially Packed for Exclusive Use of any Industry as a Raw Material or for the Purpose of Servicing any Industry, Mine or Quarry for Industrial Use only and not Intended to be displayed for Sale at a Retailer Outlet"; No MRP or RSP is printed on any package; though the items are notified for MRP based valuation under Section 4A of the Central Excise Act, 1944 ("Excise Act"), the appellant was of the opinion that they were not required to declare MRP under Standards of Weights and Measures (Packaged Commodities) Rules, 1977 ("PC Rules"); therefore, Appellant discharged Excise Duty on transaction value under Section 4 of the Excise Act. 2.1. On an intelligence developed by the officers of DGCEI, Delhi Zonal Unit, investigation was conducted and statement of concerned persons of the appellant and some dealers were recorded. On completion of the Investigation, Revenue entertained an opinion that the goods manufactured by the appellant are notified under Section 4A of Central Excise Act, 1944 for assessment of duty on the basis of Maximum Retail Price (MRP), vide Notification No.13/2002- Central Excise (NT) Dated 01.03.2002, as amended by 02/2006-CE (NT) dated 01.03.06, read with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovided an exemption that nothing contained in in the PC Rules shall apply to packaged commodities which bear specific remark on the package that it has been specially packed for exclusive use of any industry as a raw material; the packages specifically bear the remark "for industrial use only"; therefore, the goods qualify for exemption provided in Rule 34 and thereby not covered under Section 4A of the Excise Act as held in Controls & Switchgears Contractors 2005 (183) ELT 95 (Tri.-Del.) and Revenue SLP dismissed by Hon"ble Supreme Court vide 2016 (335) ELT A109 (SC). 5. Learned Counsel for the appellants submits also that the Appellant's case is not covered by exceptions to Rule 34 as most of goods are not weighing less than 5kg in any case and are not sold in retail packages; since, Appellant's goods weigh more than 5kg, irrespective whether goods are displayed for retail sale or not, they are exempted from the PC Rules; impugned goods are not sold by number or length; goods are always packed in the package of one and ultimate consumer will buy the goods based on technical parameters and depending on ultimate application for which goods will be put to use. 6. Learned Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the PC Rules and thereby Section 4A is not applicable. 8. Learned Counsel submits further that Excise department cannot decide applicability of the SWM Act or the PC Rules on its products; it is for the authorities under the SWM Act to decide whether or not Appellant's products are covered in scope of SWM Act; no objection has been raised by the SWM Authorities as to mandatory declarations on the Appellant's products; CBEC Circular No. 625/16/2002-CX dated 28.02.2002 clarified that when there is a doubt as to availability of an exemption, clarification is to be obtained from SWM department of the State; in the case of ITC Limited 2004 (171) ELT 433 (SC), it was held that once authorities administering the adherence to SWM Act have not disputed MRP declared by the assessee, it is not open for excise authorities having jurisdiction over the assessee to challenge the MRP. 9. Learned Counsel further submits on the issue of limitation that the extended period has been invoked as a matter of routine; the ingredients of Section 11A (4) are neither discussed not applied in the present case by the revenue; It is not the case that something which was required to be declared in the ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & Measures Act, 1976, Standard of Weights and Measures (Packaging Commodities) Rules 1977. He submits that the switchgear products manufactured by M/s Socomec HPL are packed in cartoons affixed with labels mentioning inter alia the name of the product, catalogue number, ordering suffix, range and quantity (in numbers); a printed price list of the Appellant was in circulation with its authorized stock lists/dealers thus giving the said products a pre-determined value and a predetermined quantity is placed in the package; opening of the packages, for the purpose of testing, inspection etc, as it happens in the case of the products, in itself alter the position of it being packed; all the above facts taken together therefore appear to fulfil the conditions of Rule - 2(A) of the PC Rules; the definition of Retail sale and Retail dealer is same before and after the amendment w.e.f. 13.1.07 of PC Rules Therefore, it can be concluded that the products manufactured and sold by the appellant were in packaged form. 8. Learned Authorised Representative submits also that even if the packages were with exclusive marking for use of any Industry as raw materials or for the purpose of servicing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effective from this date requires that for getting exemption from fixing MRP under