2009 (3) TMI 855 - AT - Central Excise

Valuation - MRP based valuation - Section 4A of Central Excise Act, 1944 - whether the appellant is required to pay duty on the value arrived at by the Revenue by calculating MRP of individual product after granting abatement?

Issues Involved:
1. Violation of Section 4A of the Central Excise Act, 1944.
2. Non-compliance with Notification No. 13/2002-C.E. (N.T.) and Notification No. 5/2005-C.E. (N.T.).
3. Breach of the Standards of Weights and Measures Act, 1976, and related rules.
4. Non-payment of appropriate duty under Rule 4 read with Rule 8.
5. Incorrect assessment under Rule 6 read with Section 4A.
6. Incorrect values in Form ER-1 Returns under Rule 12.

Detailed Analysis:

1. Violation of Section 4A of the Central Excise Act, 1944:
The appellants were accused of contravening Section 4A by using a "Combined MRP" under a "Combination Scheme" instead of assessing excisable goods based on individual MRPs. The adjudicating authority concluded that the appellants were in error for discharging their duty liability on the combined price of two different items, thus violating Section 4A. The Tribunal, however, found that the appellants' practice of declaring a combined MRP for combination packages was permissible under the Standards of Weights and Measures (Packaged Commodities) Rules, 1977, as clarified by the CBEC Circular No. 673/64/2002-CX.

2. Non-compliance with Notification No. 13/2002-C.E. (N.T.) and Notification No. 5/2005-C.E. (N.T.):
The appellants were alleged to have violated these notifications by clearing two or three different products under a combination scheme instead of individual MRP-based clearance. The Tribunal found that the combination packages, where one item was marked as "Not for Retail sale," complied with the CBEC Circular, which allowed for such combination packages to be assessed based on the combined MRP.

3. Breach of the Standards of Weights and Measures Act, 1976, and related rules:
The appellants were accused of not affixing individual MRPs on both products in the combination scheme, thus violating the Standards of Weights and Measures Act and related rules. The Tribunal held that the appellants' practice of marking one item as "Not for Retail sale" and declaring a combined MRP on the main product was in line with the provisions of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977, and the CBEC Circular.

4. Non-payment of appropriate duty under Rule 4 read with Rule 8:
The appellants were charged with removing goods without paying the appropriate duty. The Tribunal found that the appellants had correctly discharged their duty liability based on the combined MRP, as allowed by the CBEC Circular, and there was no short payment of excise duty.

5. Incorrect assessment under Rule 6 read with Section 4A:
The appellants were accused of incorrectly assessing duty by valuing goods under Section 4 instead of Section 4A. The Tribunal held that the appellants' method of declaring a combined MRP for combination packages was valid under Section 4A, supported by the CBEC Circular and relevant case law.

6. Incorrect values in Form ER-1 Returns under Rule 12:
The appellants were alleged to have provided incorrect assessable values in their Form ER-1 Returns. The Tribunal found that the appellants had correctly declared the combined MRP in their returns, in compliance with the CBEC Circular and the Standards of Weights and Measures (Packaged Commodities) Rules, 1977.

Conclusion:
The Tribunal concluded that the appellants' practice of declaring a combined MRP for combination packages was permissible under the relevant rules and CBEC Circular. The impugned orders were set aside, and the appeals were allowed with consequential relief. The Tribunal emphasized that the appellants' method complied with the legal provisions and did not result in any short payment of excise duty.

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