2012 (7) TMI 962 - AT - Central Excise

Valuation - Penalty - Held that - Similar issue on facts and law came up before the Hon ble Supreme Court for consideration in the matter of CCE Vapi vs. Kraftech Products - 2008 (3) TMI 12 - Supreme court wherein the Supreme Court after considering the relevant provisions of Excise Act and Package Commodity Rules decided the issue against the Revenue - Decided against the assessee.

Summary

Issues:
1. Applicability of Package Commodity Rules for chewing tobacco packed in pouches.
2. Valuation of chewing tobacco for excise duty based on Section 4 or Section 4A of the Central Excise Act.

Issue 1: Applicability of Package Commodity Rules for chewing tobacco packed in pouches:
The case involved the appellants, engaged in the manufacture of chewing tobacco, clearing pouches in larger packets. The dispute arose as to whether the Package Commodity Rules applied to the marketing of single unit pouches containing less than 10 gms of chewing tobacco. The appellants argued that since they marketed single unit pouches, they were not covered under the Package Commodity Rules. They relied on Supreme Court judgments to support their contention. On the contrary, the Departmental Representatives argued that even though the pouches were single units, they were marketed in multi-packs, making the total weight of the multi-pack exceed 10 gms. Hence, Rule 4A of the Central Excise Act was deemed applicable. The Tribunal considered these arguments and analyzed the relevant provisions and market practices.

Issue 2: Valuation of chewing tobacco for excise duty based on Section 4 or Section 4A of the Central Excise Act:
The main contention revolved around whether the excise duty should be paid based on the transaction value under Section 4 or the valuation under Section 4A of the Central Excise Act. The Supreme Court's judgment in the case of CCE vs. Kraftech Products was cited, emphasizing that if the commodity is not sold by weight or measure and the net weight is 10 gms or less, the Package Commodity Rules do not apply. The Supreme Court's decision was reiterated in the case of Commissioner of Central Excise vs. Makson Confectionery Pvt. Ltd. The Tribunal, following the Supreme Court's interpretation, concluded that the impugned orders confirming the duty demand based on Section 4A of the Central Excise Act could not be sustained. Consequently, the appeals were allowed, and the impugned orders were set aside.

In conclusion, the Tribunal's judgment clarified the applicability of Package Commodity Rules for chewing tobacco packed in pouches and determined the correct valuation method for excise duty based on the Supreme Court's interpretations of relevant provisions and precedents.