PC Rules, the goods were required to be sold directly to the Industrial or Institutional consumer. Whereas, in the present case the appellant was not selling goods directly, but were selling the same through retailers/dealers. He submits that the appellant suppressed fact of clearing goods without marking MRP, otherwise on which MRP was required to be affixed; therefore, extended period was invokable under Section 11A of the Act and the appellant was liable for penal action under Section 11AC of the Act. He relies on the following judgements: * Larsen & Toubro Limited 2012(275) ELT153(Bom.) * HPL Electric & Power Limited 2018 (12) G.S.T.L. 36 (Tri. - Del.) (affirmed by the Apex Court 2018 (12) G.S.T.L. J33 (S.C.)) * Controls & Switchgears Contractors Ltd 2005(183) ELT95(Tri Del). [affirmed Apex Court 2011 (274) E.L.T. A109 (S.C.)]. * Schneider Electric India Pvt Ltd 2014 (311) E.L.T. 113 (Tri. - Mumbai) 11. Heard both sides and perused the records of the case. Brief issues that require our consideration in the instant case are as to whether: (i). switchgears manufactured by Appellant are l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en if the packages did contain a marking for use by industrial consumers or for service industry it would not be exempted from the purview of provisions of Rule 34 of the PC Rules; * Goods sold/displayed in retail outlets and in many cases were less than 5 kg; they are required to declare MRP; * There was no change in the process of sales of the impugned products manufactured by the appellant at the dealer level irrespective of the amendment of the PC Rules effective from 13.01.2007 14. We find that it would be beneficial to have a look at the relevant provisions of law in order to appreciate the issue. 14.1. Section 4A of the Central Excise Act, 1944 provides that: 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime of its clearance 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 declared on different packages for the sale of any excisable goods in packaged form in different areas, each such retail 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. 14.2. Relevant terms as defined under Standards of Weights and Measures (Packaged Commodities) Rules, 1977 are as under: Rule 2 - Definitions In these rules, unless the context otherwise requires, -- ... (p) "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. (q) "retail sale", in relation to a commodity, means the sale, distribution or delivery of such commodity through retail sales agencies or other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tever nature, whether sealed or open, so that the commodity contained therein has a predetermined value, and includes those commodities which could be taken out of the package for testing or examining or inspecting the commodity. 14.4. Rule 34 of these Rules provides for exemptions/ exceptions, which in different periods are as follows. Prior to 13.01.2007 Rule 34. Exemptions in respect of certain packages. Nothing contained in these rules shall apply to any package containing commodity if, - The marking on the package unambiguously indicates that it has been specifically packed for the usage of any industry as a raw material for the purpose of servicing any industry, mine or quarry: Provided that this exemption shall not be available in respect of - any yarn which is sold in hanks to handlooms weavers; any component; part or material used in any workshop, service station or any other place where servicing or repairing of any bicycle, tricycle or motor vehicle within the meaning of Motor Vehicles Act, 1939 (4 of 1939), is undertaken; any package containing a commodity of net content of 5 kilogram or 5 litre or less and displayed for sale at the retail outlet any pack ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ights and Measures (Packaged commodities) Rules, 1977", it is for the concerned authorities to take action but not the Central excise authorities; In case of doubt the department should have sought clarification from the concerned state authorities in terms of the board circulars; there was no provision to arrive at MRP value by the department, before Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008, were notified by Notification No. 13/2008- CE(NT) dated 01.03.2008; the notification being with prospective effect, for the period in dispute, there was no mechanism to determine valuation in cases where there was no declared RSP. 16. In the impugned case, it is the argument of the revenue that the appellant sells the goods through distributors/dealers and stockists all over India and are displayed by them on the counters and anybody can purchase them. This averment of the Revenue is based on the statements of certain dealers. The fact that the packages contain a declaration to the effect that the goods are meant for industrial consumers. The appellants also contend that the technical specifications of the impugned goods render them unusable by indivi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egislature