2008 (11) TMI 672 - AT - Central Excise

Summary

Issues involved: Assessment of goods under Section 4A of Central Excise Act u/s Section 4, applicability of Rule 34 of Standard Weight and Measure (Packaged Commodity) Rules, 1977, classification of poly packs containing small pouches.

Assessment under Section 4A vs. Section 4:
The appellants, engaged in manufacturing chewing tobacco, were assessed under Section 4A instead of Section 4 of the Central Excise Act due to poly packs being considered multi-piece packages. The appellants argued that the product is chewing tobacco, not small pouches, and should be assessed under Section 4. They cited a Supreme Court decision stating that commodities packed in sachets weighing less than the exemption limit should be assessed under Section 4. The appellants contended that the poly packs are not group packages as they are not intended for retail sale, but for sale to retailers who then sell the small pouches to consumers.

Applicability of Rule 34 of SWMR:
The appellants claimed exemption under Rule 34 of SWMR as the pouches weighed less than 10 gms. They argued that the weight mentioned on each sachet entitles them to the exemption. They emphasized that the poly packs containing small pouches should not be considered group packages, as they are not meant for retail sale but for distribution to retailers who then sell the small pouches to consumers.

Judicial Precedents and Decision:
The Revenue relied on a Madras High Court decision to support the assessment under Section 4A. However, the Tribunal, in a previous case, held that pouches weighing less than 10 gms. sold in multi-packs should be assessed under Section 4. The Supreme Court, in a similar case, agreed with the Tribunal's view, stating that the reasoning of the Madras High Court did not appeal to them. The Supreme Court emphasized that the combined weight of the sachets should be considered for applying the exemption provision, and the Madras High Court decision was held to be per incuriam. Consequently, the Supreme Court set aside the impugned orders and allowed the appeals.

Conclusion:
Based on the Supreme Court's decision, the impugned orders assessing the goods under Section 4A were set aside, and the appeals were allowed on 07.11.2008.