2010 (12) TMI 130 - AT - Central Excise

Valuation - Talcum powder - MRP u/s 4A or Ttransaction Value u/s 4 of the Central Excise Act, 1944 - Assessee adopted the retail price declared on the plastic container less 50% claiming abatement under Notification No. 20/99-CE dated 28.2.1999 - even though the impugned goods are notified under Section 4A of the Central Excise Act, 1944 the same are clearly not intended for retail sale as it is an admitted fact that the appellants have manufactured and supplied the Mysore Sandal Talcum Powder to M/s. Karnataka Soaps and Detergents Ltd. who in turn have supplied the same free along with 2 nos. of 75 gms. of Mysore Sandal soap - goods are neither intended for retail sale nor are sold in retail being in the nature of goods meant for free supply and further the packages being of 20 gms. each they also stand exempted from the application of the SWM Rules, 1977 -Appeal is rejected - Valuation to be made on transaction value u/s 4

Summary

Issues: Valuation under Section 4A of the Central Excise Act, 1944 for sandalwood talcum powder manufactured in 20gms plastic containers sold for free supply along with soaps.

Analysis:
1. The appellants claimed abatement under Notification No. 20/99-CE dated 28.2.1999 read with Section 4A of the Central Excise Act, 1944 for the valuation of sandalwood talcum powder. The authorities rejected this claim and ordered valuation under Section 4 of the Act, leading to the appeal by the appellants.

2. The learned counsel for the appellants argued that the talcum powder falls under Section 4A of the Act and under the SWM Rules, the maximum retail price and net quantity need to be declared on packages containing 10gms to 20gms. Therefore, valuation under Section 4A with the prescribed abatement on the MRP should be allowed.

3. The Jt. CDR contended that the impugned goods are not for retail sale, hence the SWM Rules are not applicable. He pointed out that packages containing 20gms or less are exempted from the SWM Rules. Therefore, the rejection of the claim for valuation under Section 4A by the authorities was justified.

4. The Tribunal observed that the talcum powder, though notified under Section 4A, was not meant for retail sale as it was supplied for free along with soaps. The goods were neither intended for retail sale nor sold in retail, despite being in 20gm containers. As per Rule 3 and Rule 34(1)(b) of the SWM Rules, the goods fell outside the purview of retail sale regulations. Consequently, the provisions of Section 4A for valuation and assessment were deemed inapplicable, and the appeal was rejected.

This judgment clarifies that even if goods are notified under a specific section for valuation, their intended purpose and mode of sale play a crucial role in determining the applicable rules and regulations, especially concerning retail sale exemptions under the SWM Rules.