that the same meaning given in the explanation is to be attributed to the definition clause also, they would not have used the word, "this rule", they would have used the word "Rule". Thus it amounts to re-writing the Rules by the Court which is not permitted in law. Keeping in mind the object with which this enactment was passed, there is a need to protect an individual consumer and certainly not the industrial consumer. When the legislature, for the purpose of Rule 2-A only, explained the meaning of institutional consumer and industrial consumer, such legislative intent is to be respected. If the interpretation sought to be placed by the Revenue is accepted, it would do violence to the Rules. The difference between the definition of institutional consumer and industrial consumer in Rule 2-A and Rule 2(p) appears to be thus: 29. In Rule 2-A industrial consumer or the institutional consumer are purchasing the packaged commodities directly from the manufacturer. In the case of retail package, the manufacturer of goods meant for industrial use may not be able to supply the goods directly. Therefore, they may take the assistance of a stockist. If the customers are speared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner No. 2 is selling these through a network of stockist spread all over India, 90% of the sales are generated through the involvement of core team of sales/service engineers of petitioner No. 2 who are trained in specialized Eutectic Castolin Welding Process. These products are used in the process of reconditioning, remaking, rejuvenation and restoration of the machinery or equipment. Depending on the surface of the machinery to be welded, the particular specialized type of welding electrodes and fluxes are recommended to the customer. The sales team suggests the mix of the products, the price and the stockist from whom these can be purchased. Therefore, in the facts of this case, it cannot be said that the person to whom these petitioners are selling the products are customers in the sense it is understood under the Customer Protection Act for whose protection this particular Act and Rules were enacted. Therefore, the impugned notices issued are one without authority, illegal and contrary to the express provisions contained in the enactment and cannot be sustained.... 17. Tribunal in the case of Legrand (India) Pvt Ltd (supra) held that goods meant for industrial use, thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SP on the imported 18. In view of the above, we find that as far as the Appellant's goods are intended for industrial use and declaration to that effect is available on the packages, a fact which is not contradicted by Revenue, there is no infirmity in the Appellant's assessing the same under Section 4 of Central Excise Act, 1944. Revenue has not made out any case for assessment under Section 4A, despite the fact that they are sold through retail outlets/dealers/ stockists. Further, it is the argument of the appellant that even in cases where MRP was not declared, revenue had no mechanism to determine the same before the enactment of Central Excise valuation Rules w.e.f. 1.3.2008. We find that Larger Bench of the Tribunal in the case of M/s Ocean Ceramics Ltd, vide Interim Order Nos.01-23/2024 dated 23.01.2024 [2024 (1) TMI 1280 - CESTAT AHMEDABAD - LB], had an occasion to analyse the issue. Larger bench has gone in to all aspects of the case, history of legislation and various judicial pronouncements in this regard held that the Central Excise (Determination of RSP of Excisable Goods) Rules, 2008 are not procedural in nature and cannot be given retrospective effect and further, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Measures (Packaged Commodities) Rules, 1977, made thereunder, the Central Excise authorities should refer the matter to the Jurisdictional Officers empowered to implement that Act. We find that CBEC, vide Circular No.625/16/2002-CX, dated 28/02/2002, clarified that the Standards of Weights & Measures Act, 1976, and the rules made there under, are administered by the State Governments. Instances of dispute could arise between the department and the assessee as to whether, in respect of a particular commodity/transaction, the assessee is exempted from declaring the retail price or not. In case of such doubt a clarification may be obtained from the concerned Department (generally the Metrology Department) of the State Government. 21. Now we turn our attention to the issue of limitation. The appellants argue that they believed that their products are not covered under the PC Rules and hence, did not declare MRP. All the invoices issued by them were clearly showing that they were charging Excise duty on transaction value under Section 4 of the Excise Act. They were regularly filing ER-1 returns clearly mentioned that their product is classified under CETH 8536. The Appellant was subje ..... X X X X Extracts X X X X X X X X Extracts X X X X
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