2010 (9) TMI 257 - AT - Central Excise

MRP - Caram Eclairs and Choco Eclairs - individual weighs approximately 5.5 gms - total weight is 20 gms - Applicability of Provisions of Section 4A - Held that - poly packs and pet jars are multi-piece retail packages - The exemption under Rule 34(b) of the rules will be available in respect of a multi-piece retail package if the total weight of all the pieces in the package does not exceed the prescribed limit as held by Krafttech Products (2008 -TMI - 3484 - Supreme court) and Urison (2006 -TMI - 459 - CESTAT, Mumbai). poly packs and pet jars are multi-piece retail packages and the total weight of the pieces in such packages exceed 20 gms, the exemption under Rule 34(b) is not applicable and consequently, the assessment is required to be done applying provisions of Section 4A.

Summary

Issues Involved:
1. Classification of pet jars/poly bags containing individual pieces of Eclairs as 'wholesale package' or 'multi-piece package.'
2. Relevance of exemption under Rule 34(b) of Standards of Weights & Measures (Packaged Commodities) Rules, 1977 for deciding assessment under Section 4 or 4A of the Central Excise Act.
3. Appropriate section for assessment of the impugned products under the Central Excise Act (Section 4 or Section 4A).

Detailed Analysis:

Issue 1: Classification of Pet Jars/Poly Bags
The appellants argued that the pet jars/poly bags containing individual pieces of Eclairs should be classified as 'wholesale packages' as they contained more than ten retail packages and were meant for wholesale dealers. They cited Rule 2(x) of the PC Rules, which defines a wholesale package as one containing ten or more retail packages, and argued that their products met this definition. However, Revenue contended that these packages were 'multi-piece packages' intended for retail sale, as per Rule 2(j) of the PC Rules, which defines a multi-piece package as containing two or more individually packaged pieces intended for retail sale. The Tribunal, considering the referral order and the definitions, found that the pet jars/poly bags were indeed multi-piece packages intended for retail sale, thus supporting the Revenue's view.

Issue 2: Relevance of Exemption under Rule 34(b)
The appellants claimed that Rule 34(b) of the PC Rules exempted their products from the requirement of affixing MRP since each individual piece weighed less than 10 grams. They argued that the exemption should apply to the entire package if the individual pieces met the criteria. However, the Tribunal noted that the exemption under Rule 34(b) applies only if the total weight of the multi-piece package does not exceed the prescribed limit of 20 grams. Since the pet jars/poly bags weighed more than 20 grams, the exemption under Rule 34(b) was not applicable. The Tribunal emphasized that the nature of the package (retail or wholesale) and the total weight were crucial factors in determining the applicability of the exemption.

Issue 3: Appropriate Section for Assessment
The appellants argued that their products should be assessed under Section 4 of the Central Excise Act, as they were not intended for retail sale. They cited the CBEC circulars and previous judgments to support their claim. However, the Tribunal, referring to the Supreme Court's decision in Jayanti Food Processing (P) Ltd. v. Commissioner of C. Ex., Rajasthan, held that the assessment should be done under Section 4A if the goods were sold in packages and required to declare the retail sale price under the SWM Act or PC Rules. The Tribunal found that the pet jars/poly bags were retail packages and required to declare MRP, thus making Section 4A applicable for assessment.

Majority Judgment:
The majority of the Tribunal members agreed that the pet jars/poly bags containing individual pieces of Eclairs were multi-piece retail packages, not wholesale packages. They held that the exemption under Rule 34(b) was not applicable as the total weight exceeded 20 grams. Consequently, the assessment should be done under Section 4A of the Central Excise Act, requiring the declaration of MRP. The Tribunal directed the regular Bench to decide the appeal based on these findings.

Separate Judgment:
One member, while agreeing with the majority on the classification and applicability of Rule 34(b), emphasized that the Larger Bench's role was advisory and not to reverse the findings of fact by the referral Bench. He reiterated that the referral Bench's finding that the packages were multi-piece retail packages was sound and should be respected. The assessment should be under Section 4A as the total weight exceeded 20 grams.

Conclusion:
The Tribunal concluded that the pet jars/poly bags containing individual pieces of Eclairs were multi-piece retail packages, not wholesale packages. The exemption under Rule 34(b) was not applicable due to the total weight exceeding 20 grams. Consequently, the assessment should be done under Section 4A of the Central Excise Act, requiring the declaration of MRP. The appeal was directed to be decided by the regular Bench based on these findings.