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2011 (8) TMI 928 - AT - Central ExciseChewing Tobacco - MRP based duty u/s 4A - Rule 34 of Standards of Weights and Measures (Packaged Commodities) Rules 1977 - Appellants say that the goods were sold by weight and only individual pouches were meant for retail sale and the multi piece packages were not meant for retail sale. - held that - MRP is indicated for the multi-piece package was indicated on the multi-piece package showing the clear intention that such multi-piece package also was intended for retail sale. - So in the case before us the Appellant was required under law to declare MRP on the multi-piece package and the Appellant was doing so. Further this commodity was notified for levy of excise duty based on valuation as per section 4A of the Central Excise Act. Thus both the legal requirements for applying section 4A were satisfied and hence Central Excise duty should have been paid adopting the value as per section 4A.
Issues Involved:
1. Classification and valuation of Chewing Tobacco under Section 4A of the Central Excise Act, 1944. 2. Applicability of Rule 34 of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977. 3. Determination of whether multi-piece packages are retail packages. 4. Compliance with the requirement to affix Maximum Retail Price (MRP) on packages. Issue-wise Detailed Analysis: 1. Classification and Valuation of Chewing Tobacco: The appellants are engaged in the manufacture of Chewing Tobacco, classified under Sub-heading No. 2404.41 of the Central Excise Tariff Act, 1985. The Anti-Evasion Wing of Central Excise Commissionerate, Jaipur-II, conducted a surprise check and found various packages with different weights and MRPs. The appellants had been paying Central Excise duty based on MRP under Section 4A of the Central Excise Act, 1944, until 7.3.2004. From 8.3.2004, they switched to paying duty under Section 4 for packages containing 3 gms and 6 gms pouches, while continuing under Section 4A for 12 gms pouches. 2. Applicability of Rule 34 of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977: Under Rule 34, if goods sold by weight have a net content below 10 gms, the manufacturer is not required to affix MRP. The appellants claimed this exemption for their 3 gms and 6 gms pouches. However, the SCN alleged that these goods were sold by the number of pouches, not by weight, and that multi-piece packages were retail packages requiring MRP, thus invoking Section 4A for duty calculation. 3. Determination of Whether Multi-piece Packages Are Retail Packages: The adjudicating officer and the Commissioner (Appeal) found that multi-piece packages are retail packages. The Commissioner (Appeal) noted that the appellants' packages met the definition of 'multi-piece package' under the Packaged Commodity Rules. The packages were intended for retail sale, either as individual pouches or as a whole. The Tribunal's decision in Swan Sweets Pvt Ltd supported this view, emphasizing that the intention to sell in retail determines the requirement for MRP, not the actual sale condition. 4. Compliance with the Requirement to Affix MRP on Packages: The appellants argued that only individual pouches were meant for retail sale, not the multi-piece packages. They relied on CBEC Circular No. 411/44/98-CX, which states that Section 4A applies only when MRP is statutorily required. However, the Tribunal noted that the appellants were required to declare MRP on multi-piece packages under Rule 6 of the Packaged Commodity Rules. The Tribunal referenced the Supreme Court's decision in Kraftech Products, which clarified that goods sold by weight should be assessed under Section 4A if MRP is required by law. Conclusion: The Tribunal concluded that the appellants were required by law to affix MRP on multi-piece packages and that the commodity was notified for valuation under Section 4A of the Central Excise Act. Therefore, the appellants should have paid Central Excise duty based on the value determined under Section 4A. The appeal was rejected, upholding the demand for differential duty and interest, along with the proposed penalty.
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