2006 (11) TMI 55 - AT - Central Excise

Valuation(Central Excise) Alleged that the products(biscuits) of appellant are not covered under section 4A of CET Act and accordingly demand for differential duty interest and penalty After considering all the details decision made in favour of appellant

Summary

Issues: Correct valuation of biscuits packed in tins of 2.5 kg. and above under Section 4A vs. Section 4 of the Central Excise Act.

Analysis:
1. Issue of Correct Valuation: The appeal concerns the correct valuation of biscuits packed in tins of 2.5 kg. and above under Section 4A of the Central Excise Act. The Revenue argued for the application of Section 4 instead of Section 4A, leading to proceedings against the appellants. The Addl. Commissioner determined the valuation under Section 4, resulting in a demand for differential duty, interest under Section 11AB, and a penalty under Rule 25 of the Central Excise Rules, 2002. The Commissioner (A) upheld this decision, prompting the appellants to seek relief from the Tribunal.

2. Appellant's Arguments: The appellant contended that biscuits, being a notified commodity under the Standards of Weights and Measures (Packaged Commodities) Rules, should be assessed under Section 4A. They highlighted that packages over 1 kg. were not intended for certain industries, thus justifying assessment under Section 4A. The appellant also argued that the lack of opportunity to participate in determining the transaction value rendered the differential duty demand unjustifiable. Additionally, they challenged the penalty imposed, asserting a bona fide belief in Section 4A assessment.

3. Tribunal's Analysis: The Tribunal scrutinized the lower authorities' reasoning and found discrepancies in their interpretation of Rule 5 of the Standards of Weights and Measures (Packaged Commodities) Rules. Contrary to the lower authorities' conclusion, the Tribunal clarified that biscuits falling under Schedule-III could be packed in quantities exceeding 1 kg., allowing for retail sale. Moreover, the Tribunal emphasized that the statutory conditions for Section 4A valuation were met, as the biscuits were duly notified and not exempt under Rule 34 of the Rules.

4. Legal Precedents: The Tribunal referenced legal precedents, such as the case of Itel Industries Pvt. Ltd. v. CCE, Calicut, to support the appellants' position that goods not exempt under Rule 34 should be valued under Section 4A. The Tribunal underscored that the sale of goods in bulk did not preclude Section 4A valuation, emphasizing that the Packaged Commodities Rules did not mandate retail sale for such valuation.

5. Conclusion: Ultimately, the Tribunal ruled in favor of the appellants, setting aside the impugned order and allowing the appeal with consequential relief. The judgment, pronounced on 30-11-2006, established that the biscuits, being notified under Section 4A and not exempted under Rule 34, should indeed be valued under Section 4A, irrespective of the package weight exceeding 1 kilogram.