2007 (8) TMI 3 - SC - Central Excise

Central Excise Valuation of Goods under Section 4 i.e Transaction Value or under Section 4A i.e MRP based value. SC prescribes the ruling for proper valuation in 14 different but identical appeals in a single judgement.

Issues Involved:
1. Interpretation of Section 4 and 4A of the Central Excise Act, 1944.
2. Applicability of the Standards of Weights & Measures Act, 1976, and the Standards of Weights & Measures (Packaged Commodities) Rules, 1977.
3. Determination of whether goods should be assessed under Section 4 or Section 4A of the Central Excise Act.

Detailed Analysis:

1. Interpretation of Section 4 and 4A of the Central Excise Act, 1944:
Section 4A was introduced to simplify the valuation of excisable goods by linking it to the retail sale price (RSP) mandated under the SWM Act and Rules. The section applies if:
1. The goods are excisable.
2. They are sold in packages.
3. There is a statutory requirement to declare the RSP on the package.
4. The Central Government has specified such goods by notification.
5. The valuation is based on the RSP less any abatement allowed by the government.

2. Applicability of the Standards of Weights & Measures Act, 1976, and the Standards of Weights & Measures (Packaged Commodities) Rules, 1977:
- The SWM Act and Rules require certain declarations on packages, including the RSP.
- Rule 6(1)(f) of the SWM (PC) Rules mandates the declaration of the RSP on retail packages.
- Rule 34 provides exemptions for packages intended for industrial use or servicing any industry.

3. Determination of whether goods should be assessed under Section 4 or Section 4A of the Central Excise Act:
- Jayanti Food Processing (P) Ltd. (CA 2819/2002): The ice-cream sold in bulk to hotels was not meant for retail sale. The packs displayed "not for retail sale," and thus, the assessment should be under Section 4, not Section 4A. The Tribunal's order was overturned.
- Nestle India Ltd. (CA 1738/2004): KITKAT chocolates sold to Pepsico for free distribution with Pepsi bottles were not for retail sale. The Tribunal's decision to assess under Section 4A was overturned, and the assessment was directed to be under Section 4.
- Telephone Instruments (CA 2150-51/2004, CA 1144/2004, CA 1385/2005, CA 3847/2005, CA 6425/2005): The sale of telephones to DoT, MTNL, and BSNL involved packages with MRP declared. The Tribunal correctly held that the assessment should be under Section 4A.
- Refrigerators (CA 2877/2005, CA 6168/2005, CA 5840/2006): Refrigerators sold to bottling companies with MRP declared on packages should be assessed under Section 4A. The Tribunal's decision was upheld.
- Electric Filament Lamps (CA 498/2006): Similar to telephones, the lamps were sold with MRP declared on packages, and thus, the assessment should be under Section 4A. The Tribunal's decision was upheld.
- Mineral Water Bottles (CA 6559-6560/2005): The package containing multiple bottles with MRP declared should be assessed under Section 4A. The Tribunal's decision was upheld.

Conclusion:
- Allowed Appeals: CA 2819/2002 and CA 1738/2004 were allowed, directing assessment under Section 4.
- Dismissed Appeals: CA 2050-51/2004, CA 1144/2004, CA 4754/2004, CA 1385/2005, CA 3847/2005, CA 6425/2005, CA 2877/2005, CA 6168/2005, CA 5840/2006, CA 498/2006, and CA 6559-6560/2005 were dismissed, upholding assessment under Section 4A.

In all cases, the assessment depends on whether the goods are sold in packages with an MRP declaration as required by the SWM Act and Rules. If such requirements are met, Section 4A applies; otherwise, Section 4 applies.

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